E- Procurement Case Study
Information about the potential benefits of e-procurement is abundant while details on the impacts and consequences of e-procurement implementations are scanty on the ground. This gap regarding available information prompted the Australian Government Information Management Office (AGIMO), now a business group within the Department of Finance and Administration, to commission a review of selected e-procurement implementations and develop case studies to provide a detailed understanding of the current status of public e-procurement.
In 2004, AGIMO engaged SIRCA to review five public sector e-procurement implementations. The governments participating in the review include the national governments of Italy, New Zealand and Scotland, along with the state governments of New South Wales and Western Australia. The five case studies describe the unique e-procurement activities, background on why decisions were made, how those decisions were implemented and what e-procurement activities are currently being utilized. The key learnings and challenges resulting from these events are listed within each case study.
Many common learnings and challenges were identified from the five implementations. However, the manner in which a specific agency approached each challenge varied depending on the unique political and cultural context. Overall, the experiences discussed in the five case studies demonstrate that e-procurement can be successful in a variety of socio-technical and institutional environments. It can improve business processes within the public sector and be influential in procurement or whole-of government reform. AGIMO recognizes that Commonwealth Agencies can learn from these various approaches and experiences.
E-readiness refers to the current use and potential levels of adoption of e-procurement in government, shaped and constrained by technological and institutional environments and events at the local, national and trans-national levels.
E-impact refers to the ways in which e-procurement has transformed business models and value chains in government agencies. The concept addresses key outcomes from its use, major impediments to further progress and goals and objectives for the future, incorporating issues such as: social – effects on employment, skill composition, work organization, stakeholder satisfaction, learning and building coalitions of change, e-business performance – annual percentage of procurement using Internet, operational performance – faster delivery times, reduced transaction costs, etc.
Typically, an incremental introduction of e-procurement tools can ease the transition to an e-enabled environment. However, policy that mandates common purchasing strategies and methods provides the best results. Overall, an integrated approach between whole-of government and e-procurement initiatives can create a functionally coherent network of policies and standards; minimize competing priorities and objectives; and promote balanced benefits for all stakeholders.
Government agencies often have competing priorities and e-procurement is not always one of them. E-procurement has been successful in governments where these priorities along with policy reform have been clearly stated and maintained. The challenge for other organizations is to manage the competing priorities and push for policy reform that requires transparency and accountability in government, cost savings and simplified procedures.
Supplier adoption is important to the success of an e-procurement program. The more suppliers in the pipeline, the more inclined buyers will be to use the system. Supplier participation can be influenced by many factors. Buyer adoption is another important factor in the success chain. As more buyers use the system, more transactions move through the system and more efficiencies and savings are realized. As with suppliers, the buyer (or the buying organization) must be e-ready, and this status can vary across agencies within one government. Some issues that can influence e-readiness are the move to decentralize purchasing and finance responsibilities, the typical silo structure of governments, and the use of independent financial management information systems (FMIS) or enterprise resource planning system (ERP) tools.
Technical integration and managing technical standards are critical to project success. Developing and implementing an e-procurement system can be difficult and complex. An effective and efficient system incorporates appropriate tools and procedures that support technical, business and work practice requirements. It also integrates with buyer agency systems (i.e., FMIS / ERP) and supplier systems.
The technology used in public e-procurement systems needs to be aligned with industry standards. This can be difficult with the lack of agreed standards in the industry. In the five examples, the lack of standards and evolving classification systems around catalogues, suppliers and cost codes created difficulties in achieving interoperability across and within government.
Security and authentication are critical aspects of an e-procurement system. Developing, maintaining and communicating these technical policies and solutions are difficult in the diverse environment of today’s public sector. Public e-procurement is strongly shaped and driven by social, cultural and political factors. ERP systems, the maturity of the procurement process, even the “look and feel” of the system. Across the five examples, e-tendering was often the first tool adopted because it was an easy way to make major gains in efficiency and transparency.
Source: unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN020706.pdf
Questions
1. With your understanding of ERP from the case above, briefly explain Inter-Enterprise Integration in the case study.
2. Identify and explain any two challenges that confronted the e-procurement implementation.
3. Discuss two benefits of the E- Procurement Implementation in the case above
4. Information Technology supports pursuit of six drivers facilitating the evolution of highly coordinated, dynamically responsive supply chains. Using relevant examples, write short notes on any two of the drivers of supply chain excellence that are relevant to the implement of the e-Procurement process for Ghana
