IHEs find e-commerce pays off: want to save time, money, and increase efficiencies? Look to the web to conduct an array of business functions

University Business, Jan, 2005 by John Otrompke

Whether it's ordering supplies, paying bills, or Selling merchandise, many IHEs are embracing web-based, e-commerce as a fast, efficient, and economical means to conduct business,

For example, the not-for-profit Educational & Institutional Cooperative Services, Inc. (E&I) uses pre-negotiated contracts to win discounts for schools that do volume purchasing. The contracts are implemented on a "plug and play" model, which allows the schools to control purchasing decisions so more of the purchasing takes place online through vendor-sponsored catalog content at discounted prices. More recently, E&I and SciQuest have been experimenting with jointly sponsored "reverse auctions" and electronic requests-for-proposals (RFPs) which realize even more dramatic savings.

"While we count virtually every school in the country among our members, there are a number of small colleges we haven't reached out to, but we're getting to them," says Amy Thawer, director of e-business for E&I.

While E&I has had an internet presence since at least 2000, last year the organization started working with SciQuest, which offers on-demand applications that automate the source-to-settle process. "We took their platform, Select Site Spend Director, and created a platform that could be accessible by our entire membership," Thawer says. "The schools don't really communicate with each other yet; for example, if you're at Harvard, you can't see what MIT is doing. But it allows all universities to connect into one portal, and they all have access to E&I price catalogs."

Says E&I CEO Tom Fitzgerald, "The idea of plug-and-play is that if an individual wants to enable one of its contracts to go online, it's a costly and time-consuming process. They have to automate those contracts so they're suitable for that school's technological platform. We do it just once so that it's available for all of our members."

Take chairs for example. There is no such thing as a standard chair. There are chairs with or without arms, high back and low back, coasters, and so on. "We asked teetcase, our furniture supplier, "What are the most commonly ordered products?' and then we put together a catalog of those designs so that you could essentially point and plug," Fitzgerald says.

University of the Pacific

Frances Feicht, director of Purchasing for the University of the Pacific (Calif.), says the school has recorded significant savings through online purchasing with E&I. "Before, people were purchasing from Granger, one of our web-enabled vendors, without going through E&I, until we noticed we could get in Granger's top tier for purchasing because of the volume associated with all of our three campuses," Feicht says. "Now, with E&I, when we go online to buy light bulbs from Granger we get a $10 per item discount."

In addition to Feicht, the university, which was an E&I beta test site, employs five other procurement staff members. "Some contracts feature better discounts than others, but we've always gotten a savings," says Feicht. "Because we're members of E&I, at the end of the year, we get a rebate. We've had the system for about a year, and last years rebate was over several thousand dollars," she says.

Feicht adds that one of the attractions of the E&I utility was its affordability for smaller schools. "When I went looking at them a year or two ago at the National Association of Educational Buyers trade show, these systems were around $2,000 a month. We can't afford these systems, because they're very costly. And, several that I looked at have since gone out of business. On the other hand, E&I is free, so what have you got to lose?" she asks.

Feicht points out that one of the things her institution would like to see would be more vendors avaiLabLe through the online products. "Right now E&I does not have a lot of vendors, though they are constantly negotiating new contracts. We would Like to see a dental product vendor on there," she says.

Feicht says that one drawback to the system is the somewhat smaller number of vendors avaiLabLe to order from. But that concern is offset by the price. "Other systems have tons of vendors; SciQuest's HigherMarkets was an e-procurement system we looked at over a year ago. It had more vendors than E&I, but it was not free," she says.

E&I's FitzgeraLd explains that getting more of the cooperative's standard contracts enabled online is a project for the future. "We have roughly 100 suppliers available in the traditional format, but only about 10 percent of those are plug and play. We're hoping to bring that substantially up in the next 18 months," he says.

In addition to the plug and play offering, E&I and SciQuest have combined to initiate reverse auctions. "A group of 15 schools in the Philadelphia area (the Philadelphia Area Collegiate Consortium) conducted a reverse auction to purchase gas cylinders," says Fitzgerald. "The auction lasted about 65 minutes, and we saw prices drop by as much as $16,000 per minute at one point," he says. E&I also planned a reverse auction on truckloads full of recycled paper last month.