Case Study: A Purchasing Card Transformation

Last autumn, public agencies in the US state of Virginia commenced the second phase of a comprehensive statewide conversion to a new purchasing and travel card platform. The second phase includes the addition of several cities and districts to the platform that initially did not have card programmes, and the implementation of add-on card features and controls that are expected to drive further efficiencies.

This second phase of the conversion process caps a year-long project by the state to bid out a new card program for 228 state agencies and 70 localities, reformat 27,000 existing cards and train 600 programme administrators, and get the new program up and running in four months – all part of a process which typically takes six to nine months.

Less than a year after identifying the need for a new card provider, and installing a new system in a whirlwind 100 days, the state has achieved efficiencies and is forecasting additional significant reductions in its existing paper payment processes.

A Wholesale Renovation

After a swift but thorough request for proposal (RFP) process, we chose Bank of America Merrill Lynch (BAML) as our new card provider as we felt that they could best implement an expansive government programme within our existing parameters. BAML was tasked with implementing and initiating the new programme within 100 days to meet the strict deadline required by a sudden service change with our existing vendor. We only had 100 days, as the prior vendor would not be able to support our platform after that. BAML had experience of working on such programmes with other government agencies, which was important given the timescale of the project.

The scope of the project was immense and complex. Most of the public agencies, universities, localities, sanitation districts and airports in Virginia, even those administrated by the same vendor, maintain a separate internal enterprise resource planning (ERP) system and have different card control settings and features. As a result of these factors, we required a platform that would identify and account for many different setups, technical data requirements, a variety of products, corporate programmes, configurations and card styles. While this was not an easy task, we realised that we needed to keep each division’s unique payment requirements in mind while also maintaining a centralised platform.

It was these disparities between each agency system that resulted in 90 unique card designs, which were grouped and delivered to more than 400 different addresses. Additional specifications drove separate configurations as each agency required their own definition of payment cycles and methods, transaction controls and data integration formats back to their respective financial systems that had been developed in-house. In the end, over 40 custom integrations were designed to meet the needs of their respective financial systems.

The 100-day timeframe was made even tighter by three holidays and a lengthy winter break at state universities. These obstacles limited the number of working days available to us to work closely with each state agency. Also, until the new programme was fully implemented, we had to balance the workload of our existing payments staff, who had to split their working time between the integration of the new system and the maintenance and oversight of the old payments system.

Despite the short amount of time, the entire implementation process, overseen by BAML, went smoothly, thanks to our coordination efforts with our vendor and their business partners. For example, the card plastic vendor in Colorado turned around plastics in a tenth of its usual time and worked feverishly to ensure that all 27,000 cards were activated and in our hands by the deadline date. BAML’s product delivery team also underwrote and obtained credit approval for us in only seven business days – a remarkable feat in any credit environment, let alone in the challenging economy with which we were confronted during the process.

Our implementation also required a strong focus on training employees. Our employees learned how to employ the new platform by embarking on a multi-faceted training programme including webcasts and a 1300-mile statewide road show. At the end of this first phase, we had successfully trained approximately 600 programme administrators.

Early Successes

Not only were the new cards well received, but the new platform, Works, has also proven to be a vast upgrade. Before the project commenced, we outlined three objectives:

  1. Implementation by the end of February.
  2. Improved online capabilities.
  3. Continued efficiencies.

In a short period of time, many of our objectives have already been addressed:

  • The new platform has already automated and integrated our existing payment authorisation and reconciliation processes with our charge card payments.
  • We can now personally manage every aspect of our card programme, giving us real-time administrative and web-based controls that are available through a web-based administrative application.
  • The program’s 24/7-maintenance functionality allows us to seek help online for any unexpected issues that might arise including the need to change a credit limit. With our previous card provider, these issues could only be addressed by phone – often a laborious process.
  • Currently, most of the information we need on a daily basis is available online in one location. As a result, we run customised reports in real-time, without the help of a third party, whenever we need the data. This provides us with an accurate snapshot of our payables information at any given time and helps us to more effectively manage our payments.
  • We also used the implementation as an opportunity to upgrade our audit trail.

Next Steps

To make the transition as smooth as possible, we decided to stagger the programme implementation to give our staff more time to train and learn the new system. The second phase, as mentioned earlier, is almost complete and has already introduced new controls, features and integration pieces that many of our agencies did not previously possess. In addition there were some cities and districts that did not originally have a card programme and will now be incorporated into the system.

With many of our efficiency goals being realised, it is rather unbelievable how quickly we were able to transform our purchasing card infrastructure. With help from our bank and our vendors, we were able to accomplish the impossible and implement a complex purchasing and travel card programme in less than 100 days. We have seen enhanced data and audit trail efficiencies and an online system that is creating daily efficiencies. As the second phase nears completion, we anticipate that the new platform will help us significantly reduce our existing paper payment processes, thereby creating further critical efficiencies throughout the Commonwealth of Virginia.

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