The panel discussion focused on estimating investment costs for eProcurement systems. Panelists from Avalon Healthcare, Dell, and Paystream Advisors discussed different business models for eProcurement vendors and the importance of supplier adoption rates. Avalon Healthcare shared their experience with a lengthy eProcurement selection process. Paystream Advisors emphasized considering both hard and soft costs, as well as hidden costs and opportunity costs when estimating total cost of ownership. Their TCO tool can help organizations ask the right questions to accurately evaluate eProcurement investment costs.

1. Panel Discussion
Avalon Healthcare, Dell, Paystream Advisors
How Good Is Your Math?
Estimating Investment For eProcurement

2. Direct
$2824b
Payroll
$1797b
✓
✓
The Spending Tree – Fortune 1000
Facilities
Consulting IT Spending
Legal Services Temp LaborMarketing
MRO
Travel and Expenses Office Supplies

3. Business Case
TCOROI

4. Our Panelists
Mark Colwell
Vice President
Paystream Advisors
Kevin Turner
Global eCommerce Director
Dell
Hyrum Kirton
Vice President – Procurement
Avalon Healthcare

5. Avalon Healthcare

6. PayStream Advisors
is a provider of independent research and automation
assessments for financial automation technology to business
leaders in finance and procurement.
Advisory ServicesPayStream Research

7. The ‘New’ Dell

8. Scoping The Task
 Business models
 Key stakeholders

9. Which Of The Following Business Models Have
Been Adopted By eProcurement Vendors ?
1. Only buyer pays
2. Only supplier pays
3. Both buyer and supplier pay
4. No one pays
5. 1, 2 and 3

10. eProcurement Business Models
Buyer Funded
(example Coupa)
Supplier Funded
(example GHX)
Network
(example Ariba)
Buyer Pays Buyer Pays Cost Plus Buyer Pays
No Supplier Fees Supplier Fees Supplier Fees (typically)

11. No Supplier Transaction Fees =
Increased Adoption
 When implementing a successful eProcurement or
E-invoicing initiative it is recommenced that suppliers
have No Supplier Transaction Fees
 A no charge supplier policy will help to increase
your Supplier Adoption Rate
 Success initiative (regardless of the technology
partner) requires supplier adoption

12. Avalon’s eProcurement Journey
 Go ahead approval took 2 years from start to finish
led and pushed by procurement
 Built committee of department heads to create new
processes and vendors for company fit
 Vetted 6 E-procurement vendors over process
 Estimating investment:
• Cost at or below current vendor pay model
• Value adds to support platform robust while keeping
supplier pay model

13. Doing The Math
 Hard vs. soft costs
 Hidden costs, gotchas
 Opportunity costs
 PayStream tool

14. Hard vs. Soft Costs
 Focus on hard dollar
• Success of companies is measured in hard dollars
• Upper management wants to see hard dollar saving
 Don’t ignore soft costs
• Focus on the soft dollar costs that can be turned into
hard dollar saving
– Example: Reallocation of personnel. Retaining those people, reusing
them, freeing up their capacity, can allow a company to grow “outward”
rather than inward

15. What is Perceived as the # 1 Barrier to
eProcurement?
1. IT Resources
2. No budget
3. Lack of executive support
4. Hard to justify
5. All of the above

16. Top Barriers – Paystream Survey

17. Hidden Costs, Gotchas
 IT required changes… reliance on ERP vendor and
outside firms
 Process Exceptions… ePO without catalog;
eInvoice without ePO
 Many procurement solutions… adaptability to various
technologies and solutions
 Vendor Fees… Pay to Play
 Integration Knowledge & Support

18. The PayStream TCO Tool
 Vendor and technology agnostic
 Simple, straightforward yet comprehensive
 Helps asking right questions

19. Steps to Calculate Your TCO
.
Evaluate the features and
functionality of competitive
products – Cloud
versus On-Premise/Network
business application solutions.
Initial Costs
1. Evaluation and Selection

20. Recurring Costs
2.Evaluation and Selection:

21. Prior to making the
decision to go with a
Cloud or On-
Premise/Network
solution, a buyer must
first identify all the
necessary cost
components associated
with each option.

22. Keys to Control Costs
 Agreed-upon goals, objectives… and schedule
 An executive commitment
 Dedicated appropriate contacts for project duration
 A commitment to utilization to achieve full
return on investment

23. Presenting The TCO
 Avoiding sticker shock
 Getting buy-in

24. Where To Get The TCO Calculator?
 www.paystreamadvisors.com
 www.coupa.com/purchasing-procurement-resources/
resources/
 Your Coupa Contact