St. Petersburg, Fla., Improves Procurement Process

One Florida city's purchasing department takes steps to improve the procurement process.

by / April 22, 2010 0

A government procurement department's job may seem simple in theory - buy the goods and services a jurisdiction needs - but anyone involved in the process knows it's much more complicated. When employees must repeatedly input duplicative information for each purchase, the task becomes laborious and error-prone.

St. Petersburg, Fla., dealt with that challenge in the Purchasing and Materials Management department, the city's office for buying supplies, services and construction. Department employees felt that procurement methods could be made more efficient.

"We had a purchasing system, and it would process your requisitions and create purchase orders. But then to pay for those products, you had to manually enter the same purchase orders into the finance system because the two did not talk to each other," said Christine West, the city's Oracle e-business solutions manager.

That method left the process vulnerable to human error. Someone could accidentally type information into the finance system differently than it had been typed into the purchasing system. "There was no integration to be able to reconcile the two systems," West said.

St. Petersburg wanted to eliminate paper processes and the errors that came with them, improve employees' ability to analyze department activity and streamline the requisition process. In 2005, West and her colleagues achieved these goals by automating purchasing procedures with Oracle Advanced Procurement, an applications suite.

"It allowed purchase requisitions and purchase orders to be directly integrated with the financial side," West said. "It goes through an automated approval path, and essentially, if everyone is sitting at their desk [when] the requisition comes through, we can have a purchase order out the door within 60 seconds."

The system generates an e-mail notification to whomever must approve the purchase, so the approval itself depends on how fast the information is read and decided on.
"It's amazing in terms of the automation that we were able to put in place to streamline that entire process," she said.

Smooth Moves

With the Oracle software modules employees now use, the purchasing department has reduced the requisition-to-purchase process from six days to about two days and requisitions have increased to about 25,000 per year. Employees have preloaded templates for contract renewals and use nearly 800 contracts annually, which eases the legal department's workload and saves taxpayers $151,000 a year.

"The Oracle software radically improved the way we collect information and enables us to benchmark and do a lot of reporting that we didn't have before. The automated workflow was a huge bonus - where there's no manual signatures for the routine purchase orders that come through," said Barbara Grilli, the city's purchasing manager.

When technology isn't integrated, people don't get the time and money savings they want, said Wayne Bobby, Oracle's vice president of public-sector industry solutions.
"You'll slow the process down - cause it to be paper intensive," he said. "By establishing that ERP [enterprise resource planning] integration up front, that's where you start to see those kinds of efficiencies and savings."

The purchasing changes were part of an ERP deployment that made sweeping changes to the city's enterprisewide business functions. West manages the entire set of Oracle technology the city uses, and procurement and purchasing are just a few of the 26 modules deployed.

"We converted from 50-plus legacy systems into the e-business suite. Purchasing is just one of the several e-business modules I support," West said. "I oversee the developers and business analysts in the IT department, but the purchasing department itself is the true owner of the system."

Bobby also thinks automated tools help the Purchasing and Materials Management department avoid extra costs that would arise when mistakes were made in the paper process.

"The more paper you have, the likelier that you may lose or misprocess paper," he said. "

And if you were to lose 2 percent of the invoices, then vendors are resubmitting invoices. Penalty charges may occur."

An automated system can deliver other information to help users make intelligent buying decisions. Say someone is about to order paper for the copy machine on Thursday. The system could alert the purchaser that the office bought extra paper on Tuesday for another department.

"It's in that intelligence layer where people get the improvements in their procurement processes," Bobby said.

Grilli said she can mine the purchasing system for more information now than she could in the past.

"We can pull information out of the system that we've never even known before," she said. "For instance, who is the top requisitioner by volume in the city, which departments are the top spenders by dollar amount, [and] a lot of small business reporting, such as how much we spend with our certified small businesses."

Tough Times for Many

West estimates that the full ERP deployment, which involved re-engineering all of the city's back-end processes, including HR, accounts payable, accounts receivable and purchasing, cost about $4.6 million and required a full project team onsite. The system went live in 2005 after a 12-month implementation.

According to West, then-Mayor Rick Baker was admittedly uneasy about making such drastic changes to technology that was behind so many vital functions.

"It's a little bit of a scary proposition in your first year as mayor," said West. "He came in and said, 'I'm not sure I want to do this my first year.' We worked through it, answered all his questions [and] made sure he was comfortable."

Baker had reasons to be concerned. Recent research indicates that ERP deployments often fall short of user expectations. Panorama Consulting Group, which specializes in ERP consulting and research, released some alarming data in its 2010 ERP Report.

The company surveyed 1,600 respondents worldwide to discern common risks and drawbacks to ERP deployments. Although the respondents were from the private sector, the findings are eye-opening for the public sector. Fifty-seven percent of the Panorama respondents said ERP implementations take longer than expected, and 54 percent said they're overbudget, with an average cost of $6.2 million. As for the benefits of their ERP deployments, 41 percent said ERP implementations fail to realize at least 50 percent of the benefits; 40 percent said they had disruptions at the go-live dates; 32 percent said executives were unsatisfied with them; and 39 percent said employees were unsatisfied.

Such concerns are likely what gave Baker pause in St. Petersburg. He wanted the city to delay the project so everyone could prepare for the changes. Baker needed time to get used to it, do research and review the work that was done, West said.

There don't appear to be any major setbacks in St. Petersburg's case, but West has some advice for other jurisdictions that want to give it a try: Know what you're in for and get ready for it.

"You can't walk into it and say, 'We're going to put this new software system in, but we're just going to continue doing business the way we always have,' because then you're only getting half the value," she said. "If you're just going to do business the way you always have, what difference does it make what software you have? You have to adapt to new processes, and you have to embrace best practices and what's offered through the software."

Statistics

$151,000 - Annual savings from reduced legal department workload.

4 Days - The time cut from the requisition-to-purchase process.

 

Hilton Collins

Hilton Collins is a former staff writer for Government Technology and Emergency Management magazines.