Presentation Overview

eProcurement & eMarketplaces in the Public SectorUQ E-Commerce Seminar Series22 October 2001Presented By: Simon Porter

Presentation Overview Who is Accenture? The case for eProcurement What makes a successful eMarketplace? What is Australia doing? So what should Queensland be doing? Accenture’s solution Questions and Close The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.

Accenture is the world's leading provider of management and technology consulting services and solutions, with more than 70,000 people in 46 countries delivering a wide range of specialized capabilities and solutions to clients across all industries. Accenture operates globally with one common brand and business model designed to enable the company to serve its clients on a consistent basis around the world. Under its strategy, Accenture is building a network of businesses to meet the full range of any organisation's needs -- consulting, technology, outsourcing, alliances and venture capital. The firm generated revenues of US$9.75 billion for the fiscal year ended August 31, 2000 and US$5.71 billion for the six months ended February 28, 2001. Its home page is www.accenture.com. Who is Accenture?

What Is eProcurement? • Typical Issues • Poor information available to end-consumers regarding pricing, availability, preferred suppliers • Multiple process handoffs before orders are placed • Little or no facts available regarding true demand • Minimal service level tracking • Slow, paper-based processes • Inconsistent processes/policies or lack of knowledge about them • High levels of rework, errors • Poor Results • Purchasing volume not effectively leveraged • Poor service levels to business consumers • Slow, unreliable supply chains • Excess overhead costs ($100 per PO) Organization Unit, e.g. Business Consumers Purchasing Professionals Suppliers Office Supplies Industrial MRO Business Systems SBU Freight Carrier Business Systems Operations Typically, in a traditional purchasing environment, there are many inefficiencies which lead to higher costs and inadequate service levels.

eProcurement provides direct and efficient process linkages between the business consumers and suppliers, enabled by new class of networked solutions. What Is eProcurement? • Improvements • Online catalogs reinforce use of preferred suppliers • High accessibility via the intra/internet enables company-wide usage • One shared supply process for each spend category • Involvement by “purchasing” not required • Corporate supply managers supported by common system • Complete process automation and guidance, across companies • Logistics imbedded into supply process, leveraged to preferred carrier • Improved Results • Better compliance and usage deliver a richer fact-base which enables fully-leveraged deals • Improved service levels reduce overhead ($10 per PO) • Faster, more reliable processes reduce inventories, freight costs Organization Unit, e.g. Business Consumers Shared Supply Processes Suppliers Corporate Intranet Office Supplies Preferred Supplier SBU Commodity Supply Managers Internet Business Systems Preferred Logistics Provider Operations Business Systems Industrial MRO Preferred Supplier

Value Proposition for eProcurement One of the most valuable uses of eProcurement is in non-production resource purchasing, which is typically poorly-managed or sub-optimized within most companies. Operating Resources Corporate Spending • Information technology • Contractors • Internal admin/support services • Office supplies • Utilities • Industrial Supplies • Business Services • Temp help • Production services • Technical services • Facilities, maintenance Procurement Characteristics • Requires supplier interaction • 20-50% of spending is out-of-contract • Economies of scale are not leveraged effectively • 80% of purchasing transactions • Mostly paper-based • Enterprise Resource Planning software generally not best suited for this Source: Killen & Associates

Impact of eProcurement Benefits are sustainable with eProcurement eProcurement adds an easy-to-use, self-documenting infrastructure to solve the measurement and compliance issues that plague most sourcing efforts. eProcurement Improves Compliance Phase of Contract: Negotiate Deal Implement Contract Manage Compliance Benefits Captured Contract Savings Decline Over Time Due to Compliance/Measurement Hurdles Time

Impact of eProcurement It is important to know that eProcurement also reduces costs for suppliers. Smart purchasing professionals can use this knowledge at the negotiating table to further increase their savings. Negotiate for Your Share of the Supplier’s Savings Fact-Based Negotiation • Supplier savings • Increased Sales Volume • Automated Order Mgt. • Faster time to pay • Lower inventory and service costs Additional Negotiated Price Reduction

There are real differences in how the public sector purchases: Routine purchase order transactions tend to be for smaller amounts More use of tenders and competitive trades Emphasis on the process being seen to be fair & transparent – probity Emphasis on engaging & supporting smaller suppliers, local suppliers etc Approval & sign-off processes expressly designed to provide tight control on spending eProcurement In The Public Sector

Our experience is that eProcurement can save: Approx 4% on the cost of goods Approx 90% on the processing costs So eProcurement can reduce the cost of procurement in the public sector by 5 to 15% For a procurement spend of $1B, then that is $50+M per annum eProcurement In The Public Sector

Access to a global selling base Ability to competitively pit sellers against each other Increased price transparency Greater product visibility Ability to manage inbound inventory more effectively Define industry practices Ability to find new markets for scrap and obsolete materials Access to a larger buying base Ability to present more product detail Real time product description and specification updates Enhanced accuracy of order taking Advance industry practices in areas that have traditionally been led by buyers Value propositions for both sides For Buyers For Sellers Both must WIN

Federal Government State Government Local Government Higher Education No coordinated approach What’s happening in Australia?

One Government’s Vision Department A Supplier 1 Catalogue Supplier 2 Department B Catalogue Supplier 3 Supplier 4 Department C Catalogue Supplier 5 Service Providers A State Government

Think Big, Start Small, Scale Fast • Federal Government • State Government • Local Government • Higher Education • G2B and B2B marketplaces • Start with an end user and supplier driven vision • Consider all possibilities Think Big 1 • Natural expansions of function, scope • Increase number of users, transactions • Back end systems integration Scale Fast 3 eProcurement Deployment • Minimize risk of disruption • Demonstrate proof-of-concepts with “quick wins” • Answer frequently asked questions • Get something up and running to build momentum Start Smart 2 2001 2002 2003 2004 2005 Years

Smart State

Smart State Energex Ergon CS Energy etc

eProcurement Architecture Extranet Internet Intranet Commerce Services Network Suppliers Buyer Web Browser Buyer Web Browser Transaction Servers Print Web Server EDI Format Web Browser Fax Buyers Workflow PRs to POs to Suppliers eMail ERP SAP/ Mincom/ Aurion/Oracle

Epylon

Epylon provides an eProcurement solution Both services & technology Adjusted to each organisations own needs Backed by a marketplace with over 1,600 suppliers Specific to the public sector Understands the public sector’s requirements In use with the states of California, Michigan, North Carolina & the District of Columbia Fully owned subsidiary of Accenture Accenture started with a 25% holding in March 2000 Purchased Epylon outright in June 2001 A Brief Intro To Epylon

The Epylon Solution - Value-Add Services Additional training Process redesign Logistics Pre-Purchasing Purchasing Post-Order Strategic Sourcing Tendering RFQ Requisition-Order-Receive Invoice Reconcile Pay Payments Catalog creation Strategic sourcing Supplier recruitment Supplier training Training materials Limited training Help desk & tech support Buyer council Buyers Config & Upgrades Community functions Integration to ERP ASP hosted software ASP hosted software Supplier inbox Supplier aids Training materials Supplier council Suppliers

Epylon Requisition

Epylon Approval Workflow

Supplier Network

North Carolina @ Your Service

North Carolina eProcurement

North Carolina Supplier Benefits

eMarketplaces in the Public SectorUQ E-Commerce Seminar Series22 October 2001Presented By: Simon Porter

Presentation Overview