1. State of Wisconsin Procurement Analysis Project
Desired Future Situation & Detailed Recommendations
January 2001
Advanced Data Concepts, LLC

2. ORGANIZATIONAL & POLITICAL CONSIDERATIONS IMPLEMENTATION GAME PLAN
CONTENTS
INTRODUCTION
RECOMMENDATIONS
GAP ANALYSIS
IMPERATIVES
SYSTEM OPTIONS
ORGANIZATIONAL & POLITICAL
CONSIDERATIONS
IMPLEMENTATION GAME PLAN
BEST PRACTICES PROCESS MAPS
APPENDICES
GLOSSARY
CASE STUDIES
E-PROCUREMENT VENDOR LISTING
SUPPORTING CHARTS
Data Warehouse Project - Development & Implementation

3. OBJECTIVES OBJECTIVES DESIGN GUIDELINES PHILOSOPHY
PROJECT OBJECTIVES, DEFINED BY THE INTERAGENCY GROUP, DROVE INTENSIVE SET OF INTERVIEWS AND ANALYSES
INTRODUCTION
OBJECTIVES
OBJECTIVES
Identify and realize efficiencies from common business needs
Reengineer procurement/purchasing processes and implement performance metrics
Define and understand successful procurements
DESIGN GUIDELINES
Identify and accommodate different business requirements and needs
Make it easy and timely
Provide timely and accurate information to all participants
Leverage the State’s scale and scope
Use technology effectively throughout the procurement cycle
PHILOSOPHY
Make purchasing a strategic asset
Provide quality goods and services for the best possible price
Encourage participation of other units of government and vendors

4. State Agencies and UW Campuses
ADVANCED DATA CONCEPTS COMPLETED AN INTENSIVE TEN WEEK EFFORT TO ANALYZE THE STATE’S PROCUREMENT OPERATIONS
INTRODUCTION
State of Wisconsin Management Team A D C S E R V I A D C S E R V I
Current Situation Analysis
Desired Future Situation
Model
Detailed/Global Recommend.
Detailed Requirements
Data Schema
Vendor Management
Impact
Cost
Implementation time
Politics
Data Collection
Interviews (10 agencies)
Surveys (all others)
Document
Process
Systems
Validate
Best Practices
Reengineered Business Processes
Performance Metrics
Data Model
Vendor Analysis
State Agencies and UW Campuses

5. This document now answers the questions:
RECOMMENDATIONS TO FACILITATE WISCONSIN MOVING FROM ITS CURRENT STATE TO A DESIRED FUTURE STATE HAVE BEEN DEVELOPED
INTRODUCTION
In November 2000, ADC provided SBOP with a picture of the current procurement situation in the State of Wisconsin
This document now answers the questions:
What is the Desired Future State?
How do we get there?

6. Procurement & Operational Excellence
EMBRACING THE FOLLOWING STRATEGIC FRAMEWORK WILL DRIVE PROCUREMENT & OPERATIONAL EXCELLENCE
INTRODUCTION
Purchasing as a Strategic Asset
Buyer/Supplier Management
Strategic Planning
Continuous Learning & Innovation
Review Buying and Supplier Behavior
Strategic Sourcing
Key Performance Indicators
Business Process Re-Engineering
Best Practices
Imperatives
Organization Impact
Commodity Code Standardization
Human Capital Development
Procurement & Operational Excellence
State of Wisconsin
Technology Architecture
Enterprise Application Solution
E-Procurement
Data Warehousing
N-Tier / Client-Server Architecture
Vendor Management
VendorNet
E-Procurement
Supplier Performance Measurement

7. THIS PROJECT RESULTED IN SEVERAL MAJOR RECOMMENDATIONS
INTRODUCTION
THE FOLLOWING IMPERATIVES MUST BE ADDRESSED TO REALIZE IMPROVEMENT OPPORTUNITIES IN THE PROCUREMENT CYCLE.
Leverage Large Volume Purchases - achieve maximum vendor discount
Expand Use of Cross-Functional Teams - develop sourcing strategies for high volume and complex purchases
Approval Process - decrease approvals to one per transaction (requisition and purchase order)
Commodity Coding - standardize on UN/SPSC naming convention
Purchasing Card Reporting and Management - report on P-Card purchases by commodity and dollar amount
Purchasing as a Strategic Asset – establish purchasing as an integral part of the strategic planning process

8. THIS PROJECT RESULTED IN SEVERAL MAJOR RECOMMENDATIONS
INTRODUCTION
KEY IMPERATIVES CONTINUED …
Expand Training Program - provide a continuous improvement program for SBOP and agency procurement staff
Standardization and Consolidation - institute a standardization program to achieve cost savings
VendorNet Official State Bidders List - eliminate all bidders list but VendorNet
Vendor Data Rationalization - WISMART the only vendor table for State
Key Performance Indicators - for Staff, Vendors and Customer Satisfaction
Develop Data Warehouse - for the analysis of statewide purchasing activity and spend data

9. THIS PROJECT RESULTED IN SEVERAL MAJOR RECOMMENDATIONS
INTRODUCTION
SYSTEMS SOLUTIONS
Near-Term, Immediate:
Begin development of Data Warehouse to capture data for the analysis of statewide purchasing activity and spend data [Also listed as an Imperative]
Conduct detailed feasibility study to determine best approach for dedicated statewide procurement solution that automates the requisition to payment process
Enhance in-house purchasing system (e.g., PurchasePlus)
Purchase procurement software package (e.g. PurchasingNet, Compusearch Software – Prism, Dynamic Software, MRO Software, …)
Medium-Term:
Utilize E-Procurement – use reverse auctions and/or strategic sourcing for new purchases where feasible
Chief Information Officer – centralize technology initiatives under leadership statewide executive
Long-Term:
Adopt the implementation of an Enterprise Application System (EAS); also referred to as an Enterprise Resource Planning (ERP) System
Includes consideration of upgrading WisMART (AMS Advantage 3.0 Software) and migrating all agencies to WisMART in conjunction with retaining newly deployed statewide procurement system

10. Please reference exhibit on the following page.
WE HAVE TRIED TO ENSURE THAT RECOMMENDATIONS ARE CONSISTENT WITH THE INTERAGENCY GOALS
INTRODUCTION
Please reference exhibit on the following page.

12. RECOMMENDATIONS
GAP ANALYSIS

13. GAP ANALYSIS
GAP ANALYSIS
ADC created 85 process maps that outline the current situation in ten agencies, including the University of Wisconsin
Gap analysis charts, on the following pages, identify changes required to migrate current processes to best practices

14. GAP ANALYSIS – P. CARD
GAP ANALYSIS

15. GAP ANALYSIS – SIMPLIFIED BID

16. GAP ANALYSIS – SEALED BID

17. GAP ANALYSIS – DIRECT CHARGE

18. GAP ANALYSIS – REQUEST FOR PROPOSAL (RFP)

19. GAP ANALYSIS – STATEWIDE RELEASE

20. GAP ANALYSIS – ACCOUNTS PAYABLE

21. GAP ANALYIS – REQUEST FOR BID (SBOP)
GAP ANALYSIS

22. GAP ANALYSIS - VENDOR NET (STATE BIDDRS LIST)

23. RECOMMENDATIONS
IMPERATIVES

24. Imperatives have been identified in the following areas:
IMPERATIVES REPRESENT FOUNDATIONAL RECOMMENDATIONS THAT MUST BE ADDRESSED BY THE STATE TO ENSURE SUCCESS
IMPERATIVES
Imperatives have been identified in the following areas:
Leverage Large Volume Purchases
Cross-Functional Teams
Approval Process
Commodity Coding
Purchasing Card Reporting and Management
Purchasing as a Strategic Asset
Expand Training Program
Standardization and Consolidation
VendorNet State Bidders List
Vendor Data Rationalization
Key performance Indicators

25. LEVERAGING LARGE VOLUME PURCHASES
IMPERATIVES
Desired Future State
Leverage large volume purchases to achieve maximum vendor discount
Business Case for Action
Currently not all agencies consistently utilize statewide contracts therefore lessening volumes
Usage on statewide office supply contract $4 to $5 million
UW utilizes different office supply contract; year to date expenditures approximately $5 million
DWD did not utilize statewide office supply vendor for a three year period.
Combination of this volume would result in the state leveraging lower costs from the office supply vendor and insuring states customer service requirements would be met
State has no official purchasing classification system and spend data cannot be aggregated for evaluation

26. LEVERAGING LARGE VOLUME PURCHASES …
IMPERATIVES
Recommendation(s)
SBOP must identify and manage classification system that would allow the aggregation of purchasing spend data by commodity
Aggregated commodity spend data must be used to identify the largest volume commodities
Items within the largest volume commodities must be standardized so that number of items is reduced while item volume is increased
SBOP must obtain data from municipalities and school districts that utilize their contract. This information must be included in quantity and spend estimates provided to vendors in solicitation
Solicitations methods must require vendor to offer maximum cost saving and customer services
Approach
A standard commodity code must be adopted
Baseline spend data must be gathered on all commodities purchased statewide
Standards committees must be formed to consolidate items in commodities with multiple items purchased in large quantities
As new leveraging opportunities are uncovered, SBOP must determine the procurement method that will result in the highest savings. For example:
Strategic Sourcing solicitations
Reverse auctions
Discounts based on quantity thresholds
Rebates based on quantity thresholds
Discounts in return for contract extensions

27. USING STANDARDS COMMITTEES/ CROSS-FUNCTIONAL TEAMS
Desired Future State
Standards Committees are used to leverage large volume purchases and to develop a sourcing strategy
Business Case for Action
According to Purchasing Online, a supply chain magazine, the use of cross-functional teams is the best of the best practices in supply management
In his book, Balanced Sourcing, Timothy Laseter indicates that using multi-functional teams is a winning sourcing strategy
Wisconsin currently uses standard committees to develop RFB/RFPs
Standards committees are not used consistently by agencies or SBOP staff members

28. USING STANDARDS COMMITTEES/ CROSS-FUNCTIONAL TEAMS
Recommendation(s)
SBOP should increase the use standards committees to develop RFB/RFPs
SBOP should use cross-functional teams to develop sourcing strategies on all high-volume state-wide commodities. The strategy may include:
Standardization
E-commerce opportunities
Strategic vendor partnering opportunities
Volume discount sourcing
These teams should set client goals and objectives and be held responsible for the success and/or failure of the initiative.
Approach
Identify staff in agencies to participate in cross-functional teams
To ensure team success, they will need
Organizational resource availability
Supplier participation and involvement
High level of internal and external decision-making authority
Effective team leadership
Performance evaluation and rewards

29. Business Case for Action
APPROVAL PROCESS
IMPERATIVES
Desired Future State
Approvals done on-line via automated workflow:
Requisition would be entered on-line by program end-users
One approval for requisitions
Purchase Orders would be created by copying information from requisition
One approval for purchase orders
One approval for releases against a master ageement
Business Case for Action
Five of the nine agencies reviewed have manual requisitioning and purchase order processes
Many departments require multiple approvals (manual or online) of requisitions and purchase orders
Manual budget checking in non- automated agencies add to required approvals and slows processing
Routing paper requisitions and/or rekeying information into multiple systems
increases processing time
reduces customer satisfaction

30. APPROVAL PROCESS … Recommendation(s) Approach
IMPERATIVES
Recommendation(s)
Implement an automated purchasing system with online budget verification
The automated purchasing system should accommodate decentralization to the end user level
The system should maintain an online vendor file, accessible to all users
System should have automated workflow
Approach
Non-automated agencies should streamline paper process
Non-automated agencies should implement an automated purchasing system
Automated requisitions include:
commodity codes
commodity description
accounting string(s) - pre-encumbrance
System creates purchase orders by copying requisition information, releasing pre-encumbrance and performing an encumbrance against accounting string(s)

31. Create a standardized naming convention that:
COMMODITY CODING …
IMPERATIVES
Desired Future State
Create a standardized naming convention that:
Allows the standardized coding of purchases
Allows the compilation of aggregate purchase information in a unified framework permitting search and analysis
Integrates procurement card statement categories with all purchase transactional data
Business Case for Action
State Bureau of Procurement (SBOP) is required by statute to report on Purchases throughout the state
No Statewide naming convention exists for purchasing data
Base line spend data by purchase is necessary for:
Standardization
Workload management
Performance measure development
Strategic sourcing
E-Procurement
Negotiating better pricing agreements with vendors
Currently base line spend data cannot be produced on a timely and accurate basis

32. COMMODITY CODING … Recommendation(s) Approach
IMPERATIVES
Recommendation(s)
Select UN/SPSC classification system as State’s commodity coding system
Code maintains good hierarchical groupings
Allows reporting on a contractible group
Identifies all buyable products and services and places them into a logical hierarchical classification
Has a pilot commodity coding project with Visa
Set SBOP staff as the state-wide mangers of the code
Will determine code classifications
Make decisions about adding new code
Liaison to code management company for developing new code when required
Approach
SBOP should:
Work with IT to determine most efficient way to disseminate code throughout enterprise
Develop procedures for code application and maintenance
Develop a cross functional groups to facilitate code implementation through all agencies
Provide all changes to code
Determine how items should be classified in response to agency question
Develop a continuous training program on use and value of commodity code
End user to add commodity code description to system requisition

33. PURCHASING CARD REPORTING AND MANAGEMENT
IMPERATIVES
Desired Future State
Report on P-Card purchases by commodity and dollar amount
Maximize the utilization of P-Cards throughout state agencies
Utilize P-Cards for ordering on statewide contracts
Business Case for Action
Utilization of P-Cards for low dollar hi-volume purchases is a best practice
According to the study on corporate procurement practices conducted by the Hackett Group:
P-Cards, when used with other best practices, can reduce the cost of a transaction from $9.50 to $1.87.
P-Cards can reduce the cost of making a payment by 85%.
The state is expected to expend $50+million dollars using P-Cards this fiscal year however individual purchases cannot be identified or aggregated by commodity

34. PURCHASING CARD REPORTING AND MANAGEMENT …
IMPERATIVES
Business Case for Action
Vendors that accept Visa report purchases using Merchant Category Codes (MCCs)
codes are tiered
merchants that are coded at level two provide data on dollars spent via a general classification code
merchants coded at level three can provide more itemized expenditure information and a commodity code can be added to each record
Currently Visa has a pilot program with Dun & Bradstreet to utilize its UN/SPSC commodity code
Identification of P-Card purchases will allow:
Required oversight and reporting of state purchases
Identification of commodities where volume discounts are likely
Identification of commodities for E-Procurement initiatives
Recommendation(s)
Require current bank/Visa to provide level 3 reporting for companies that currently have it
Include level 3 reporting as a requirement in all supply bids where the volume is expected to exceed $1million
Request that all current suppliers on high volume contracts, with 2 years or more left on their contract become level three vendors
Cross reference current level 2 reporting to commodity codes and develop reports

35. PURCHASING CARD REPORTING AND MANAGEMENT …
IMPERATIVES
Approach
SBOP obtain level 3 reports from bank for all level 3 vendors
Require P-Card acceptance and level 3 reporting on large volume procurements expected to exceed $1 million
Since only 1000 vendors provide level three information this information will not be available from most vendors. To capture some purchasing detail SBOP should:
Use ProCard (reporting software) to develop a report that will cross reference level 2MCCs to commodity codes by department
Report information monthly to agencies
It is noted that some level 2 MCC information will not correspond to an individual commodity code group
MCC Code 5200 Home Supply Warehouse as an example is used for companies like Home Depot and Menards that supply a wide variety of items
Given the variety of items sold by these companies level three reporting is not likely to yield the required detail
Spend data from these vendors should be given a special category.
Items bought here cannot be captured for inclusion in aggregated spend data
Dollars in this category should be used to negotiate discounts at Home Supply Warehouse stores such as Menards and Home Depot

36. PURCHASING AS A STRATEGIC ASSET
IMPERATIVES
Desired Future State
Purchasing is a strategic asset to the State of Wisconsin and an integral part of the strategic planning process
Business Case for Action
SBOP is statutorily charged with reporting the state purchasing activities
Accurate spend data enhances the ability of SBOP to develop commodity management strategies, leverage purchasing volumes and improve sourcing
Strategic sourcing and E-Procurement could save the State $90 million dollars (10% of $900 million) over the first two years based on research conducted by research organizations such as the Gartner Group
Strategic sourcing and E-Procurement can improve the quality of goods and services

37. PURCHASING AS A STRATEGIC ASSET …
IMPERATIVES
Recommendation(s)
Identify a commodity for immediate strategic sourcing initiative, such as telecommunications including cell telephones and pagers
Conduct a pilot E-Procurement initiative
Identify a commodity such as food and food service and identify contracting improvement opportunities
Utilize cross-functional teams comprised of end-users, buyers, SBOP staff and management for:
continuous improvement in commodity and supplier strategies and relationships
E-Procurement opportunities
strategic sourcing
standardization's and consolidations analysis of services across agencies
Develop on-going training for SBOP and agency procurement staff
Approach
Purchasing can be established as a Strategic Asset through a set of specific pathways designed to achieve incremental and significant cost savings by improving procurement - Buy for Less, Buy Better and Consume Better
Buy for Less where savings are 5 to 15%:
Volume consolidation
Supply base optimization
Enhanced negotiation and contracting skills
Leverage State clout
Buy Better typically results in savings of 5-15%:
Improved coordination/forecasting accuracy
Streamlined bidding processes
Longer-term commitments to suppliers
Consume Better savings are expected to exceed 5%:
Optimize lifecycle costs
Outsource non-core activities
Increase use of cross-functional teams
Reduce complexity/simplified specifications
Increase standardization
Rationalize requirements
Identify staff in agencies to participate in cross-functional teams
Implement a data warehouse
Benchmark current pricing
Develop an effective communication program
workshops
intranet

38. PURCHASING AS A STRATEGIC ASSET …
IMPERATIVES

39. EXPAND TRAINING PROGRAM
IMPERATIVES
Desired Future State
State provides a continuous improvement program for procurement staff providing hours of training for SBOP staff and hours of training for agency staff on an annual basis
Business Case for Action
Best-in-Breed organizations provide continuous improvement training for its procurement staff
SBOP conducts in-house training directed primarily at agency procurement personal
New SBOP procurement staff receive entry-level training
Staff not required to attend refresher courses
Long term staff may not have received any training within the last ten years

40. EXPAND TRAINING PROGRAM …
IMPERATIVES
Approach
SBOP should update training to include initiatives implemented by this assessment, develop and disseminate a schedule to all agencies
Develop the “brown bag lunches” series given once a month at various agencies. Recruit agency staff to lead the discussion on trends and best practices in the purchasing field as it relates to their agency
Identify resources to develop web-based training, such as:
University
NAPM
Outside Consultants
SBOP should identify classes given either by NAPM or NIGP for:
Mid-Level Purchasing and Supply Training
Senior-Level Purchasing and Strategic Supply Training.
These classes can be taught off or on-site.
SBOP should develop a RFP for procurement training services and identify a pool of consultants that can provide purchasing training
Recommendation(s)
SBOP should continue with its in-house training of new staff for entry level knowledge
Develop “brown bag lunches” once a month at various agencies
Develop web-based training for self-paced learning of all State staff involved in Purchasing
SBOP should provide outside training
National Association of Purchasing Managers (NAPM)
National Institute of Governmental Purchasers (NIGP)
Pool of training consultants
SBOP should encourage its staff to become certified as a C.P.M., or a CPPO, or CPPB

41. STANDARDIZATION AND CONSOLIDATION
IMPERATIVES
Desired Future State
Institute a standardization program (tool to achieve cost savings)
Business Case for Action
Neither state nor agencies limit the type of items purchased to increase the volume of a selected item or commodity
Examples of state contracts providing too much variety:
copier contract 15 types of copiers , 6 to 8 brands per type
printer contracts 25 types of printers, 4 to 12 brands per type
hand & electric tool contract offers access to all items on eight vendor catalogs
Standards committees have no cost savings goals and are encouraged to develop requirements for many of items rather than consolidation to as few different types as possible
Agencies provide no guidelines for staff regarding types of supplies which they are allowed to purchase therefore staff may use several varieties of the same item.

42. STANDARDIZATION AND CONSOLIDATION …
IMPERATIVES
Recommendation(s)
Set cost saving goals for specific commodities
Develop multi-agency standards committee with goals of reducing number of items in commodity
Rebid expiring contracts within targeted commodities using reduced items listing and include requirements for analyzing cost savings.
Approach
SBOP should work with agencies to develop statewide, internal support for cost reduction/cost savings programs.
SBOP should obtain baseline spend data on statewide purchases
Until this data can be obtained from internal reporting vendors should be asked to provide usage
Evaluate commodities to determine where standardization is warranted
Develop cross function, multi-agency team to work on standardizing designated statewide contracts
Agencies should also develop agency wide teams to target standardization and consolidation opportunities within the agency

43. VENDORNET STATE BIDDERS LIST
IMPERATIVES
Desired Future State
VendorNet the only State Bidders List
Business Case for Action
PRO C 35 has established VendorNet as the State’s bidders list
VendorNet is a real-time, interactive, bid posting Internet application
VendorNet is a precursor of E-Procurement initiatives
Currently, VendorNet has a base of 1,600+ vendors
Many of the State agencies continue to maintain their own bidder lists
It is a common practice for agencies to send copies of bids and RFPs to non-VendorNet vendors

44. VENDORNET STATE BIDDERS LIST …
IMPERATIVES
Recommendation(s)
Allow all vendors to register on-line with VendorNet
Registration required for bid to be responsive
All vendors that have a current contract must be on VendorNet
Do not charge vendors to register with VendorNet
Charge fee for automated services, such as receiving bid notification electronically or downloading bid documents
Fee structure is based on:
number of commodity classes
in-state vs. out-of-state vendor
Change legal notice requirement from newspaper advertisement to electronic notification
Enhance VendorNet ability to accept online payment
Enhance VendorNet to calculate bid tabulation
Enhance search engine capabilities
Approach
Change Wis.Stats ; >Wis.Adm.Code Chapter Adm 9 to indicate that vendors must register with VendorNet to bid with the State and/or receive contracts. Vendors must pay a fee to be notified automatically of all agency requests for bids/proposals over $25,000.
SBOP should work with agencies to ensure all current agency vendors are on VendorNet
SBOP should develop a two-year strategic plan to ready all its vendors for E-Procurement
At the end of 2-years, change Wis. Stats to identify legal notice as electronic notification
SBOP should implement enhancements to VendorNet application/environment to include:
on-line payment
calculate bid tabulation
increased search engine capabilities

45. VENDOR DATA RATIONALIZATION …
IMPERATIVES
Desired Future State
WISMART the only vendor table for State
Vendor List cleansed and rationalized within WISMART.
Recommendation(s)
Standardize Vendor Information.
Business Case For Action
Multiple Vendor lists, files and databases across the State inhibits the State’s ability to effectively manage Vendors and monitor their performance.
No coding standards for Vendor Information (e.g., identification, address standardization, multiple locations, etc.)
Approach
Define rules and standards for Vendor identification and coding.
Combine, cleanse, and rationalize multiple Vendor lists in use across State.

46. KEY PERFORMANCE INDICATORS - VENDORS
IMPERATIVES
Desired Future State
RFPs and contracts resulting from RFPs should contain clear vendor performance standards
SBOP should monitor vendor performance on statewide contracts
Central purchasing staff within agencies should monitor performance on agency initiated contracts
Business Case for Action
Failure of vendors to meet performance criteria means
agency is paying for a quality level that will not be achieved
terms and conditions which are key to cost savings may not be honored
Customer (end-user) satisfaction will be low
Performance criteria that is not quantifiable or unclear leads to differences in the expectations of the vendor and the end user and results in disputes

47. KEY PERFORMANCE INDICATORS – VENDORS …
IMPERATIVES
Recommendation(s)
All RFPs and contracts resulting from them should contain measurable performance standards
Performance standards at a minimum should identify:
the specific service (s) that must be performed
expected outcomes or deliverables
provide quantifiable test methods by which outcomes or deliverables will be judged
quality measures that must be met
time frame of delivery requirements
any performance/cost reduction relationships
minimum vendor capabilities
Approach
Contract value and complexity should dictate the contract monitoring frequency for SBOP and agency staff
On Statewide contracts SBOP should work in tandem with lead agencies to identify vendor performance standards
At contract start up, purchasing staff and vendor should review performance requirements included in contract
Procurement staff should be assigned specific contract administration duties that include:
determining vendor compliance with contract terms and conditions
determining the level of customer satisfaction with vendor services
working with Accounts Payable to insure that invoices reflect contract terms and conditions

48. KEY PERFORMANCE INDICATORS - STAFF
IMPERATIVES
Desired Future State
SBOP and Agency purchasing staff will have clear goals and objectives for performance
Goals, objectives and performance standards will reflect purchasing as a strategic asset
Staff goals and objectives will be tied to the overall goals and objectives of the their department
Staff will be given performance standards that identify a satisfactory level of performance that are specific and measurable
Business Case for Action
Currently criteria for doing a good job is defined by evaluating transaction data (how many bids or RFPs handled, timely renewal of expiring contracts, attendance, on time arrival, etc.)
To achieve an overall goal of purchasing as a strategic asset, goals, objectives and performance standards must be based on activities that add value to the procurement process
Samples of typical performance appraisal questions for transactional purchasing and performance indicators of purchasing as a strategic asset are listed on the next slide

49. KEY PERFORMANCE INDICATORS – STAFF …
IMPERATIVES
Recommendation(s)
SBOP and agencies should identify goals and objectives that enhance the purchasing performance as a strategic asset ( goals related to cost savings require accurate baseline spend data)
Staff should be apprised of organizational goals and objectives and (in tandem with supervisors) set goals for performance that support agency goals.
Specific and measurable performance standards should be gleaned from goals and objectives that clearly identify satisfactory performance
Incentives should be developed that will reward successful completion of employee goals and objectives
Approach
SBOP Management and Human Resources department must identify incentives (over and above standard increases) that can be offered to employees that successfully complete goals and objectives.
SBOP and agency management must develop a strategic plan for department procurement that identifies departmental goals and objectives
Supervisors, in tandem with employees, must set goals and objectives that support agency goals.
Supervisors must develop employee performance standards and measures.
Goals and objectives must support purchasing as a strategic asset as opposed to a transactional activity.

50. KEY PERFORMANCE INDICATORS – STAFF …
IMPERATIVES
Comparison of Performance Indicators for Transactional vs. Strategic Procurement
Performance Indicators must be specific, measurable and time limited. Listed below are sample questions that are used to determine performance in a transactional purchasing environment and measurable performance indicators that are used when purchasing is a strategic asset
Typical performance appraisal questions in a Transactional Purchasing Environment
For the current evaluation period what activities did the employee perform?
Sourcing
How many bids and Requests for Proposals were completed?
Were the bids or requests for proposal completed within department time frames?
How many standards committees did employee chair?
Was an RFP developed as a result of the Standards committee?
Purchasing Process
How many purchase requisitions and purchase orders did the employee process?
Customer Services
How did the end user rate the employee?
helpful
courteous
Contract Administration
Did the employee assist in the resolution of vendor/ end-user disputes?
Performance Indicators for Activities where Purchasing is a Strategic Asset
Within the upcoming fiscal year employee will meet the following performance standards
Sourcing
Cross functional teams chaired by employee will meet a minimum of 85% of the cost saving goals for target commodity
The aggregate of purchases managed by employee will result in 1% cost savings over the aggregate of those same commodities in the previous fiscal year.
Employee will have 0% of re-bids due to unclear specifications, terms or conditions
Purchasing Processes
Employee will evaluate the processes of 3 agencies to determine if there are opportunities for streamlining
Customer Services
Purchasing staff will collect and deploy to a minimum of 3 end users market intelligence that will result in improved end user buying decision
Contract Administration
Employee will audit vendor reports and invoices quarterly to determine if contract terms and conditions are being met

51. KEY PERFORMANCE INDICATORS - CUSTOMER SATISFACTION
IMPERATIVES
Desired Future State
SBOP mission statement incorporates its customer service initiatives
Business Case for Action
SBOP currently receives customer feedback from interagency meetings and surveys to agency purchasing staff and vendors
monthly meetings of Purchasing personnel
too large for meaningful customer feedback and dialogue
does not include agency end users
Current surveys are information gathering tools not specifically targeted to determine customer satisfaction
SBOP is considering charging agencies for value added services
internal customer’s perceptions of SBOP’s service overall service and value will have a great impact on their acceptance of this funding philosophy

52. KEY PERFORMANCE INDICATORS - CUSTOMER SATISFACTION …
IMPERATIVES
Recommendation(s)
SBOP should develop a mission statement that includes its customer service goals. Mission statement should be incorporated into policies and procedures
SBOP should conduct easy to answer “pulse” surveys, assessments of specific purchasing initiatives, for both vendor and internal customers
Implement Customer Advisory Boards much like users groups that exist in the software industry. They provide feed back on both SBOP and agency practices.
Utilize feedback from surveys and Customer Advisory Boards to develop performance standards for SBOP staff
Approach
Develop mission statement and internal communication plan for incorporating customer service principles of mission statement into SBOP culture.
Determine areas requiring feed back and develop survey schedule and topic. Staff should be assigned to this initiative.
Purchasing advisory teams, comprised of like size agency end-users, procurement staff and vendors should be developed to provide SBOP feedback on its polices, procedures and services.
Incorporate customer service performance standards as evaluation criteria in employee performance appraisals

53. RECOMMENDATIONS
SYSTEM SOLUTIONS

54. Highly manual; many hand-offs High “touch”; labor intensive
MIGRATE FROM MANUAL FRAGMENTED SYSTEMS TO AUTOMATED INTERGRATED SOLUTIONS
SYSTEM SOLUTIONS
Current Situation
Highly manual; many hand-offs
High “touch”; labor intensive
Significant non-value-added activities
Multiple systems; heterogeneous environment
Desired Future Situation
Fully automated, end-to-end
Low “touch”; exception-based processing
Integrated workflow
Leverage N-Tier Systems Architecture

55. DESIRED SYSTEM MUST CONTAIN FEATURES CONSISTENT WITH INDUSTRY BEST PRACTICES ACROSS THE PROCURMENT CYCLE
SYSTEM SOLUTIONS

56. DESIRED SYSTEM FLOW MUST MINIMIZE MANUAL PROCESSESS, MAXIMIZE AUTOMATION AND MANAGE BY EXCEPTION
SYSTEM SOLUTIONS

57. MAJOR SYSTEM RECOMMENDATIONS
SYSTEM SOLUTIONS
SYSTEMS SOLUTIONS
Near-Term, Immediate:
Begin development of Data Warehouse to capture data for the analysis of statewide purchasing activity and spend data [Also listed as an Imperative]
Conduct detailed feasibility study to determine best approach for dedicated statewide procurement solution that automates the requisition to payment process
Enhance in-house purchasing system (e.g., PurchasePlus)
Purchase procurement software package (e.g. PurchasingNet, Compusearch Software – Prism, Dynamic Software, MRO Software, …)
Medium-Term:
Utilize E-Procurement – use reverse auctions and/or strategic sourcing for new purchases where feasible
Chief Information Officer – centralize technology initiatives under leadership statewide executive
Long-Term:
Adopt the implementation of an Enterprise Application System (EAS); also referred to as an Enterprise Resource Planning (ERP) System
Includes consideration of upgrading WisMART (AMS Advantage 3.0 Software) and migrating all agencies to WisMART in conjunction with retaining newly deployed statewide procurement system

58. SEVERAL SYSTEM SOLUTION OPTIONS EXIST
SYSTEM SOLUTIONS

59. RECOMMENDED NEAR TERM SOLUTION
SYSTEM SOLUTIONS
Option 2. State should pursue this option as the near-term solution:
Data Warehouse enables State to capture, report and analyze spend data.
Deploying Purchasing Software into the WISMART agencies automates the majority of manual purchasing functions within the State Agencies.

60. INVESTMENT REQUIREMENTS OFFER ANOTHER PERSPECTIVE FOR EVALUTING SYSTEM OPTIONS
SYSTEM SOLUTIONS

61. Integrated Financial Mngt. SPEED Fast
TWO KEY DIMENSIONS THAT DIFFERENTIATE ALTERNATIVE SOLUTIONS ARE IMPLEMENTATION TIME (SPEED) AND DEGREE OF CHANGE (FOCUS)
SYSTEM SOLUTIONS
Maintain Existing System
and Deploy Enterprise
Procurement Software
To Agencies
No Feasible
Alternatives
Maintain/Upgrade AMS
Advantage Software
and
Deploy Enterprise
Deploy EAS/ERP
Solution
FOCUS
Procurement
Integrated Financial Mngt.
SPEED
Fast
Slow

62. What’s a Data Warehouse?
DEPLOYING A DATA WAREHOUSE IS AN IMPERATIVE FOR A COMPREHENSIVE ANALYIS OF STATEWIDE PURCHASING ACTIVITY
SYSTEM SOLUTIONS
What’s a Data Warehouse?
An information source containing data from multiple, heterogeneous, independent and possibly non-synchronous systems, which is stored to optimize retrieval and reporting of data across the enterprise.
Typically subject-oriented allowing users access to operational data to track and respond to business trends and facilitate forecasting and planning efforts.

63. HOW DO DATA WAREHOUSES DIFFER FROM OPERATIONAL SYSTEMS?
SYSTEM SOLUTIONS
Typically operational and transaction processing systems store data in its most atomic (non-redundant) format to alleviate performance issues and ease database maintenance.
Data stored in such a state is referred to as Normalized.
Normalized data can be difficult to extract and analyze when large amounts of data are required across a broad range of information types.
This difficultly is compounded when multiple systems and/or databases need to be accessed.
Large data extracts also degrade performance, which is not advisable in on-line, operational environments.
Data Warehousing addresses theses issues by focusing on structuring information into specific subject areas of interest (e.g., Purchasing).
Data is the restructured into relevant Facts (e.g., Spend Data) and Measures (e.g., Total Spend Amount) that can be accessed by various Dimensions (e.g., Agency, Time [Month/Year], Vendor, Commodity, etc.) for analysis.

64. DATA WAREHOUSE ARCHITECTURE
SYSTEM SOLUTIONS
Each “interfaced” agency would be responsible for generating an extract for the Data Warehouse.
Remaining agencies purchasing activity would be captured via an extract from Purchase Software / WISMART.
A “DW Load” process would then consolidate, cleanse and load the combined purchasing data to the Data Warehouse.
Various Data Marts could then be generated to support the required reporting and analytical needs.
Desktop and Browser-based query, reporting and OLAP tools (e.g., Business Objects) would provide access to the Data Marts.

65. DATA WAREHOUSING ARCHITECTURE
SYSTEM SOLUTIONS
FMS
TIPS
FMS /
Proteus
PeopleSoft
UW/System
Financial Data
Warehouse
RAPIDS
DWD
FARS
ETL
EAPS
DOT
DHFS
DOC
P/S
Purchasing
Software/
WISMART
DOA, et.al.
WISM
ART
DW Load
Spend Data
Strategic
Sourcing
Vendor
Performance
Data Marts
Note: An automated extract of Detailed Purchasing
Activity from DHFS and DOC may not be available until
Purchasing function is automated.

66. AN ENTERPRISE APPLICATION SYSTEM IS THE LONG-TERM RECOMMENDED SOLUTION
SYSTEM SOLUTIONS
Enterprise Application System (EAS) is:
“An integrated technology bundle (some combination of software, hardware, and services) designed to integrate multiple facets of a business through the interchange of information from various vertical business process areas and related databases. These solutions effectively enable agencies to retrieve and disseminate mission critical data from throughout their organizations, providing managers with real-time operating information.”
Source: “Enterprise Application Solutions in the Public Sector”, Dataquest Perspective, VMPS-WW-DP-9903, Garter Group, April 1999.

67. BASED ON DISCUSSIONS WITH GARTNER GROUP …
SYSTEM SOLUTIONS
One-third of State Governments have or are moving towards EAS solutions
Within 2 years, remaining States will enter RFP process for EAS solutions
Governor Councils mandating EAS solutions
Most will pursue single-vendor solutions
Fluidity in E-Commerce market space will likely drive “best-of-breed” solutions
70% of existing State legacy environments are American Management Systems sites
Public Sector EAS providers:
Leaders: Oracle, PeopleSoft, SAP
Others: JD Edwards, Lawson, Baan

68. PROCUREMENT IS ONE COMPONENT OF AN OVERALL EAS SOLUTION
SYSTEM SOLUTIONS
1. Core Business (ERP)
Finance and Accounting
Controlling
Human Resources
Asset Management
Materials Management
Maintenance Management
Treasury
2. Extended
Case Management
Fleet Management
Claims Processing and Settlement
Procurement
Licensing
Logistics
Customer Interaction Systems
Real Estate
E-Business / EDI
Tax and Revenue
Reporting / Decision Making
Project Management
Sales and Distribution
3. Business Line-Specific
Administration and Finance
Social Services
Criminal Justice
Public Safety
Transport
Health
Public Works
Source: G2R/Dataquest (April 1999)

69. Avg. Annual Growth Rate:
RISING EAS SPENDING UNDERSCORES THE GROWTH OF THIS APPROACH IN THE PUBLIC SECTOR ENVIRONMENT
SYSTEM SOLUTIONS
Avg. Annual Growth Rate:
23.4%
Total U.S. Public Sector EAS Spending Forecasts, (in Millions)
Source: G2R/Dataquest (April 1999)

70. AN EAS/ERP IS THE RIGHT LONG-TERM SOLUTION AND MUST EXTEND BENEFITS BEYOND PROCUREMENT TO JUSTIFY BUSINESS CASE FOR INVESTMENT
Pursuant to Executive Order No. 408 and specifically Section of the Wisconsin Statutes, the Secretary of the Department of Administration is to create an internet-based “service center” giving citizens access to core state government services which includes portals, e-procurement, e-records and e-signatures.
Electronic Government requires a well designed front-end web portal, tight integration with back-office administrative systems (finance, purchasing, human resources, etc.), and reengineered business processes to successfully manage the new business model.
Enterprise Application Systems or ERP serve as the most comprehensive foundation for the successful implementation of electronic government initiatives. Such systems not only provide the technical capability to make this happen, but also force the necessary degree of organizational change required.

71. Software consolidation
AN EAS/ERP IS THE RIGHT LONG-TERM SOLUTION AND MUST EXTEND BENEFITS BEYOND PROCUREMENT TO JUSTIFY BUSINESS CASE FOR INVESTMENT
Software consolidation
State will minimize costs associated with maintaining a large number of disparate systems (e.g., over 12 different financial and purchasing systems currently in use)
Real Time update
Better management through seamless integration with finance, human resources, payroll, manufacturing (Badger Industries), and other functions. Examples include:
Cut financial period closing times
Capability to properly link cross-functional business process and adapt to organizational changes
Leverage EAS/ERP built-in “best business practices”, research and development, best-of-breed pre-configured solutions (e.g., E-procurement, Citizen Relationship Management) and industry groups

72. Reduce transactions to lower procurement costs Faster cycle times
THE STATE CAN REALIZE THE FOLLOWING BENEFITS FROM AN INTEGRATED E-PROCUREMENT & PURCHASING SOLUTION
SYSTEM SOLUTIONS
Reduce transactions to lower procurement costs
Faster cycle times
Reduced maverick or unauthorized buying
Increased control over the supply chain
Improved integration of the procurement function with back-office systems
Proactive management of key procurement data
Higher quality purchasing decisions
Elevation of procurement to a position of strategic importance

73. E-PROCUREMENT HAS THE POTENTIAL TO CREATE NEW EFFICIENCIES BY PROVIDING IMPROVED QUALITY, LOWERING COSTS, REDUCING CYCLE TIME AND TRANSACTION COSTS
SYSTEM SOLUTIONS
Forrester Research, Inc - Jan. 2000

74. CENTRALIZED MANAGEMENT ENHANCES OPPORTUNITIES FOR SUCCESS IN STATEWIDE ENTERPRISE TECHNOLOGY INITIATIVES
SYSTEM SOLUTIONS
Gartner Group indicates majority of States currently have or are in process of recruiting a Chief Information Officer.
Given Wisconsin’s push toward E-Government and E-Procurement, a Statewide CIO will be crucial to achieving the State’s vision.
IT Organization and System changes necessary to support the vision require CIO-level authority to direct and coordinate their implementation.

75. ORGANIZATIONAL & POLITICAL CONSIDERATIONS

76. ORGANIZATIONAL & POLITICAL CONSIDERATIONS
BUY-IN MUST BE DEVELOPED EARLY AND REAFFIRMED OFTEN; UNDERSTANDING AND MANAGING CHANGE IS CRITICAL TO ORGANIZATIONAL SUCCESS
ORGANIZATIONAL & POLITICAL CONSIDERATIONS
Major organizational change for State of Wisconsin implies significant potential disruption to existing ways of doing business
Willingness to accept change cannot be assumed
A success implementation must have sponsorship at the highest levels of the organization
Middle management and staff must also internalize and buy into the vision
The buy-in process must start before the project begins
Agency staff must be deeply involved in implementing the new business imperatives and systems solution
An effective communications process is a necessary vehicle to obtain staff input and share information

77. TRADITIONAL INTERNAL BARRIERS TO CHANGE
ORGANIZATIONAL & POLITICAL CONSIDERATIONS
BARRIERS TO IMPLEMENTATION
COMMON SYMPTOMS
Inadequate definition of change
Implementation breaks down at lower levels
Organization questions management’s knowledge of “the details”
No architecture to manage change
Vague directives from senior management
No follow-up
Unclear role definition
Not aligned with the culture
Organization ignores directions as being inconsistent
Change viewed as temporary or reversible
No understanding or management of resistance
Employees exhibit dysfunctional behavior
Line management frustration
Inadequate sponsorship
Middle managers kill initiatives
Management loses credibility
Poor execution of roles
Partial implementation or implementation breaks down completely
Successes are not repeatable
Too much change already on the plate
Organization grinds to a halt
Activities fall through the cracks
Complaints of overload and burnout
Strategy de jour syndrome

78. BARRIERS TO CHANGE EXIST AMONG THE AGENCIES
ORGANIZATIONAL & POLITICAL CONSIDERATIONS
De-centralization has created information silos
Agency vision instead of State vision
Lack of structured interagency communication
Independent spirit of agencies
Agencies are operating with a variety of processes and procedures within the framework of the statutes and procedures set forth by DOA
Agency staff highly invested in maintaining solutions developed by them for their particular agency
Lack of centralized leadership in Information Technology
No comprehensive IT strategy to support business goals
Limited financial resources

79. Characteristics of Effective Implementation Planning
THE CHALLENGE GOING FORWARD IS TO IMPLEMENT THE RECOMMENDATIONS TO REALIZE THE GREATEST BENEFIT AND AVOID “ORGANIZATIONAL STONEWALLING”
ORGANIZATIONAL & POLITICAL CONSIDERATIONS
Characteristics of Effective Implementation Planning
Focused and manageable implementation projects
Fast-paced planning with deliverables and due dates
Top management team leadership
Target improvements by implementation project

80. FIRST STEP... ESTABLISH STRONG EXECUTIVE SPONSORSHIP
ORGANIZATIONAL & POLITICAL CONSIDERATIONS
The extensive nature of the business change, broad number of agencies and stakeholders impacted, and the balance between central coordination and local control requires strong executive sponsorship
Create common agreement around a common enterprise view that transcends interagency conflict and “stonewalling”
Continuously communicate the value and importance of the initiatives

81. SECOND STEP... CREATE FIVE TASK FORCES, WITH CROSS-FUNCTIONAL REPRESENTATION FROM THE AGENCIES, FINANCE, AND IT
ORGANIZATIONAL & POLITICAL CONSIDERATIONS
Strategic Procurement Steering Committee
State of Wisconsin
VENDOR DATA MANAGEMENT
(RATIONALIZATION OF VENDOR DATA)
DATA WAREHOUSE
(DESIGN & IMPLEMENTATION)
STANDARDS
(PROCESSES, COMMODITIES, …)
ENTERPRISE PROCUREMENT SYSTEM
(EVALUATION & SELECTION)

82. THIRD STEP… ADDRESS POLITICAL CONSIDERATIONS
ORGANIZATIONAL & POLITICAL CONSIDERATIONS
Change Wis.Stats ;16.701>Wis.Adm.Code Chapter Adm 9 to indicate that vendors must register with VendorNet to bid with the State and/or receive contracts
Change Wis.Stats to identify legal notice as electronic notification
The State should establish a centralized CIO position to provide consistent direction to the agencies
Centralized leadership in Information Technology would support the States business strategies and goals while insuring that technology decisions remain aligned with IT strategies
Develop incentives (financial or others) to reward agencies and staff for participating in new statewide procurement initiatives

83. IMPLEMENTATION GAME PLAN

84. Implementation Timeline and Preliminary Cost Estimates
IMPLEMENTATION GAME PLAN

85. BEST PRACTICES PROCESS MAPS

86. BEST PRACTICES PROCESS MAPS
BEST PRACTICES PROCESS MAPS FOR THE DESIRED FUTURE STATE HAVE BEEN DEVELOPED
BEST PRACTICES PROCESS MAPS
Process Maps illustrating “Best Practices” in procurement have been developed in the following areas:
Direct Charge Process
Purchase Card Process
Simplified Bid Process
Statewide Contract
Sealed Bid
RFP Services
Quarterly Procurement Plan
Accounts Payable
Statewide Contract RFB / RFP
VendorNet Registration
Special Services
Process Maps are presented on the following pages of this section of the report.

87. State of Wisconsin Procurement Analysis Project
APPENDICES

88. GLOSSARY OF TERMS AM - Account Management AP - Accounts Payable
Baseline Spend Data - Spend information for a commodity for a designated time period to base future cost savings
Bidders List - A listing of all vendors who wish to do business with the State of Wisconsin.
Browser - A software application used to locate and display Web pages.
Browser-based Query - The ability to request information from Web databases.
Data Marts - A database, or collection of databases, designed to help managers make strategic decisions about their business.
Data Warehouse - A collection of integrated subject-oriented databases designed to support the decision-support-system function.
“DW Load” - Data Warehouse Load
EAPS - Encumbrance Accounting and Payment System
EFT - Electronic Fund Transfer
FARS - Financial Accounting Reporting System
FMS/Proteus - Financial Management System/ Purchasing and Cost Accounting System

89. GLOSSARY OF TERMS GL - General Ledger
OLAP - Online Analytical Processing, a category of software tools that provides analysis of data stored in a database.
Process Maps - a graphic description of a process showing the sequence of process tasks, for a specific purpose from a selected viewpoint.
N-Tier - A special type of client/server architecture consisting of well-defined and separate processes, each running on a different platform.
Client/Server Architecture - A network architecture in which each computer or process on the network is either a client or a server. Servers are powerful computers or processes dedicated to managing disk drives, printers, or network traffic. Clients are PCs or workstations on which users run applications.
RAPIDS - Purchasing System for DWD
RFB/RFP - Request for Bid / Request for Proposal
TIPS - Transportation Interactive Procurement System
UN/SPSC - United Nations Standard Products and Services Codes system is an open, global standard that provides a logical framework for classifying products and services of all kinds throughout the world. It is structured as a five-level hierarchy. At each level, a two-character numerical value classifies each item more specifically.

90. GLOSSARY OF TERMS DHFS - Department of Health and Family Services
Vendor Table - A list of all vendors who have done or are currently doing business with the State of Wisconsin.
WisMART – Wisconsin State Management Accounting and Reporting Tool
WISCONSIN STATE DEPARTMENTS
DHFS - Department of Health and Family Services
DOA - Department of Administration
DOC - Department of Corrections
DOT - Department of Transportation
DWD - Department of Workforce Development
SBOP - State Bureau of Procurement
UW/System - University of Wisconsin

91. State of Pennsylvania / State of Ohio Dell Computer
SELECTED CASE STUDIES
CASE STUDIES
State of Georgia
State of Washington
State of Pennsylvania / State of Ohio
Dell Computer

92. STATE OF GEORGIA
CASE STUDIES
Georgia’s Department of Administrative Services (DOAS) implemented PeopleSoft Inc. ERP software, on time, 18 months, and on budget, at $52 million 1999
“Big bang” approach – went live with ERP system throughout the entire organization at once
Modules include financials, purchasing and human resources
Provides better compliance with Generally Accepted Accounting Principles (reduce audit time by 50%)
Enabled the consolidation of old, non-integrated mainframe applications
Success factors:
Strong support from Governor’s Office
Extensive planning
Effective communications through project Web page, , instant messaging, and face-to-face meetings
Needed to add temporary employees to help oversee the project
Extensive training of existing staff
Effectively managed regulations, boards, commissions and agencies to minimize turf wars and maximize cooperation

93. STATE OF WASHINGTON
CASE STUDIES
Selected AMS’ E-Procurement solution, called Buysense, which allows the state to purchase goods and services online. (July 2000)
AMS’s Buysense is powered by software from Ariba, Inc. and can be implemented in three to four months.
In pilot study, a transaction made through Buysense reduced transaction cycle time by over 60%.
State officials intend to leverage embedded tracking technology to increase the number of purchases at government discount rates.
When fully implemented, the state expects to have 10,000 users making more than 500,000 transactions annually totaling approx. $150 million in expenditures
Deal is structured such that AMS’ revenue will come from transaction feeds charged to both the State and vendors. Supplier will pay a percentage of the value of the transaction, <1%, and the state will incur a purchase order fee of $3.30, but will drop to as $2.50 as transaction volumes increase toward target of 500,000 by the fourth year.

94. Have successfully utilized “Reverse Auctions” to realize cost savings.
PENNSYLVANIA & OHIO
CASE STUDIES
Have successfully utilized “Reverse Auctions” to realize cost savings.
Pennsylvania has claimed savings of $11 million in 2000.
Ohio is the first state in the U.S. to conduct competitive, Internet auction of $250 million in interim Treasury funds.
Using new competitive live auction system, BidOhio, has generated tax savings of over $3 million with the last 12 auctions.

95. Implemented packaged E-procurement suite from Ariba
DELL COMPUTER
CASE STUDIES
Implemented packaged E-procurement suite from Ariba
Established electronic catalogs for suppliers
Routing about $10 million per month worth of requisitions, representing a broad range of non-production commodities

96. E-PROCUREMENT VENDOR LISTING
E-PROCUREMENT VENDORS
Rules-based
requisitioning
clearinghouse
Supplier
Dynamic
pricing tools
Direct
materials
Vendors
Comments
Ariba
Market leader known for usability; trailing Commerce One with supplier links
Commerce
One
Leads with supplier links; backing away from pushing own requisitioning tool
Will Survive
Oracle
Good workflow; good potential base with direct materials, will play to installed base
SAP
Less aggressive than Oracle but same key characteristics; will play to installed base
Clarus
Build-in analysis tool; direct buyer-to-supplier links
Sun-Netscape
Good support for exchanging trading info; no supplier clearinghouse connections
Intellisys
SupplyNet hosted catalog service acts as a clearinghouse for suppliers
May Survive
PeopleSoft
Links to Commerce One’s MarketSite; similar direct material potential to Oracle, SAP
Concur
Partnered with Nortel to deliver worldwide as British Telecom did with Commerce One
Rightworks
Fewer than 10 customers; built-in analysis tool; links to Commerce One’s MarketSite
Source: Forrester Research, Inc

97. E-PROCUREMENT DEPLOYMENT STRATEGIES
SYSTEM SOLUTIONS
What is your Internet
procurement system?
With which applications is your
procurement system integrated?
Commercial
Service
10%
Supplier
Solution 3%
Commercial
Product
22%
Home Built-System
65%
Data Source: Forrester Research, Survey of 40 Companies

98. Enterprise Resource Planning N-Tier Architecture/Internet Enabled
Building Blocks
SYSTEM SOLUTIONS
ERP Systems and N-Tier Architectures form the foundation of
E-Government and E-Procurement offerings.
E-Government
(G2C) Services
E-Commerce
(G2B/Trade Exchanges)
Enterprise Resource Planning
N-Tier Architecture/Internet Enabled
Government Finance Officers Association, October 2000

99. N-TIER SYSTEMS ARCHITECTURE IS REQUIRED TO SUPPORT THE STATE’S DIGITAL GOVERNMENT INITIATIVES
SYSTEM SOLUTIONS
EAS solution providers have, or are in the process of migrating their product offerings to n-tier architectures.
E-Procurement (G2B) and E-Government (G2C) solutions leverage n-tier architectures.
Tiered architectures provide increased performance, flexibility, maintainability, reusability and scalability, while hiding the complexity of distributed processing from the user.
Classical distributed, client/server architectures typically consist of three (3) tiers: Presentation, Application, and Data (see appendix x).
Internet adds variations on the Presentation and Application tiers to support web browsers (i.e., thin clients) and web servers, resulting in the “n-tier” characterization.

100. N-Tier Systems Architecture
SYSTEM SOLUTIONS

101. State of Wisconsin Procurement Analysis Project
Purchasing Data Warehouse Project
Development & Implementation
January 2001
Advanced Data Concepts, LLC

102. DATA WAREHOUSE IMPLEMENTATION METHODOLOGY
IMPLEMENTATION GAME PLAN
Adapted from Building the Data Warehouse
by W. H. Inmon

103. DATA WAREHOUSE IMPLEMENTATION TASKS
IMPLEMENTATION GAME PLAN
PROJECT ORGANIZATION
Establish Purchasing Data Warehouse project steering committee
Responsible for managing project priorities
Manage expectations of agencies as to benefits they will derive from the data warehouse
Expedite resolution of major issues
Establish project office
Organize project team and define key roles
Project Manager, Architect, Senior Business Analysts
Database Administrator(s)
IS Manager(s) responsible for supporting the project and development
Determine enterprise communications strategy

104. DATA WAREHOUSE IMPLEMENTATION TASKS …
IMPLEMENTATION GAME PLAN
DATA MODEL ANALYSIS
Identify major subject areas (e.g., strategic sourcing, vendor analysis, commodity spend, etc.)
keys, attributes, relationships among data attributes, etc.
Separate primitive from derived data
Entity Relationship Diagram (ERD)
Midlevel Data Model (data item set)
Physical Data Model
BREADBOX ANALYSIS
Sizing (gross estimates) of the purchasing decision support environment; projecting how data the data warehouse will hold
Develop projections for one-year and three-year horizon for the purchasing data warehouse environment
Determine levels of granularity - the level of detail held in the units of data in the data warehouse

105. DATA WAREHOUSE IMPLEMENTATION TASKS …
IMPLEMENTATION GAME PLAN
TECHNICAL ASSESSMENT & PREPARATION
Review both the methods for loading the data warehouse and its access within acceptable performance requirements
ability to manage large amounts of data
ability to organize data according to data model
ability to both receive and send data to a wide variety of technologies supported in the various agencies
ability to allow data to be accessed flexibly
Determine timing requirements for data loads
Determine security requirements
Define amount of disk space storage needed
Estimate volume of processing anticipated
Profile nature of traffic – short or long bursts – coming out of the technology that controls the data warehouse
Identify required network links
Define technical and online analytical processing (OLAP) tools
Business Objects, Crystal Reports, Cognos PowerPlay
DBMS technology and operating system
Performance monitors
Ensure that facilities are available when needed

106. DATA WAREHOUSE IMPLEMENTATION TASKS …
IMPLEMENTATION GAME PLAN
SUBJECT AREA ANALYSIS
Reconfirmation of the scope based on the data to be included
Definition of what data is to be populated
Evaluate the business questions:
What business questions need to be answered by the data warehouse
Which business questions will not be answered by the data warehouse
SOURCE SYSTEM ANALYSIS
Identify the source data for purchasing data mart
Data integration – key structure/key resolution as data passes from the operational environment to the DSS environment
Mapping of data from the operational environment to the decision support environment
Develop meta data (data dictionary for all data elements)
Determine how time variancy will be created from current value data

107. DATA WAREHOUSE IMPLEMENTATION TASKS …
IMPLEMENTATION GAME PLAN
DATA WAREHOUSE DESIGN
Develop data schema (star schema and facts tables) based on previously defined data model and source system analysis
Physical denormalization of data where applicable (e.g., where performance improvements are desired)
Creation of data artifacts to ensure that relationships are preserved (even if source system no longer retains the needed data)
Define performance improvement opportunities through the use of derived, summarized, and aggregated data
If the volume of warehouse warrants, consideration should be given to partitioning the data and distributing portions of it to remote sites
Identify indexes

108. DATA WAREHOUSE IMPLEMENTATION TASKS …
IMPLEMENTATION GAME PLAN
PROGRAMMING SPECIFICATIONS
Some of the major issues associated with developing the formalized interfaces include:
Determining if two sets of programming specifications may be needed – one for the initial load and one for the ongoing operation
Time stamping of operational data
How updates are made to the data warehouse
POPULATION
Execution of the programs
Frequency of population
Purging of data

109. DATA WAREHOUSE IMPLEMENTATION - TIMING
IMPLEMENTATION GAME PLAN

110. DATA WAREHOUSE IMPLEMENTATION - INVESTMENT
IMPLEMENTATION GAME PLAN
Cost Considerations
Hardware and Software – data storage, OLAP tools, hardware, and related licensing fees
Development costs are variable and depend heavily on the state of existing operational purchasing systems
Development may require the acquisition of new hardware and/or software environment
Ongoing maintenance will require process

111. DATA WAREHOUSE IMPLEMENTATION – RISK MANAGEMENT
IMPLEMENTATION GAME PLAN

112. DATA WAREHOUSE IMPLEMENTATION – RISK MANAGEMENT …
IMPLEMENTATION GAME PLAN