E-procurement and other self-service components of an ERP system can help decentralize the procurement process for higher education institutions receiving grants. This allows principal investigators to focus on research rather than grant management. Setting up each grant as a unique project with its own budget allows expenditures to be tracked. A decentralized e-procurement system empowered principal investigators to make purchases according to research needs with automated budget checking and approval workflows. This streamlines the procurement process for higher education institutions handling grants.

1. E-Procurement: Decentralizing the
Process for Higher Education Institutions
To help principal investigators focus more on research and less
on grant and expense management, institutions need to employ a
tightly integrated, automated procurement process supported by
advanced enterprise management systems.
Executive Summary
Supply chain management (SCM) allows organi-
zations to automate and streamline sourcing and
procurement. In most industries, procurement
involves three processes: purchasing, receiving
and settlement. For institutions in higher
education, however, this function brings added
complexities:
• Highly decentralized structures require pro-
curement to take place at the department level.
• Professors and other staff members, including
principal investigators (PIs) dealing with
grants, all rely on procurement and sourcing
for utilizing public funds (from grants) for
a pre-defined purpose (such as conducting
research or performing clinical trials).
• Grants’ terms define the conditions of pro-
curement, as well as the total budget, for
making various types of purchases.
To address these challenges, electronic pro-
curement (e-procurement) can be coupled with
other self-service components of an institu-
tion’s enterprise resource planning (ERP) system
(e-settlement and e-supplier, for example) —
allowing PIs to carry out their research without
worrying about tracking their budgets and
managing the procurement process.
In this paper, we discuss the processes involved
in implementing a procure to pay (P2P) system,
and detail how institutions that receive grants
from various government and non-government
agencies can use this model to decentralize and
digitize procurement.
Higher-Education Grants at a Glance
Higher education institutions, such as univer-
sities, draw revenue from various sources.
In addition to student fees, they depend on
federal and state government assistance, as
well as private grants, for funding research by
professors and other staff members.
When it comes to grants, there are numerous
terms and conditions that govern them.
Depending on whether a grant is federally or
privately subsidized, different levels and types
of conditions/compliance may be imposed
to oversee how the funds (or budgets) are
expended. For example:
• Federal travelers are required by 49 U.S.C.
40118, commonly referred to as the “Fly
America Act,” to use U.S. air carriers for all
air travel and cargo transportation services
funded by the U.S. government
cognizant 20-20 insights | october 2016
• Cognizant 20-20 Insights

2. cognizant 20-20 insights 2
• The federal government may mandate that
only a specific percentage of its total budget
can be made available each year for education
services.
Grant funding is as much about expenditures
as it is about revenue, and the terms of grants
specify how expenses will be allocated and
accounted for. Thus, having a sound, thoughtful-
ly developed procurement policy and process for
supporting grant policies is imperative for higher
education.
Decentralizing the
Procurement Process
The reach of the Internet and advancements in
digital platforms and technologies have enabled
closer communication within business-to-busi-
ness (B2B) and business-to-consumer (B2C)
environments. As a result, procurement has
taken a whole new dimension.
In most modern ERP systems, the procurement
process focuses on improving employee pro-
ductivity, increasing collaboration, advancing
efficiencies and affording meaningful insights
to enhance decision making and streamline
processes through automated, integrated data
processing. Self-service components, such as
e-procurement, e-settlement and e-supplier,
allow employees and suppliers to collaborate
directly — improving supplier/customer relation-
ships and experiences, and decentralizing pro-
curement. Designated employees are given the
authority to “own” expense management and
control expenditures within their departments.
How Higher Education Benefits
For higher-education institutions, decentral-
ization offers a unique advantage for principal
investigators, who must manage their grants
budgets as an independent department. They
are also singularly responsible and accountable
to the granting agency.
Not surprisingly, PIs typically prefer to spend
more time on research and less on tedious pro-
curement processes. To balance these respon-
sibilities, they require an automated system for
creating requisitions, equipped with “built-in”
procurement components that streamline the
approval process and improve the visibility of
cost-chargeable expenses.
Using e-supplier and e-settlement modules as
part of the procurement function, buyers can
strengthen their supplier relationships, which
can result in a more efficient process, consistent-
ly competitive pricing and dynamic, discount-
based payment terms.
Tracking the Grant Process
Figure 1
Identify
Funds/Grants
Create
Requisition
Create
P.O.
Invoice from
Vendor
Post
Vouchers
Post
Payments
Accounting
Entry Lines
to GL
Accounting Based on
Grants & Funding
Create
Voucher
Matching
Approve
Voucher
Payment
through Pay
Cycle
Budget
Liquidation
Multi-Level
Approval
Multi-Level
Approval
Budget
Check
Budget
Check
Budget
Available?
Budget
Available?
Create Pre-
Encumbrance
Create
Encumbrance
Receive
Items
Budget Based on
Grants Tie Up with Fund &
Grants Project
Create Budget
Ledger
Updated
Budgets/GrantsCommitment
Control
Requisition
P.O.&
Receiving
SettlementsAccounting
YES
YES
NO
NO

3. cognizant 20-20 insights 3
Purchasing can also benefit from an automated
B2B platform that directly connects the ERP
system to the supplier — affording real-time
interaction, collaboration and data exchange
with buyers.
Establishing Business Processes
Self-service procurement offers a unique prop-
osition by establishing business processes for
grants-based higher-education institutions.
• E-procurement provides PIs with a complete
self-service platform and approval framework
for punch-out, catalog management, and
grants budget-checking.
• E-supplier and e-settlement functions afford
direct access to the supplier of an institution’s
ERP system. This allows suppliers to acknowl-
edge and/or request purchase-order changes,
send advance shipment notifications, raise
invoices, review amounts due and request
dynamic discounting.
These capabilities are apart from standard pro-
curement functions, such as acknowledging the
receipt of items and settling the amount due to
suppliers.
Following are areas that institutions need to
address when establishing a decentralized pro-
curement process.
Structure
• Treat each grant as a unique project.
>> Each grants project provides a separate
entity to track research-related progress
and activities. It also offers an administra-
tive and financial structure for the activities
performed under a grants agreement, and
establishes a grants/project budget against
which expenditures can be recorded.
>> View the grant amount as a budget item
against the department of the PI and the
grants project.
>> Establish budgets against the grants project
and multiple sub-categories identified by
expense accounts. These accounts can then
be used during the procurement process to
book actual expenses against the budgeted
amount.
Transactions
• Once the structure is established, a PI or
someone from their staff can proceed with
creating requisitions within the e-procure-
ment system.
• In a decentralized procurement setup, a PI is
empowered to make purchases according to
the research requirement (lab equipment, for
example). This eliminates the need for the PI
to approach the central procurement team for
every purchase request, which creates more
inefficiencies and more touch points within
the process.
• Decentralized e-procurement is only possible
with self-service modules, which not only
enhance the user experience, but also make
it possible for individuals, including novice
users, to purchase items from the comfort of
their offices.
• Based on an institution’s relationship with its
suppliers, a transparent punchout or cata-
logue-based requisition process can be set up.
• Once a requisition is entered, it should be
budget-checked to ensure that an adequate
grants budget exists against the sub-category
(account), department and grants project.
• A requisition can go through multiple rounds of
approval, based on any or all of the following:
>> Dollar limit.
>> Supervisor relationship (PI as project man-
ager has the final approval in this case).
>> Item type; for example, CapEx vs. OpEx pur-
chases.
>> Grants funded vs. non-funded (for non-
grants-based purchases).
>> Buyer review or approval.
An approved requisition can flow seamlessly
through purchasing, and generate a purchase
order that can automatically stream to
suppliers. The result is an automated,
optimized procurement setup that requires
minimum human intervention.
Self-service procurement offers
a unique value proposition by
establishing business processes
for grants-based higher-education
institutions.

4. Quick Take
Utilizing the functionality of e-procurement,
e-supplier and e-settlement components,
principal investigators can manage their
grants more effectively. Likewise, buyers and
suppliers can build stronger relationships.
These benefits can improve the procurement
process in a number of areas, all of which take
place in real time.
• PO acknowledgment
• Request for change orders
• Advanced shipment notifications
• Invoice settlement
• Dynamic discount
• Determine payments due
Procurement Process Improvements
4cognizant 20-20 insights
Implementation
Establishing a procurement process as part
of an ERP-based supply chain requires careful
planning and execution. Complexities arise when
institutions also receive grants for conducting
various types of research. In these cases, a grant
is two-pronged — involving both revenue and
expenditures.
• Revenue comes from funds received from a
grants agency.
• These funds cover expenses for salary, lab
equipment and research-related activities.
• Higher-education institutions require a
one-to-one mapping of grants-based revenue
and expenses, against which a grant can be
utilized.
Automated, Integrated Procurement
The following actions and questions are critical
to designing and implementing an automated,
decentralized procurement process:
• Discuss and identify key stakeholders from the
team of PIs who will take part in designing the
procurement system (these could be PIs with
the most authority or with the most grants).
• Understand the current process of awarding
grants and establishing budgets.
• Identify the current approval process for pro-
curement against a particular grant.
• Understand the inefficiencies in tracking
budgets vs. actuals, the available balance
at any given time, pain points around the
approval process, and current supplier/buyer
relationships.
• How decentralized is the current setup? Do PIs
need to approach buyers for every purchase?
What is the cycle time of procure-to-receive
and receive-to-pay processes?
• How are the payment terms set up?
• How efficient is the invoicing process? What is
the visibility to suppliers of their amount due?
The above will help establish design and imple-
mentation requirements and trigger critical
questions, such as:
• Will punch-out suppliers need to be estab-
lished?
• Will catalog management be required? How
will the item master be established?
• How many levels of approval are required per
the procurement policy?
• Will PIs have staff to set up as requesters,
and hence add one more level to the approval
process?
• How many PIs and PI staff will be requesters?
An e-procurement license is generally based
on the number of requesters in the supply
chain system.
• Can PIs be set up as individual departments?

5. • What is the process for distinguishing grants-
based and non-grants-based requisitions for
the same item and the same category?
• Does the grouping of purchases align with the
budgets provided by granting agencies?
• How will the PIs receive and process the items
they ordered in the system?
• Will the supplier organization make the
payment early to receive discounts?
By answering these questions, institutions can
create the foundation for a secure, automated
and cost-effective procurement process.
Looking Ahead
According to APQC, a member-based nonprofit
organization that studies process productivity
and quality, businesses that excel at managing
procurement processes spend considerably
less as a percentage of revenue and employ
fewer full-time equivalents to achieve the same
results.1
(Figure 2).
Apart from grants, higher-education institu-
tions count on student fees as a main source
of revenue. A decentralized, e-procurement
process can improve return on investment by
making more funds available for meaningful
research and providing more students with the
level of education they seek.
As more self-service models emerge for
decentralized setups, advancements in digital
platforms and technologies will expand the
reach of the Internet — enabling institutions and
suppliers large and small to dramatically improve
their business and financial performance.
cognizant 20-20 insights 5
The Benefits of P2P Automation
$0.93
$3.92
$6
$4
$2
0
Top Performers All Other Organizations
Top performers spend $2.99 less per $1,000 in revenue
on procurement activities than all other organizations.
Total cost to perform the procurement process group per $1,000 revenue
76%
reduction
Figure 2
Source: www.apqc.org
A decentralized e-procurement
process can improve return on
investment by making more funds
available for meaningful research and
providing more students with the
level of education they seek.

6. About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process services,
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Footnotes
1
https://www.apqc.org/blog/conquering-procurement-begins-cost-effectiveness
About the Author
Rohit Srivastava is an Associate Director within Cognizant’s Oracle Solutions Practice, with over 10
years of experience in PeopleSoft finance and supply chain implementation. Rohit also has extensive
experience in defining business processes across multiple industries, including higher education,
healthcare and retail. He provides process, domain and technology consulting, and has far-reaching
expertise in business process analysis, solution design and implementation in areas such as finance
and supply chain management. He holds an executive MBA from IIM Kolkata and is a Certified Project
Manager from PMI. He can be reached at Rohit.Srivastava@cognizant.com.
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