Schools Master Online Exchanges

FRAMINGHAM (07/06/2000) - Business is warming to the idea of using online buying exchanges to make purchases, and the same is true for schools, even the K-12 school systems not commonly on the cutting edge of network trends.

Public school systems, in particular, are actively seeking Web-based trading exchanges that bring together their traditional suppliers and introduce them to potential new ones. Several California school systems, for example, have begun purchasing from one of the exchanges, Epylon.com, and they give online buying high marks.

The Orange County Department of Education has made more than 50 separate online purchases for office and custodial supplies, software and textbooks in the two months since it started using Epylon.com, which is focused on the academic market.

Using Web browsers, authorized purchasing agents post requests for quotes to registered suppliers or a specific subset of them. The suppliers respond with electronic bids by a deadline, and the purchasing agent reviews those and selects a winning bid.

"We have found out about additional vendors we didn't know about before," says Nina Young, Orange County Department of Education director of purchasing, contracts and facilities.

Young says her department still uses telephone and fax to inform suppliers about upcoming contract opportunities but has let them know the county is taking bids online as well.

"It's easier, it's faster and it's saving us money," she says, noting the school system has a US$150 million annual budget, with almost 30 percent of it going to purchases.

Use of electronic purchasing is still new for the school system, but if it becomes commonplace, Young says she would like to see the education department's back-end financial systems - based on Bitech software - modified to automatically accept the online purchasing information. That way, it would be possible to avoid additional key-entry work.

School administrators say a handful of other exchanges, such as Simplexis. com and Kawana.com, cater to the academic market. Schools are also buying online directly from distributors such as J.L. Hammett and Grainger.com.

"For the past three years, we've been using the Web for more and more purchasing transactions," says David Louis, purchasing agent at the Modesto City schools. "There are now so many Internet portals out there. But we're very interested in finding ones that meet our needs, that are focused on the educational sector."

The Modesto City school system also recently began using Epylon.com, and Louis says he's impressed that purchasing agents can get bids back in about 20 minutes. The school system is evaluating several exchanges, including Purchasepro.com, the Ariba Network, Commerce One Marketplace and Demandstar.com, that don't focus solely on educational buying.

"One thing I don't want to lose sight of is that while technology can help us process procurement, people still remain the critical linchpin," says Louis.

That means that online suppliers shouldn't forget they still need to excel in service and problem resolution. "Ultimately, you still need people to fulfill an order."

The heated competition in online bidding suggests that exchanges are going to bring lower costs for schools, Louis says.

What are the rules?

Some school systems say they are interested in online purchasing but need guidance on the rules.

"I've been able to go in and get a lot of quotes, but I'm waiting for approval from the State Department of Education to do the actual purchase ordering," says Lorraine McKeown, purchasing clerk at the Lower Camden County Regional High School District in Atco, New Jersey.

Clearly on the educational buyers' short list, Epylon. com now has 1,500 registered suppliers presenting their wares to school purchasing agents.

The exchange is a free service to buyers, while suppliers have to ante up between 1 percent to 3 percent of online sales to Epylon.com as a broker fee, according to Kim McNair, senior marketing director.

The exchange is based on Art Technology Group's (ATG) Dynamo e-commerce software, running on Solaris, with the application written in Java and XML.

An Oracle database holds school contract information and supplier catalogs. The purpose is to give online buyers a customized view of items they are authorized to purchase under contractual pricing terms negotiated by the schools.

"Some suppliers give us their paper catalogs, and we'll convert it to XML at no cost," McNair says.

Epylon.com also employs the WebMethods application server to pull down catalog data directly from a supplier's Web site and present it at the ATG e-commerce server for viewing by the purchasing agent.

"This allows the buyer to have this catalog information customized and aggregated for them," McNair says.

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