Transcript of a BriefingsDirect podcast on how Ohio State University Medical Center has streamlined their procurement process with cloud-based tools from Ariba.

1. Medical Center Realizes Savings and Productivity
Enhancements with On-Demand Cloud Procurement System
Transcript of a BriefingsDirect podcast on how Ohio State University Medical Center has
streamlined their procurement process with cloud-based tools from Ariba.
Listen to the podcast. Find it on iTunes/iPod. Sponsor: Ariba
Dana Gardner: Hi. This is Dana Gardner, Principal Analyst at Interarbor Solutions, and you’re
listening to BriefingsDirect.
Today, we present a sponsored podcast discussion on how businesses are
using cloud commerce and automated procurement to dramatically improve
how they source and manage the buying process. [Ariba is a sponsor of
BriefingsDirect podcasts.]
In doing so, we'll see how they improve cash management and gain an
analytical edge to constantly improving these processes. We will examine how the Ohio State
University Medical Center has moved its procurement activities to the cloud and adopted
strategic sourcing, dramatically increasing efficiency across the purchases managed. We'll learn
more about how a large medical enterprise is conducting its business better through collaborative
cloud commerce.
Please join me now in welcoming our guest. We're here with Karen Sherrill. She is Senior
Commodity Manager at the Ohio State University Medical Center in Columbus. Welcome to the
show, Karen.
Karen Sherrill: Why, thank you.
Gardner: What was wrong before? What did you need to change in how you sourced and
procured that led you to adopt more automation and more of these cloud-based services?
Sherrill: The Medical Center is a government agency. So as you can imagine, it’s tied down with
a lot of bureaucracy and paper. But as we moved into the year 2010, we were
receiving a lot of pressure to do things faster and more efficiently. The only way
to do that was some type of technology to allow our current staffing levels to
support the needed growth to be able to support our customers faster.
We were processing about 422 bids a year, and that equated to about the same
number of contracts. We had only 26 buyers who were able to support the
business that was projected to grow significantly with our medical center
expansion and the growth of our ambulatory site.

2. Some of the limitations that we were running up against was that our resources were spending a
lot of time providing technical support to the old legacy system. In addition, the legacy system
was supporting static documents. So we were posting PDFs, and suppliers were mailing in bids,
which was not an efficient way to analyze them on the back-end.
We were manually tracking supplier contract terms, conditions, and modifications, and that was
taking a significant amount of time in order to execute the final agreement.
We had no repository for contracts. So when people were seeking agreements, we were looking
on shared drives and peoples’ desks and were having to go to external storage. Contracts were
expiring. We were not aware of them and not renewing them in a timely fashion.
No framework
In addition, we had counterparts with the university and we weren't able to collaborate with
them and have visibility into what bids they were doing and what bids
we were doing. So there was no framework to support that type of
collaboration that was essential for us to be successful going
forward.
Those were some of the limitations and concerns that we were trying to address and we therefore
implemented technology in order to help us meet or relieve some of these concerns.
Gardner: When you decided that you were no longer able to scale this effectively and that your
existing processes were breaking down under complexity and load, how did you go about
seeking a solution? What were the requirements that you had in mind when you were seeking to
improve on this situation?
Sherrill: One of the requirements was that it had to be an automated technology and it had to be
easy to use. The provider of the technology would need to provide the technical support,
primarily not for the buyers, but for the suppliers, who would be interacting with the system and
would need training and guidance to navigate the system in order to submit an effective bid
result.
Gardner: Tell me a bit about the Ohio State University Medical Center. For those who aren't
familiar, let us know the breadth and depth of the organization there.
Sherrill: The Ohio State University Medical Center is located in Columbus, Ohio. We consist of
five hospitals. The main hospitals are the James Cancer Hospital, the Ohio State University
Hospital, the main campus, and then we have Ohio State University Medical Center Hospital
East.
We have about 58,000 inpatient admissions and about one million outpatient admissions, and we
do about 15,000 inpatient surgeries, about 19,000 outpatient surgeries, and about a 120,137 visits
to our emergency department.

3. We consists of about 450 beds, and that does not include our one million square foot expansion
construction project that we currently have underway, and is expected to be completed in fiscal
year 2014.
Gardner: So clearly it's a very big and busy place. Are you managing all the procurement for
medical supplies and office supplies? What's the extent of the purchasing and buying that you're
involved with?
Divided into two sections
Sherrill: We're divided into two sections. I head up the indirect products and services, which
means that anything that's non-clinical or not related to a patient's care. So that would be
marketing, advertising, linen, landscaping, anything that's not directly related with patient care.
I have a counterpart who handles all the clinical types of purchases, which would be
mammography equipment, needles, drug-eluting stents, all the medical type related supplies and
services.
Gardner: So there you were just a few years ago, looking at this problem, knowing where you
wanted to go, knowing that you needed to automate and outsource a significant portion of this,
and with a very big organization that doesn't just stop in order for you to bring in a new system.
You need to keep the plane flying while you change the engine, so to speak.
So, Karen, tell us a little bit about how this unfolded. How did the journey begin, and where have
you come in just a fairly short amount of time?
Sherrill: Initially they did an RFP for the e-sourcing technology. Ariba was selected. That was
done prior to my coming on board, but when I came on board they said, "This is the technology
we have selected and you need to implement this."
As a result, being a new person in the organization, I didn't really know how the organization
operated, because I came from the private sector. This was a public sector entity. I was a new
person, and no one knew who I was.
The first thing for me was to build relationships internally, and I did that by just taking the time
to stop, listen to the way they currently did business, and why they did it that way. Sometimes
they may be doing things for a good reason or maybe there was a legal reason. There were other
things they were doing because they did it for 50 years, and maybe we didn't need do it that way
any longer. So that was the first step.
The second step was that the leadership heads agreed to lay out a significant amount of
investment in this particular technology, and my only assignment was to implement it. So we
created this analogy that the locomotive is out of the gate. The financial investment had been

4. made. Then you have Karen Sherrill, who is trying to prove something, and my only assignment
is to get this implemented.
The rule was that you have three choices: you can get on the locomotive and enjoy the ride, you
can step aside and let the train pass you by, or you can try to get in front of the train and stop the
progress.
That was the analogy or the vision that we put in place, and they could decide where they wanted
to fall. We had individuals who chose three different areas.
Enjoy the ride
Most of them decided to get on the train and enjoy the ride, because they were really itching for
change and becoming more efficient. Others were nonbelievers, saying that this is never going to
stick, so I am going to let the train pass me by. And there were a few who were afraid of
technology changing, afraid of the processes changing, afraid of the shift in power as a result of
the processes changing, and they feared visibility. So they tried to stop the train.
Because we had leadership support, whenever we ran across those individuals, we could run it up
the chain. We had an endearing term that they would then get the smack down or be smacked
back in line so the train can continue on.
We had to do that several times, but in the end we knew what the destination was and the
locomotive was going to get there. We were not going to be one of those organizations that
bought the technology, and when the subscription expired, we had not had one bid go through the
tool.
One of my personal objectives was that a year was not going to go by without one bid going
through the tool. One year sounds like a long time, but they didn’t have any processes
documented. So we had to step back a few months to document the processes in order to
effectively communicate how we wanted this technology to be configured.
But it was not going to take more than a year to get one bid through the tool. Then, when we had
the one success, the goal was to build upon that success and continue to get more and more
momentum. That’s how we were able to drive this locomotive to conclusion very quickly.
Gardner: It's so important when you're dealing with technology shifts not to underestimate the
importance of those people issues and to provide the time for those transitions to take place. So
that’s clearly a big deal.
Was there something about the way that the service delivery, the software as a service (SaaS), or
cloud delivery helped in that regard? Did people feel like they were getting support? How would
you characterize the way that a cloud delivery transition may have affected this people, or
behavioral, aspect of things?

5. Sherrill: One of the key reasons we selected the cloud on-demand version versus something
hosted behind our firewall, or even deciding to integrate it with our systems behind our firewall,
is that you have to get IT support internally, get their approval, and that would have delayed the
implementation of this significantly.
We consciously made the decision not to integrate. There was really no need to do it at this point.
And they wanted to see if we would use the technology. Why invest in integrating something
that’s never going to be adopted?
So one of the benefits of using the on-demand solution in the cloud is that you don’t have to
build that interface behind a firewall and you do not have to use internal resources to implement
or execute the system. So that was one benefit to using the cloud solution.
Assisting suppliers
One of the problems we were having was that on the old system buyers were providing
suppliers’ technical support, such as suppliers can't remember their email, they got the wrong
category, they didn’t get the bid, and the buyers were constantly having to interface with
suppliers.
When you go to a technology approach that’s more advanced, they're going to need even more
assistance on how to navigate the sites or get their passwords reset. With the on-demand
technology we are able to utilize the Ariba help desk. Most of our tickets are supplier based, and
within 12 months of implementing there were over 700 tickets issued to the help desk, which
were transparent to me and all the buyers.
That's a benefit that is definitely required when you go to a more advanced technology for
processing bids. The suppliers are going to be needing more support, but you can't have your
resources that are supposed to be focusing on strategic sourcing spending all their time trying to
help suppliers to submit a response to a bid.
Gardner: I'd like to hear more about the efficiencies that you've been able to develop with this
system and approach, but let's look at the higher-level benefits around strategic sourcing.
Is there something about using the network, Ariba’s Community, their cloud, their Discovery
process and services that allowed you to increase the amount of folks that would be interested in
doing business with you. Were you able to find additional people when you were seeking them,
sort of a matching process I suppose? Was there really a radical or a substantial difference in how
you sourced, regardless of how you went about sourcing?
Sherrill: There was an additional benefit from using Ariba Discovery in our legacy system.
There were only about 5,000 suppliers. As a public entity we're required to do public
notifications of our bid opportunities. With only 5,000 suppliers within our legacy base, the
competition could be somewhat limited, because it's only those suppliers who knew about our
site and had come there to register to receive our bid notification.

6. When we transitioned to Discovery, there were about 350,000 suppliers on Discovery. It's grown
to over a half-million at this point. So we've substantially increased the number of suppliers that
are aware of our bid opportunities.
When you increase the number of suppliers aware of your bid opportunities, the number of
suppliers that participate grows or increases. When you have more suppliers participating, you
have increased competition, which then lowers pricing. And we found that to be the case on two
high profile projects.
One project was related to linen. There was a supplier that we were aware of but we couldn’t find
their contact information. We put the public bid notification on Discovery, and the supplier
popped up. They participated in our bid.
They didn’t win, but they were strong competition, and the incumbent felt the need to reduce
their pricing by about 16 percent, which resulted in a half-million dollar savings in year one and
year two of the agreement. So if we didn’t have that strong competition, that saving probably
would not have been generated.
Driving down prices
The dynamics that were working there was that you had the incumbent, who if they lost the
business, would have a lot of explaining to do, working against the dynamic of a new company
who was being told, "Do whatever you have to do to get the business." That dynamic drove the
pricing down. So that was one benefit.
On several of our categories, we're just getting a lot more suppliers participating, finding
suppliers that can source things that the buyers may not be a subject matter expert in. Because
we're joined with the university, they're utilizing the system too, and sometimes they're being
asked to source things like hay or dental strips. They're not a subject matter expert in that. Where
are they going to find suppliers?
By just putting out a bid notification on Discovery, it makes the buyers who are more of a
generalist have the tools necessary to find suppliers that can compete on categories that they're
not subject matter experts in, in order to generate the competition to reduce price and get
additional value from the supplier base.
Gardner: You mentioned earlier that one of the requirements you had was to automate and
create more of a solid data repository, perhaps a system of record, for these sorts of activities. In
going to Ariba, have you been able to achieve that, and what has that done that for you? Is there
an analytics benefit and an auditing or tracking benefit? How has being able to satisfy that
requirement benefited you as a business?
Sherrill: It's allowed us to standardize on the Seven-Step Strategic Sourcing Process, and within
that process there are certain documents that have to be completed. We get audited on that

7. documentation being completed. It's basically around, did we follow the public bidding
guidelines? Did we do a public bid? Was the lowest and most responsive bidder selected? And
what was the documentation, the score sheet, that support that contract award?
Now, when an auditor comes in and they select bids, we can run a report of all the bids that were
run during a particular period of time. They can just select the bids that they want, and the buyers
can just do a search and pull the documents that were requested.
Before, they had to go to some file cabinet and find the bid number. What if it was misfiled? It
allows us to obtain audited documents much more quickly and it also standardized on the process
to make sure the documents are completed in order to close the project out. So from a visibility
standpoint, that has benefited us.
From the reporting aspect, we also can see how many bids are being run by what people and how
many contracts are being executed, so we can get visibility into workload. Someone is doing x
number of bids, but their work is not very contract related, versus someone is not doing very
many bids, but they are doing a lot of contracts, versus someone who is not doing any bids or
any contracts -- and that’s kind of an issue. So we can run a report and keep track of productivity,
where we may have to shift projects or resources in order to better support our customers. And
we can do that by just running a quick report.
Savings is another big initiative. Everybody wants to know, how much savings you generated
over what period of time. We used to have an Excel spreadsheet where people were loading in
their projects. A high-level executive would say, "I want to know what the savings were," and
there would be this big initiative about going to the spreadsheet to update your savings. Of
course only one person could go into the particular spreadsheet at a time, and the accuracy of it
was always questionable.
People feel more comfortable
Now we have the technology where people load up their projects and load up their savings. We
can run a monthly report that is scheduled. People are required to review their savings numbers
on a monthly basis and make any tweaks or adjustments. When we get those requests for savings
number, the accuracy of it is a lot higher and people feel more comfortable with it and people can
update their savings at the same time.
So if we have to do it on a quick term basis, like in two or three hours, you can say, "Go and
update your projects." The source analysts can just pull down that report, and we've got our
numbers. That is a beautiful thing as far as visibility into savings, tracking the savings, and
building more confidence in the accuracy of the numbers we report.
Gardner: How about the productivity of your buyer workforce there? Obviously, you're doing
more things, but are you doing it with the same staff? How are they feeling about the workload?
What's the sense of what you can do with your resources there?

8. Sherrill: Our resources, since we went live, have only increased by one, but we got additional
work to go with that. That was medical center expansion project. So the workload has increased
and we have had the same number of people.
Before we implemented Ariba, the construction category had a lot of bids, and that particular
buyer was getting a lot of complaints that he wasn't turning the bids around faster, or as fast as
the end user would like, and the analysis was taking too long. They wanted to see the bid results.
They wanted to see it analyzed quickly, and they were escalating these complaints.
We implemented Ariba. So now he's able to execute his bids faster. Once he loaded one bid up, if
another one was similar, he could copy and just tweak, which increased the efficiency on his end.
And because the suppliers were inputting their responses online, it was easier for him to export
and do the analysis much quicker, but that particular user base also embraced the technology.
We've got them to the point that when the bids come in, they can go in and pull them down
themselves and do the analysis and decide who they want to shortlist.
That particular group is much happier. We're not getting any complaints, and the projects are
moving off of his plate much faster. In fact, we used to have a lot of projects that were past due,
past due, past due. The last report that we did there was something that was just due out in the
future. So we're starting to get ahead of our strategic sourcing pipeline.
Gardner: That sounds very impressive. What would you have in terms of suggestions or
recommendations for folks who are examining moving to a cloud-based procurement and
strategic sourcing service or activity? Do you have any 20/20 hindsight, something that you
could offer in terms of what you learned along the way?
Sherrill: The first thing I would recommend, and most companies may have it, is that you need
to have your processes documented. When you buy one of these subscriptions, the clock starts
ticking. If you have to stop and document your processes, then you're not using the tool, but you
are paying for it.
Document your processes
Have your processes documented, so as soon as your subscription starts, you can have the tool
configured and you don't have to use eight months, like we had to do, to figure out how we
wanted the tool to be configured.
They also need to keep in mind that the technology is just a tool and it requires people,
processes, and the technology to be successful. I like to say that you have to have brains behind
the tool or it's not going to work for you.
Some of the people here had the skill set to embrace the tool and the utilization of the tool, but
we have other people who don't have the correct skill set in order to effectively utilize the tool.

9. That’s kind of a constraint if you don't have the authority to transform your organization and
right size it with the people that have the correct skill sets.
Another important implementation is that you've got to have support from the top, who will back
you up when someone is trying to put up a wall or be an obstacle to the implementation.
The way you get the leadership support is having an individual who has built credibility as far as
the transformation actually working. The person leading the process needs to have the right skill
set, and from what we found, that was a person who had excellent project management skills.
Also key is that they need to be able to do strategic sourcing. You have more credibility, if you're
actually using the tool and actually using the processes that you are implementing.
Number three, the person has to have excellent communication and interpersonal skills to deal
with those people who don't want to go along with the process, as well as team building skills. If
that particular leader has all those skills, it allows the opportunity for them to do sourcing events
and lead by example.
One of the things that made Ohio State University’s implementation successful is that my
projects were the ones that went through the tool first. I was able to identify any problems and
reconcile them immediately, so that the buyers that were putting in their bids behind mine would
never run across those problems.
If there were problems that I encountered that I wasn't able to fix, and a buyer identified it, I
could say, "I'm aware of that problem, and here is your workaround," so that I didn't get any
"aha" or "got you" moment that they were trying to come up with to stop the implementation.
The second component to that is that you need to have early adopters. These were people who
wanted to change, who wanted to have their sourcing projects to be the first ones to go to the
tool. That was valuable in that, while I as a project leader will say that this is great, I'm going to
say it's great, because I am responsible for rolling it out. But I had early adopters who also agree,
who are fans, who are vocal about it, and also had successes. That was very instrumental to
rolling the project out successfully.
Adding credibility
Then once you've got several of the people who have the credibility of utilizing the tool, who
are actually sourcing professionals that are using the tool, it adds credibility, and then everyone
else has no choice but to follow along.
The other important thing is that you have to shut down the old way of processing bids. We had a
go-live date and we had those individuals that decided to use the old way all the way up until the
last date, but when we came to the go-live date, there were no more bids going out the old way.
That led to us having 100 percent compliance, since we went live May of 2010. Those would be
my recommendations.

10. Gardner: That’s very good insight. I appreciate that. You've been listening to a sponsored
podcast discussion on how businesses are using cloud commerce and automated procurement to
dramatically improve how they source and manage the buying process.
I want to thank our guest. We've been here with Karen Sherrill, Senior Commodity Manager, The
Ohio State University Medical Center in Columbus. Thanks so much, Karen. That was very
insightful. I appreciate it.
Sherrill: Thank you for having me.
Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. As always, thanks for
listening and come back next time.
Listen to the podcast. Find it on iTunes/iPod. Sponsor: Ariba
Transcript of a BriefingsDirect podcast on how Ohio State University Medical Center has
streamlined their procurement process with cloud-based tools from Ariba. Copyright Interarbor
Solutions, LLC, 2005-2011. All rights reserved.
You may also be interested in:
• Ariba Live Discussion: How Cloud Alters Landscape for eCommerce, Procurement and
Supply Chain Management
• Analysts Define Business Value and Imperatives for Cloud-Bases B2B eCommerce
• Cloud-Based Commerce Network Helps Florida Manufacturer MarkMaster Reach New
Markets, Streamline Transactions
• BriefingsDirect Analysts Discuss Business Commerce Clouds: Wave of the Future or Old
Wine in a New Bottle