BAE Systems adopts eprocurement for enterprise efficiency

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1 C A S E S T U D Y BAE Systems adopts eprocurement for enterprise efficiency Leveraging a hosted solution to reduce cost and improve service levels Company Profile BAE Systems is a premier global defense and aerospace company delivering a full range of products and services for air, land and naval forces, as well as advanced electronics, information technology solutions and customer support services. BAE Systems Key Facts - 3rd largest global defence company - 6th largest US defence company - 96,000 highly skilled people - Global capability - Customers in over 100 countries - Annual sales exceed 15 billion * - Annual R&D exceeds 1.2 billion * - More than 100 new inventions every year Challenge Originally, BAE Systems sought to achieve its business goals with an inhouse software solution. With low user adoption and frustration with long cycle times, BAE Systems needed to reevaluate its approach. Ultimately, management wanted a single solution deployed across the global enterprise that delivered business results at a lower total cost of ownership and higher service level. Background: Building a Process Efficient Company In 2001, BAE Systems undertook an enterprise wide effort to e-enable key areas of the organisation from sales and collaboration to sourcing and procurement. The objective was to drive process efficiency and consistent use of technology platforms. BAE Systems knew that an undertaking of this magnitude would require a shift in the cultural mindset of its staff. When it came to adopting a catalogue ordering system for indirect procurement, BAE Systems purchased an enterprise software platform to support its organizational and process transformation. The goal was to enable web based ordering of low value, high volume indirect goods and services from catalogues specifically configured for BAE Systems to maximize corporate deals with suppliers. Expected benefits included decreased off-contract spend, enforcement of standard processes, reduced cycle times, and increase visibility into total enterprise spending. What BAE Systems found, however, is the challenge of user adoption, training, and support detracted from their mission to drive adoption, scale the program and improve business performance. Additionally, BAE Systems had to invest an unexpected amount of time and energy on ensuring performance and reliability of the technical software platform. Driving Improvement: Cost of Ownership and Service Quality A year later, BAE Systems initiated an improvement program with the goal of identifying potential new or better solutions to the existing offering. As part of this process, cost and support levels were identified as the two paramount decision criteria. After careful review, BAE Systems considered two primary options. They could either continue to invest in the current enterprise software solution and support model; or they could move to a Software-as-a-Service (SaaS) model with Exostar. BAE Systems quickly discovered there are many hidden costs in the deployment of an eprocurement solution. There are the initial software, hardware and implementation investments, as well as ongoing configuration changes and inevitable upgrade activities. As a business critical system, the performance and uptime requirements for the solution were understandably high. This required system redundancy, 24/7 performance monitoring, and load balancing to ensure any BAE Systems user around the globe could utilize the system at any time to accomplish their business needs. Furthermore, the critical business information in the system necessitated best practice levels of security, back-up and disaster recovery to mitigate business risk. Not only did these activities significantly increase cost and fees, the complex technical operations became a distraction from the team achieving its business goals. The BAE Systems team recognized that service levels for users of the system, Copyright 2013 Exostar LLC. All rights reserved. 1

2 Goals BAE Systems primary objective was to build a more process efficient organisation. Through this, secondary objectives were targeted: Reduce purchase and process costs Increase adoption of e-procurement system across the enterprise to obtain spend visibility; Decrease cycle time from order raised through approval; Provide improved, seamless support across a global user base; Achieve best practice service levels for system reliability and availability. When BAE Systems realized that Exostar could offer them the same product in a secure, hosted environment, the company recognized the immediate savings by moving to a Software-as-a-Service (SaaS) model. Additionally, BAE Systems no longer shoulders risk to deliver mission critical performance, that burden sits with Exostar, said David Fitzgibbon, BAE Systems Management Team. As a result, our organisation has witnessed increased visibility to spend and a resulting cost containment through Exostar s centralized method of procurement process enablement. both BAE Systems employees and suppliers, had become a barrier to adoption of the system. Performance challenges and suboptimal user experiences had dampened enthusiasm across the enterprise. The team was determined to drive improvement in three key areas: system performance, process standardization, and end-user support. Particularly, BAE Systems desired an integrated, one-stop-shop support model including a single user registration process, full time helpdesk, and common administrative support model for end-users despite their geographical locale. It was important to BAE Systems to have a single party responsible for support, problem tracking, and issue resolution not just for the eprocurement system but also for the related business processes. This was a challenge due to the multiple parties involved including various BAE Systems functional areas, suppliers, the underlying software provider, as well as BAE Systems outsourced IT support vendor. The Solution: Exostar s hosted ProcurePass After careful analysis of the alternatives, BAE Systems decided to move to Exostar s ProcurePass solution, a hosted eprocurement system for cataloguebased requisitioning and order management. BAE Systems believed that Exostar would deliver against their needs and free up BAE Systems to focus on optimizing their business. BAE Systems found Exostar s holistic offering created value on multiple levels. The ProcurePass software had all the functional capabilities needed to meet BAE Systems business requirements. Exostar s Software-as-a-Service model reduced the legacy complexity and cost to a simple, annual service fee that delivered improved total cost of ownership Exostar created an end-to-end support model that provides end-users a single point of contact including support covering the UK and the US. The process provides BAE Systems with an escalation process dependant upon the nature of the support request, technical support and a single point of accountability. Taking the Leap Moving to Exostar from a fully implemented in-house solution meant the transition would have to be seamless. Current users were to see no disruption in service during migration to the ProcurePass solution while at the same time thousands of additional users were to be on-boarded to the new platform. BAE Systems measured success on user adoption and overall utilization of the solution as demonstrated by procurement volume across the platform. BAE Systems further measured the program on improvements in reliability and service during and after the transition period. With a user population in excess of 3,000 end-users at the start of the migration, and a year-end 2006 population of over 6,000 end-users, the migration met its initial objectives for user adoption. Further, the key objective of seamless migration was achieved through solid Copyright 2013 Exostar LLC. All rights reserved. 2

3 Expected Results Decrease cycle times Improve reliability and availability Drive procurement through catalogues for greater consistency; improved visibility to spend; increased accuracy of reporting Develop a common model that provide benefits delivered through standardization Realign existing processes and recognize that current ones are not necessarily the best practice Utilize service metrics to drive continuous improvement execution between the Exostar and BAE Systems teams. BAES Systems' ProcurePass End-users 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Q Q Q Q Q Q Q Q US Total End-users UK Total End-users Total Users "Aberdeen research of over 600 enterprises finds significantly faster time to value and lower project risk with Software as a Service solutions," says Beth Enslow, SVP of Enterprise Research for Aberdeen Group. "Procurement and collaborative supply management processes are top areas where enterprises are moving to SaaS platforms from proven providers like Exostar." Reaping the Benefits of Software as a Service Moving its web-based ordering to Exostar provides BAE Systems with many benefits. Exostar s Software-as-a-Service (SaaS) model delivers to BAE Systems the reliability, redundancy, and performance to consistently provide service to any user at any location around the world. Exostar s tiered support structure takes significant burden off the BAE Systems team for end-user, supplier and administrative support. In fact, BAE Systems was able to reduce the personnel dedicated to operational support from four (4) full time to the equivalent of one half (.5) a person. BAE Systems outsourced the complexity and risks related to disaster recovery, back up, storage, replication, and software performance for their users across the globe to Exostar. The BAE Systems team was particularly pleased to establish a single point of vendor management and accountability. A renewed focus on the business transformation instead of technology has enabled BAE Systems to more quickly achieve its business goals. As a result of this initiative, BAE Systems now enjoys users that are content with their indirect and IT procurement requests. Managers, some who are approvers, are equally enthusiastic having greater visibility and control over their business spend. Last, the organisation has effective checks and balances to ensure standard processes and approvals are being implemented on a day-to-day basis. Success of the program was further validated and expanded upon within BAE Copyright 2013 Exostar LLC. All rights reserved. 3

4 About ProcurePass ProcurePass is a hosted procurement application that enables buyers to search for items, create requisitions and manage the purchase order lifecycle. Benefits include:- Intuitive catalogue based shopping cart Configurable workflows, approvals and notifications Advanced search capabilities Real-time status of orders, ASN s and invoices Supports cost center data, commodity codes, hazardous material flags, etc. Flexible support for catalogues, roundtrip / punch-out process, or special request purchase orders Localization for multi-language/multicurrency Systems Information Technology organisation. The IT team was determined to incorporate greater process efficiency and ultimately drive faster delivery of IT goods and services across the enterprise. Leveraging the ProcurePass solution, BAE Systems IT organisation is able to use catalogue-based eprocurement to increase the amount of IT spend (goods and services) managed within its standard process, and to speed response times to end-users. Through Exostar, BAE Systems can manage overall spend through the system with two dozen customized reports. BAE Systems can track operational metrics such as overall spend, the volume of orders, and support issue resolution timeframes. More importantly for their internal audience, the organisation is tracking cycle time from an order raised through approval. This, ultimately, provides them the business control to give end user satisfaction and meet their business objectives. Exostar ProcurePass Solution: providing an integrated, holistic approach to world class procurement Copyright 2013 Exostar LLC. All rights reserved. 4

5 Conclusion As companies struggle to achieve improved process efficiency, cost reduction, and enterprise integration, eprocurement remains a very effective method of reaching these business goals. For many organisations, eprocurement is a solid first step on the path to broader enterprise transformation and process improvement. However, many companies discover that activities related to technology, operations, user support and program administration represent significant cost, complexity and distraction from achieving business objectives. Exostar s hosted ProcurePass application delivers world-class functionality, security and service levels. ProcurePass is a component of Exostar s integrated purchase-to-pay platform with over 38,000 trading partners already adopted to the system. This scale of operations affords customers like BAE Systems the confidence to outsource their eprocurement solution to Exostar and focus their energy where it belongs on the success of their business. About Exostar Exostar is a leader in secure cloud-based solutions that improve collaboration, information sharing, and supply chain management for over 100,000 companies worldwide, including some of the largest players in aerospace and defense, life sciences, pharmaceuticals, and financial services. Our secure, cloud-based, single-sign-on identity and access management platform and our multienterprise collaboration solutions allow users to connect once and access all their critical applications and information across the spectrum of partners and vendors they work with. Exostar helps our customers utilize and protect their intellectual property, streamline the partner lifecycle, implement new engagements, and expedite all phases of their supply chain. Copyright 2013 Exostar LLC. All rights reserved. 5