Assuming that you were responsible for designing and implementing the
new procurement system at PepsiCo, what problems, and opportunities
would you have considered in conducting your initial systems
investigation?
1. What was PepsiCo?s main business objective for this project?  
2. What factors were present to motivate the company to implement this project? 
3. Who were the main participants PepsiCo had to involve in developing
the Purchase to Pay system?
4. Which systems development life cycle approach would have been best used for 
PepsiCo?s project? Explain your answer.  





Case One
PepsiCo Implements New Procurement System to Minimize Costs
PepsiCo is a world leader in manufacturing convenience foods and
beverages, with annual revenues of about $25 billion and more than
142,000 employees. The company consists of the snack businesses of
Frito-Lay North America and Frito-Lay International; the beverage
businesses of Pepsi-Cola North
America, Gatorade/Tropicana North America, and PepsiCo Beverages
International; and Quaker Foods North America, manufacturer and
marketer of ready-to-eat cereals and other food products. PepsiCo
brands are available in nearly 200 countries and territories. The
volume of supplies and ingredients purchased by PepsiCo?s Frito-Lay
division alone is huge. The company purchases raw materials from
hundreds of vendors, which deal in everything from ingredients for
potato chips to office products. To manage procurement processes
across its divisions, PepsiCo implemented a system it named Purchase
to Pay. Purchase to Pay tracks a variety of processes from product
purchases to procurement management to vendor selection and payment.
In the company?s ongoing mission to reduce costs, PepsiCo turned to
the Purchase to Pay system to see whether it could assist staff in
negotiating the best deal with suppliers. The investigation uncovered
a considerable amount of waste in the procurement process. PepsiCo was
not getting good deals on supply purchases and sometimes was being
overcharged.  PepsiCo needed to improve the system to control its
spending. The company?s IS staff set out to develop a standardized
system to allow them to better track and analyze
purchases. PepsiCo wanted to negotiate volume discounts with vendors
and control individual, or ?maverick,? purchases that were above
negotiated prices.
In exploring existing procurement solutions from vendors, PepsiCo
decided on a system from Business Objects Corporation. That vendor?s
system would store procurement data in a database and provide business
intelligence information
through a Web-based user interface over the corporate intranet. ?Ease
of use, scalability, and support are some of the reasons why we chose
the Business Objects solutions to be an integral part of PepsiCo?s
Business Intelligence strategy,? said Tien Nguyen, vice president of
application services at
PepsiCo Business Solutions Group. ?The real value in Purchase to Pay
comes in the ability to analyze our spending patterns and identify
cost saving opportunities,? explains Yelak ?Business Objects is the
ideal solution for this, and we can replicate the benefits as we
extend it across our corporation.? Biru, Business Intelligence and
Integration team member.  One example of how Business Objects has
improved the Purchase to Pay system can be found in PepsiCo?s raw
materials payment system. PepsiCo typically pays vendors upon
receipt of goods. During any month, the company may receive multiple
deliveries from a vendor and will cut a check for each of those
deliveries. Using the  Business Object solution, PepsiCo can make one
monthly payment that provides vendors with an itemized statement
detailing each bill of lading, invoice
number, the amount of each check, and the grand total, all via an extranet.
PepsiCo has minimized its expenses by streamlining the Purchase to Pay
process. The company anticipates a savings of more than $10 million in
the system?s first year of operation and more than $43 million over
the next three years. Within the next few years, the majority of
business intelligence
reporting will be done using solutions from Business Objects. As users
learn the system and as PepsiCo develops more reports, users are
expected to experiment with ad hoc queries and dig deeper into the
data. PepsiCo?s new and improved Purchase to Pay system is a perfect
example of the benefits of continuous improvement through the systems
development process. By implementing a new system that is flexible and
scalable, PepsiCo has simplified
and improved its procurement processes both now and for the future as
it changes to meet new challenges.