Getting What You Want From ERP in the Cloud
"Probably one of the biggest wins for us has been just driving compliance against our contracts," said Brooke Krenn, whose company, Cox Enterprises, recently moved to a cloud-based ERP system. "We're able to see very easily now when a location or a business unit ... is purchasing off-contract or when they're not utilizing one of our preferred or negotiated suppliers."
The latest BriefingsDirect podcast, from the 2012 Ariba LIVE Conference in Las Vegas, explores the latest in cloud-based collaborative commerce with Cox Enterprises, a US$15 billion communications, media, and automotive services company.
We'll learn how Cox, through the Ariba Network, manages multiple ERP systems for an improved e-procurement strategy and has moved toward more efficient indirect spend efforts to improve ongoing operations and drive future growth across more than 50,000 employees.
To hear more about how they have done this, Interarbor Solutions Principal Analyst Dana Gardner interviews Brooke Krenn, the senior manager of procurement systems for Cox Enterprises, based in Atlanta.
Listen to the podcast (9:39 minutes).
Here are some excerpts:
Dana Gardner: A lot of organizations either have organically developed multiple systems for different groups or, for merger and acquisition reasons, have different ERPs. How has that been a challenge, when it comes to procurement?
Brooke Krenn: We have six separate ERP systems spanning major subsidiaries, including Cox Communications, Manheim, Cox Media Group, and AutoTrader.com. Cox is a very interesting company in that our business units are very diverse and very unique. Across four divisions and our holding company we have those six ERP systems.
So with that, obviously, there are a lot of challenges. There's not a lot of common ground, when it comes to purchasing. Across those six ERP systems we needed some way to drive consistency, as we focused on really capitalizing on our indirect spend across all the business units.
My team is the Procurement Systems Team. We fall under supply chain in Cox Enterprises. I have a team of three, and we manage our e-procurement platform, with which we do about $50 million year-end POs, and average about 1,500 POs a month. We also manage our P-Card program, which is about $130 million a year in spend, and also our fuel card program, which is about $50 million a year.
Historically, our spend, specifically the indirect spend, has been all over the place. We haven't had a lot of visibility into that spend and haven't had a consistent manner in which we purchased.
We had an e-procurement solution for about 10 years. We were on that software for a decade, and it was just very dated. It wasn't supported very well. We knew it was time to make that change. Where we were in the economy, everyone was looking at the most logical places to save time and money and to become more efficient. Obviously, procurement was one of those areas where we could do very quickly.
We knew the first step was replacing the software that we did have. Immediately, Ariba was one of the top contenders, as we looked for a new solution, simply because of the user experience was most important to us, and also how quickly we could implement it.
Gardner: So you're going from an on-premises software installed affair to now more of a Software-as-a-Service (SaaS) and cloud affair. Was that something that was difficult or something you were looking forward to?
Krenn: Moving to the cloud in an on-demand solution was great for us. Having the on-premises software in the past, any time there was an upgrade or an update, we had to be sure IT knew about it and we scheduled the time on a night or a weekend. We had to call on resources internally within the company. So it was very exciting for us to move to an on-demand solution and all of the technology that was available with that.
For the users, it's been a great change, because now they consistently know there's one place to go. When they need to order office supplies, when they need to order something for their break room, when they need to order business cards, they know where to go. In all of our divisions and all of our locations, employees want to do the right thing. They want to purchase the right way. A lot of times they're just not sure of what to do.
So with this implementation of a new tool, we were able to really drive them in the right direction, and it was an easy solution for them. It was easy for us to implement, and it's been very easy for our end users and our employees to adopt.
Gardner: Has that, in fact, translated into other metrics of success that you could describe for us?
Krenn: Probably one of the biggest wins for us has been just driving compliance against our contracts. We're able to see very easily now when a location or a business unit within one of the divisions is purchasing off-contract or when they're not utilizing one of our preferred or negotiated suppliers. That's probably been the biggest win for us.
We have the visibility now to see very quickly within our P2P tool and also within our spend management tool to see where this spend is taking place and able to reach out directly to those locations or to those employees that are purchasing off-contract. Obviously, the more purchasing power we have, the more spend we are driving to these contracts, the better our pricing is going to be going forward.
We went about implementing our new P2P solution a bit unconventionally, you could say. About 98 percent of our transactions are actually on a supplier card -- a P-Card model, which has just been tremendously successful for us. With that, we didn't have to integrate directly into our six separate ERPs because our payment method is with that supplier card.
Ease of implementation was one of the biggest wins. Also with that is the ease of use for the end user. There's no reconciliation for them at the end of the month. We're taking care of all of that GL coding information, all of the approvals, upfront. The supplier card model, again, has been great on the end user side as well as on the AP reconciliation side.