Georgia County Streamlines Financial Systems and Procurement Procedures
As the third most-populated county in Georgia, Dekalb County provides its growing population with a wide range of products and services. Similar to other government agencies, the county strives to deliver a high level of service to citizens, while ensuring wise spending of a $1.8 billion annual budget.
To ensure efficient spending of these taxpayer dollars, the county recently leveraged technology and integrated various private-sector business practices into day-to-day county operations. For instance, a prime area that offered potential savings involved integrating the county’s financial management system with procurement procedures.
Collaboration between county leadership and department heads addressed the need to overcome inef-
ficiencies often encountered by other government organizations. A key solution involved implementing Oracle’s E-Business Suite, a system that integrates financial management, accounting, and procurement.
Because the Oracle system is a multi-faceted application, county officials looked at the business value specific to each area of implementation.
As a result, the county decided to “deep dive” into procurement, which offered many opportunities for positive return on investment by reducing manpower, operating costs, and inefficiencies.
At the most basic level, integrating procurement across departments, as well as into the broader context of financial management, has streamlined county operations. In addition, extending the new-found efficiencies to key vendors has also transformed the county into a better business partner. Central to this ability has been a new technology enabler–Integration as a Service, or IaaS–and the county’s work with integration domain expert, Hubspan.
Today, DeKalb County can unequivocally say that its procurement process is significantly improved. Due to these changes in procurement operations alone, the county has saved nearly $250,000 annually.
Efficient, revamped procedures have also helped DeKalb County receive an AAA rating, awarded by Moody’s Investors Service. Only 37 municipal governments, out of nearly 4,000 nationwide, have received this enviable rating.
The Journey to Efficiency
DeKalb’s central accounting system was a 22-year-old mainframe application that was incapable of scaling to serve the needs of a growing population. In addition, this system was not e-business friendly.
Confronted by these limitations, county officials decided that the acquisition and deployment of an integrated business system, built on a new computing architecture, would be a top priority.
With such a significant project and little time to move up a learning curve, the county hired a consulting firm that had successfully worked with many municipal governments. This firm provided assistance with implementing and managing the Oracle E-Business Suite.
Procurement, which is a major activity in a county like DeKalb, was paper-based, labor-intensive, and only loosely tied to the central accounting system. Buyers were more frequently handling routine transactions, rather than steering complex negotiations better suited to their expertise.
The procurement department used software that transmitted requisitions and purchase orders to vendors by fax or e-mail, and these procedures required significant manual intervention. Perhaps worst in terms of efficiency, office supplies were stocked in a warehouse, with delivery of even routine items, such as paper clips, taking as long as one week.
Selecting a Vendor
In drafting a Request for Proposal (RFP), several objectives guided the search for a new, integrated sys-tem. The county wanted to adopt distributed processing, which was faster and more flexible than main-
frame-based operations, yet still offered the benefits of centralization.
Next, county officials wanted a system that offered an array of robust features. Finally, to keep pace with growth, the system needed to scale rapidly and easily, while handling e-commerce from the ground up.
A number of vendors responded to the RFP, and the hired consultant then conducted an objective analysis of system capabilities. Oracle and PeopleSoft (later acquired by Oracle) emerged as the prime contenders.
The decision was made to select Oracle for several compelling reasons. First, the Oracle E-Business Suite consists of fully integrated applications, with best practice-based capabilities for finance, accounting, procurement, and other critical business functions. Because the goal was to start from the ground up, complete integration across most major business functions was a key requirement.
Second, the Oracle system could scale and adapt to growing needs, thereby protecting the initial investment. Finally, and arguably the most important point, integrating departments into the system would not require significant internal IT (information technology) or consultant resources.
County management made a formal presentation of the system’s merits to the DeKalb County Board of Commissioners. The decision to move forward with the $8 million purchase was made in May 2003, and implementation planning began shortly afterward.
Implementing the System
Rather than implementing all applications simultaneously and perhaps achieving less than optimal results, the county created dedicated Oracle/county teams to launch the system module by module. In this way, deployment was divided into manageable parts, with specific milestones and goals determined for each functional area.
DeKalb County went “live” with the first of its Oracle applications in June 2004, and a nearly two-year process advanced to its first phase of fruition.
While implementing the system, it became increasingly clear that the Oracle E-Business Suite’s Advanced Procurement module could support significant improvements in the county’s procurement process.
Through its ability to integrate purchasing activities with “back office” applications such as accounts payable and to introduce new functionality as business needs dictated, the flexibility existed to create a truly first-class purchasing department. In particular, procurement goals included the following:
Simplifying ordering–replace error-prone, paper-based processes with self-service, online ordering that also improved employee productivity.
Enforcing policy and supporting corporate governance–allow management to limit purchases to pre-approved items and tightly control spending levels.
Reducing costs–eliminate maverick purchases, reduce transaction overhead, and maximize the full value from preferred supplier agreements.
Oracle Procurement supported these goals through centralized Web-based shopping that eases the process of creating, tracking, and managing orders.
“Punch-out” capability lets requisitioners move quickly through the DeKalb County firewall into a “catalog” of pre-approved items. Users simply click an on-screen vendor logo to launch the process.
Besides streamlining and im-proving the buying experience, the punch-out function eliminates pa-per shuffles between the county and its vendors. Once a requisition is placed and approved, a purchase order is automatically created, and all procurement data is immediately shared with the vendor’s system and with the DeKalb finance group. The ordered product can then arrive within hours.
By eliminating time-consuming manual procedures, county buyers gain the time to spend on more challenging procurements. In addition, because purchasing is consolidated across many departments, more favorable terms and prices can be negotiated with multiple vendors.
The implementation has also helped to drive the strategy behind vendor choices by providing the time and opportunity to step back and evaluate decision criteria. Perhaps most importantly, we save our taxpayers money.
Expanding and Ensuring Integration
To achieve all the benefits of the implemented system, the county looked into ways to directly connect with the most strategic suppliers. Attempting to use the fax and e-mail notification system had proven unworkable. At the same time, many vendors had agreed to support the new punch-out capability, but they did not have the systems or technology requirements to achieve a direct connection.
Installing middleware to bridge the connection gap was an option, but most middleware is designed to optimize processes “inside the four walls.” Moreover, many middleware packages require expensive customization and continual main-tenance in order to meet evolving business needs.
A consultant then brought the Hubspan Integration-as-a-Service (IaaS) solution to the table. Similar to the Software-as-a-Service (SaaS) model, IaaS provides integration functionality on a monthly subscription basis, eliminating the time-consuming process of licensing and maintaining middleware.
Hubspan IaaS provides the county with a central hub that transparently connects to vendors regardless of their underlying technologies. This solution securely transmits data across firewalls, converting information into formats that can be read and accepted by receiving systems.
Equally important, the Hubspan team played a crucial role in assuring that vendor partners were onboard with the system, thus easing the transition for all parties.
Hubspan IaaS transcends mere data translation by enabling the county to efficiently manage end-
to-end purchase transactions, while helping to define and map information into vendor order systems.
As a result, DeKalb has limited the use of fax and e-mail notification systems to exception situations.
Connecting with Vendors
Through Hubspan-powered integration, the county has extended the benefits of Oracle Procurement to 11 major county vendors, some of which include Graybar, Nafeco, Dell, and Office Depot, with more in the process of being added.
We determined which vendors to connect with the system by ranking them based on the number of purchase orders issued annually, dollar volume of business, and electronic data transmission capabilities.
The county then initiated discussions with each candidate, promoting the potential for increased business at less cost. After identifying key decision-makers, the procurement department conducted follow-up meetings to demonstrate the integrated system and its benefits.
In evaluating the system, which has now been in operation for nearly two years, employees and vendors are reporting the following results:
Increased compliance–Buying from a pre-approved catalog lessens the time that buyers and suppliers spend negotiating for purchases.
Greater accuracy and consistency–As shopping carts fill, accurate product descriptions, units of measure, and prices flow into Oracle Procurement and the final purchase order.
Heightened efficiency–Punch-out functions make it faster and
easier for requisitioners to buy many different categories of products. Vendor employees need not retype information from faxes and e-mails into order entry systems.
Reduced costs of doing business–With better visibility into the purchasing process, contract nego-
tiations are smoother and less time-consuming. Direct, streamlined purchasing has significantly reduced overhead costs from procurement operations. In addition, by devising a system that is easier for employees and business partners to use, business process improvements can be disseminated county-wide.
Successful implementation of the Oracle Procurement solution and the Hubspan IaaS connection has laid the foundation for automating invoice processing and integrating these processes with the Oracle Accounts Payable application. When vendor invoices can be accepted directly into Accounts Payable, DeKalb County will be able to reduce errors even more. Testing with Office Depot is currently underway to implement these procedures.
Modernizing county procurement processes by the judicious use of technology has required strategic
planning, hard work, and evangelism, but results have been worth the effort. The county is saving money, streamlining business practices, and building effective, vendor relationships that can be efficiently replicated, going forward.
On a broader scale, implementation of the Oracle application, of which iProcurement is a single feature, enables DeKalb County to migrate from antiquated, paper-intensive systems to fully integrated, Web-
enabled technology. Moving forward, our citizens will receive the quality of service they deserve, and the county will continue its quantum leap into a new age of responsive, effective government.
About the Author
Vernon Jones is the youngest person to hold the position of chief executive officer (CEO) of DeKalb County, GA. His responsibilities include managing 7,000 employees, directing day-to-day county operations, and presiding over twice-monthly meetings of the county’s Board of Commissioners. Prior to his election as CEO, Jones served in the Georgia General Assembly as a representative from DeKalb County. He has also held leadership roles at various private-sector communications companies.