Program Optimization Scope

1
Program Optimization Scope

• State of California has 4 billion in annual
  procurement spending involving over 5 million
  (est.) traditional, paper-based transactions
• State of California and local government entities
  spend 449.6 million on CAL-Card involving 1.8
  million transactions last year
• State agencies 156 million and only 630,000
  transactions (Total contribution declining year
  over year 25 decline since 2002)
• Local government - 293.6 million and 1.2
  million transactions
• Review of SCPRS data for FY03/04 identified 1.7
  billion with Visa enabled merchants

2
Program Optimization Value Proposition

• Changing payment methods on 1.7 billion will
  result in 23.2 million in hard cost savings
• 12.7 million in Sales Volume
  Rebate
• 10.5 million in Prompt Payment
  Rebate
• Transactional process cost savings equal over 12
  million for 500,000 transactions (per 1992 study)
• CAL-Card use saves at least 24.49 per
  transaction per 1992 study
• CAL-Trans estimates savings to be in the 90 per
  transaction range
• Program optimization supports Acquisition Reform
  goals within the California Performance Review
• Services are fully funded by contractors The
  State bears no cost
• State of California resource commitment is
  limited Visa and US Bank will perform a
  majority of the required work

3
Program Optimization Overview

• Strategic Assessment Link to Business Goals by
  analyzing accounts payable data
• Determine the states spend patterns
• Identify purchase card expansion targets
• Identify quick hit (1-3 months) and longer term
  (3 months) savings opportunities
• Conduct analysis with Visas Supplier Matching
  Service (to identify the current check/P.O.
  accepting vendors that accept the Visa card)
• Quantify benefits associated with moving
  transactions from checks/paper P.O.s to the
  CAL-Card, including process cost savings and hard
  dollar savings

4
Accounts Payable Reports
Results from the analysis will be displayed in a
series of reports including

• Total spend by payment method
• Top 10 merchants paid by check
• Top check spend by supplier
• Annualized Spend by Visa
  Acceptance and Payment Method
  
• Top suppliers by annualized spend
• Total Spend by Business Unit and
  Payment Method
• TOTAL SAVINGS TO THE STATE FOR HARD AND SOFT COST
  SAVINGS