In the wake of Hurricane Katrina, the rebuilding of New Orleans made it more important than ever for the city to modernize its cumbersome and inefficient paper-basedprocess. Thanks to the Web-based BuySpeed e-procurement system, the city was able to accomplish that — saving more than $1.25 million along the way.
Since being implemented in 2006, BuySpeed has helped the city cut its processing time by 80 percent and increase its purchase orders by fivefold, even after staff cuts.
BuySpeed, which is a product of Austin, Texas-based Periscope Holdings, integrates with the city'sDynamics-GP general ledger system, and combines Web requisitioning, electronic approvals, contract purchases and electronic purchase-order delivery to reduce purchase cycle time citywide.
BuySpeed also gives the city self-service vendor registration and secure bid management, which reduce costs and improve the efficiency of the competitive bidding process. Electronic receipt and invoice entry close the procurement loop by automating the entire “procure-to-pay” cycle.
The city's initial investment in BuySpeed was $256,200, which included software and professional services for implementation and consulting. The initial cost of the BuySpeed system, when compared to the actual cost savings gained, delivered a 4-to-1 return on the city's investment.
“BuySpeed was clearly the best solution we evaluated,” said Andrée Cohen, purchasing administrator for the city of New Orleans. “None of the other solutions came close to demonstrating the range of e-procurement functionality offered by Periscope, let alone Web-based.”
Periscope's ‘priority project’
Prior to Hurricane Katrina, the city had recognized the deficiencies in its manual purchasing process and issued an RFP for an electronic purchasing system. The city's primary objective was to acquire a Web-based purchasing system that would allow it to automate the requisition, bid, purchase-order and contracting process, manage the vendor database and integrate with its financial system.
Just months before Katrina, the city awarded a contract to Periscope Holdings for its Web-based e-procurement software, BuySpeed. Under the contract, BuySpeed would be integrated with the city's Microsoft Dynamics-GP general ledger system. Periscope would provide professional services for the software's implementation and consulting.
BuySpeed was set to go live the first week in September 2005. But just a few days before the new system's planned launch, Katrina hit New Orleans and chaos ensued. Periscope responded to the city's call for help.
“The Periscope team worked quickly to establish a field purchasing environment that provided access to the state of Florida emergency supplier list,” Cohen said. “They also helped us procure desperately needed items such as computers and clothing.”
Periscope worked closely with the city not only to provide temporary disaster support but also to continue implementation of BuySpeed. The urgency to get the new system up and running was made more pressing by the Federal Emergency Management Agency (FEMA)'s purchasing procedures implemented as a stopgap measure immediately following the disaster.
FEMA's system gave the city little ability to track the history of purchases at a time when it was making an unprecedented number of them. The city was relying heavily on federal assistance and donations to fund recovery efforts. City officials knew they had to automate, control and account for the city's spending or else compromise the city's ability to continue to receive this funding.
“We knew it was critical for the future of New Orleans that the city get its automated system in place quickly — despite the unimaginable challenges faced after Katrina,” said Brian Utley, Periscope president and CEO. “It immediately became Periscope's priority project.”
The city launched BuySpeed in March 2006. The software not only provided the functionality to address the problems the city had faced with its manual purchasing system, but it also gave the city the ability to efficiently control and account for the increased purchasing necessary for the city's reconstruction.
BuySpeed's Web functionality addressed the multiple challenges the city of New Orleans had faced pre-Katrina under its manual system by providing: improved vendor management; electronic requisition and approvals; improved purchase orders and contracts management; electronic tracking of receipts and invoices; and entirely automated bid management.
The city has reaped dramatic savings through the use of the BuySpeed purchasing automation system. Fewer staff now handle more purchases in less time, supporting New Orleans' massive reconstruction effort following Katrina.
If the city had continued to use its manual purchasing system in 2007, the city's total purchasing costs would have been $1,595,143. The city's total costs using BuySpeed to perform procurement activities in 2007 were $336,000, including all staff salaries, training and benefits.
With BuySpeed, the city's cost per bid has been cut by two-thirds, and the number of bids processed has almost doubled, even with reduced staff. In 2004, it cost the city an average of $3,360 per bid to complete 120 bids. Through BuySpeed, that cost was reduced to $1,126 per bid for 207 bids processed in 2007.
Among other benefits of BuySpeed:
The city's cost per purchase order is nine times less, even with reduced staff. By using BuySpeed, the city reduced the cost per PO from $80 with 12 staff members in 2004 to $9 with seven staff members in 2007. Twelve staff members processed and distributed 2,144 purchase orders in 2004 using the traditional manual processes. Seven staff processed 11,162 purchase orders completed electronically in 2007.
The city quickly collected much-needed information from local suppliers — information that was practically nonexistent while the city used the FEMA stopgap system after Katrina. BuySpeed allowed the city to target local, regional and national vendors — without a fee — and collect specific information necessary to source its purchasing needs. Today, BuySpeed manages more than 6,600 vendors for the city and serves as the foundation for purchases of commodities and services supporting its redevelopment.
Average cycle-time for requisition completions dropped from 4.5 days to one day, translating into an 80 percent reduction in processing time to complete the entire requisition-to-PO process. ?
For the complete version of this article, visit http://govpro.com/news/E_procurement_New_Orleans_2341/.
About the author
Liz Carmack, a freelance writer and a professional communicator, wrote this case history on behalf of Austin, Texas-based Periscope Holdings.