BI Case Study: BI Buying: Virginia e-Procurement System Sets the Standard for States

A hosted e-procurement system used by the state of Virginia includes a sophisticated Web-based BI portal. Buyers use the portal to analyze buying behaviors, while sellers can quickly find reports that summarize who is selling what. The system is the largest and most robust state e-procurement system in the country.

The Commonwealth of Virginia is rare among states in that its six-year-old Web-based procurement system is entirely computerized. Only a few other states in the U.S. have even attempted an e-procurement system of its scope. The complex and robust buying and selling system, called eVA, is used by buyers at state agencies as well as higher education and many smaller local governments and state-affiliated groups. It’s also used by vendors eager to snare a portion of the $4 to $5 billion-plus that Virginia spent online last fiscal year.

Through a Web-based business intelligence portal that is a key part of the system, buyers and sellers alike have secure access to a range of reports that draw on the state’s back-end Oracle data warehouse. The cutting-edge system, which is completely hosted by an outside firm, allows state agencies to evaluate their buying behaviors and patterns in sophisticated ways to meet regulations and save the state money.

On the buyer side, the eVA system is used by some 170 state agencies and institutions and 12,000 users, ranging from the Commonwealth’s largest agencies to colleges and universities to small municipal groups (such as local police departments).

On the seller side, more than 34,000 vendors are registered and can choose to receive e-mail or fax notification for bid and proposal opportunities. They can publish electronic catalogs, submit electronic bids and proposals, and access historical purchasing data.

“Ninety-plus percent of state purchasing is done through this system,” says Bob Sievert, director of the eProcurement Bureau in Virginia’s Department of General Services.

Cooperative procurement is one huge area for potential savings through an e-procurement system. Although conversion to new cooperative buying has been gradual so far, the potential for agencies to save money is high. Using the state-wide system, state agencies, small local governments, colleges, and universities—even Virginia’s volunteer fire departments— can drill down into the warehouse to see what others are buying, then join a purchase to save money. Users “can cross organizational boundaries and say, ‘Who else is buying desks? Who else has bought desks historically? Maybe we can partner, do some volume purchases together, and lower our costs,’” Sievert says.

Savings are difficult to quantify for such a large and complex system, but by Sievert’s conservative estimate, Virginia has been able to demonstrate savings of 5 to 10 percent overall on individual competitive procurements using the system. “We’ve been very satisfied with the return on investment,” he says.

The BI Component

The BI portal, from Mountain View, CA–based Viador Inc., provides secure access to published reports used for operational management and budgeting by both buyers and sellers. All data for each agency is captured in the Oracle data warehouse. A variety of reports are available through the BI portal both to buyers within state agencies and to organizations and vendors who want to do business with the state.

The system draws from multiple data sources, with the data warehouse as the primary source. For security reasons, only data residing in the warehouse is included in any reports (so the system doesn’t draw on potentially unsecured data). If data needed for a report isn’t in the warehouse—data from a state finance system, for example—an automated job imports a copy of the data into the warehouse first.

Vendors primarily use eVA to evaluate who competing buyers are and what prices are being paid. Before the eVA system was in place, there was no single repository for that data and no way to look across the entire market. Often, a vendor’s best approach was to submit a Freedom of Information Act request to each agency for its purchasing history, an awkward and time-consuming approach.

Now the data is readily available from the eVA home page. Vendors “don’t even have to log in to get those reports,” Sievert says. “They can get as creative as they want to be ... down to the purchase-order line-item level.”

Putting BI in Buyers’ Hands

The state’s buyers, on the other hand, can now get close, detailed looks into just how Virginia’s dollars are spent. Before the system was in place, Sievert estimates that just 30 or 40 state agencies were analyzing their spending patterns in any meaningful way. Some used reporting functions in their ERP systems, in-house tools, Microsoft Access or Excel, commercial report writers (such as Crystal Reports), or resorted to manual tracking. Many agencies didn’t even try.

Now, every agency has “just about every kind of data you can imagine,” Sievert boasts. Because the eVA system collects procurement data across the entire state, it’s a far more comprehensive data source than anything an individual agency had in place.

As an example, Sievert cites an extensive state program to increase spending with small, women-owned and minority-owned businesses. Through the BI reporting capabilities of eVA, the state can assess how well it’s meeting its own mandates to do more work with those businesses. Buyers at state agencies are able to analyze spending behavior at each level of a state agency.

Such reports can help assess the availability of vendors in a particular market, helping the state expand beyond its usual suppliers and reach out to disadvantaged vendors. The reports, Sievert says, help address issues such as, “What do we buy [heavily] that has little availability from disadvantaged businesses? Let’s try to cultivate and grow that particular vendor community.”

An even more powerful tool in the eVA system is the ability of state agencies not only to determine what has been spent and where but also to examine patterns before a transaction takes place. For example, reports can delve into an e-procurement process before bids are placed. The system can examine businesses designated as disadvantaged, for example, and see at what point in previous bidding processes a particular vendor dropped out—of whether they participated at all. “You can have a whole different discussion with them,” Sievert notes, “if they were invited and didn’t choose to participate. What’s wrong? Is it too complicated? Is it too hard? What are the issues there? It really gives us insights into what we need to do.”

Such spending management and analysis are at the heart of Virginia’s use of the BI portal. “It’s not just the typical pie-chart presentation of, ‘How much did we spend last year?’” Sievert points out. “We’re really delving down into behavioral details. We want BI tools to help us assess our behavior, assess our problem areas ... and leverage our spending.”

The Challenge of BI in E-Procurement

The top cutting-edge component of Virginia’s system may not be the BI element itself at all, since nearly any vendor touting an e-procurement solution these days promotes its reporting and business intelligence capabilities. Rather, where Sievert sees Virginia as ahead of its time is in moving the state far enough along in the implementation to be able to actually leverage the BI functions that are available.

To use a BI tool such as the Viador portal properly, he maintains, a system needs substantial transaction data coming in. Based on his experience in the public sector, maturing to that point can be challenging. “You can get so caught up in struggling with implementation issues and getting transaction data to report,” Sievert suggests, “that you never make it to the BI side of the system … You can have a BI tool, but without data, it’s no good to you.”

That points up what may be the biggest challenge in implementing a complex e-procurement system with true BI functionality: getting users across the organization—in this case, across the entire state of Virginia—trained to fully understand and take advantage of the system’s vast capabilities.

That was a challenge for Virginia in rolling out the eVA system, Sievert admits candidly. He and his staff didn’t allow adequate time or resources for training users. The original plan was to follow a “train-the-trainer” model, but because the rollout moved extremely quickly, internal staff users simply could not learn the system quickly enough to teach subordinates. That meant that Sievert’s team spent much more time than anticipated training users.

What’s Ahead

Virginia has made the most progress in training users to take advantage of the e-procurement system’s reporting functions to address buying behavior issues—measuring buying patterns and improvements in meeting state regulations. A harder task, Sievert says, is moving to the next level: using the system for smart buying and cooperative procurement. “That’s a slower trend,” he admits. Most state agencies and organizations have been using the e-procurement system for at least three years. Even so, Sievert acknowledges, many are just beginning to use it to evaluate buying decisions in light of cost savings.

As with virtually any BI rollout, public or private, training is an ongoing challenge. “Overcoming that problem is a recurring issue,” Sievert observes. “We have to do a lot of marketing to make people aware, to get them to take advantage of the information that’s available.” The Viador BI portal itself is relatively straightforward and easy to use; training tends to focus on helping users understand what’s available and how to take advantage of it.

In format, the BI portal incorporates tab-delimited reports and follows a familiar Excel-like format to help users feel comfortable. Still, there’s a definite learning curve as users get a sense of how to leverage information and use reports to help them with their jobs, Sievert says. “They’re not used to asking those questions; they haven’t had these tools before.” As users grow and learn, Sievert expects more agencies will move to the next level, using the system to assess buying patterns and to consolidate purchasing and—in the end—make smarter buying decisions.