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Given all this, it's not surprising that Duckett and his team have been afforded the opportunity to experiment with technology to maintain a very precious asset: the thousands of miles of power lines that Entergy owns. In fact, this company was an early adopter of procurement software for services, implementing a system for vegetation management and contingent workforce management years ago.
Although Duckett and his team were thrilled with the improvements their procurement solution created, they gradually grew dissatisfied with the tool. "The solutions provider enforced a rigid, pay-as-you-go system with pricing based on the percentage of the spend it handled," said Duckett. Over time, that approach made the cost of solution less and less competitive with alternatives in the marketplace. More damaging, however, was solution provider's resistance to make improvements requested by Entergy's team. "Most of our enhancement requests went unfulfilled," complained Duckett.
The solution worked well enough, however, to pique Entergy's interest in rolling out software for complex service procurement to other business units and in other spend categories. Armed with a list of desired features and functionality, Duckett and his team went shopping last year for new software. They included their ERP solutions provider on their short list of prospects, even though the supplier did not offer an out-of-the box solution that met their requirements.
Entergy Selects IQNavigator
Eventually Duckett and his team settled on IQNavigator's project management solution as its second-generation services procurement technology platform. The application was very competitively priced, saving Entergy money. It also offered most of the critical project procurement features and ease-of-use the energy services company wanted. Best of all, according to Duckett, IQNavigator could fully support contingent workforce management, another area where Entergy believed it could improve performance by replacing an incumbent supplier.
IQNavigator's solution is a hosted, on-demand solution, which meant a quick implementation for Entergy with no need to install servers, and no requirement to buy a database license. IQNavigator's frequent solution upgrades (approximately once every four months) and a willingness to regularly incorporate new features at customers' requests addressed Entergy's desire for continuous process improvement. Duckett and his team were happy: just over a year ago, they implemented the IQNavigator tool.
Here's how the vegetation management portion of the implementation works. Entergy loads key data from its contractor agreements, including supplier's pricing, into IQNavigator. Contractors record work they complete in the Internet-accessible system. IQNavigator then creates an invoice from this data based on the contract rates, and it routes the invoice for approval to the appropriate, pre-specified people. Approved invoices are then automatically downloaded into Entergy's PeopleSoft backend for payment.
The IQNavigator Story
IQNavigator's flagship product was its contingent workforce application, which it launched back in 1999. The solution took off in the 2002-2003 timeframe, when it caught the eye of several large, innovative companies, including Shell Oil, Alcatel, and Northrop Grumman. IQNavigator built on this success with by expanding into project procurement and then complex services procurement just over a year ago. In 2004, it launched its initiative to serve the international market, adding support for 5 additional languages.
What motivated IQNavigator to create applications specifically for services procurement in the first place? There's certainly been no shortage of generic eProcurement systems available, many of which have some functionality aimed at supporting a variety of spend categories.
"The functionality required to support services is completely different from what's needed to buy goods," explains John F. Martin, senior vice president of strategy and technology for the company. "When you're buying goods, you know in advance how much the bill will be. The functionality of the eProcurement system, therefore, focuses typically on catalog content, replenishment, and invoice matching."
With services, however, the requisitioner rarely knows how much the final bill will amount to. To illustrate this point, Martin offered the example of purchasing web hosting services. "Each monthly bill is unique, calculated by multiplying the volume of the data transfers by the various rates, and then adding in penalties levied or bonuses earned for performance against the service level agreement," said Martin. Likewise, Entergy's vegetation management bills are based on such variable inputs as the number and timing of hours worked.
Pricing for services are complicated by another factor: invoices are calculated differently from category to category. Some types require payment upon completion of certain milestones; some are based on hours worked and various pay rates (regular, overtime, holiday), while others combine charges for materials and labor. IQNavigator sole mission since its founding has been to optimize process management just for service-related processes.
IQNavigator's applications can do lots of other cool things besides the basics of creating and routing invoices. They can generate activity reports of services deliverables, such as a summary of the number and length of calls a call center handles on a particular customer's behalf. They can automatically allocate charges across multiple G/L codes, so for example, two departments can automatically share the cost of a service. They provide sourcing tools so customers can bid out and even reverse auction their requirements online. They can feed precise, accurate data into enterprise spend management analysis tools. IQNavigator customers can also use the solution to monitor and compare rates for similar services across business units and locations. For example, the system can produce a report that compares what rates a company is paying for a DBA (database analyst) in Houston, Orlando, and Malaysia, so it can identify opportunities for cost savings.
In its next release, IQNavigator plans to roll out supplier performance management. It will support derived quantitative metrics based on data within the system, and it will enable qualitative evaluations through webform user surveys.
According to Martin, IQNavigator is doing extremely well. It has 40 customers, surpassing rival Elance; its revenues tripled from 2003 to 2004; and it expects to break even on a cash-flow basis this quarter. Martin attributes this success in large part to the scalability of IQNavigator's solution. "As an on-demand provider, we maintain a single version of our software," said Martin. "Companies that sell behind-the-firewall enterprise applications, on the other hand, must dedicate significant resources to maintaining multiple versions of their software for multiple operating systems."
Like any solutions provider, IQNavigator has room for improvement. “Their fast growth is straining their resources,” said Duckett. “They need to strengthen their business processes to ensure smoother implementations, he explained. But all in all, Entergy is very happy with its new solutions provider. And IQNavigator appears to have a very bright future, indeed.
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