E-Procurement Adoption in the Public Sector

I’ll be writing a paper on E-Procurement adoption and CSFs very soon but I’d like too spill over some of my study on why the uptake has been slow for organizations in the public sector. I’ve primarily based this piece on two articles I found on ProQuest.

To understand the difference between the two sectors it’s necessary to begin by answering how and why adoption of e-procurement systems have been growing exponentially in the private sector. The fundamental answer to this question lies in the fact that the private sector is concerned with profitability. Once an organization considers itself as dealing on this end, a whole window of opportunities opens up in terms of governance and legislation. Private businesses do not always have to be accountable to the public, they can take their bucks wherever they like. They can choose their own suppliers and negotiate their own prices. They can make alterations in production, savings in logistics all contributing greater sales and revenue.

The Long & Short of It

The challenge for the public sector is exactly that: where it can’t be competitive. The public sector has a responsibility to deliver services which adhere to standards of transparency, accountability and strong value-for-money. In ensuring that the overall benefit is for the community, various kinds of complex contractual agreements are used (Vaidyam, Sajeev & Calender, 2006), this contributes to the complexity of buying. Buying from local suppliers is almost always a requirement for an organization in the public sector and it thus cannot use the efficiencies of buying from a few selected suppliers, instead all the suppliers in the market segment are invited to lower costs but this has a terrible side-effect of producing more losers in the private sector than winners – especially where firms participate in an all or nothing approach.

Critical Success Factors (Adapted from Vaidyam, Sajeev & Calender)

1- User Uptake and Training – It will be necessary to ensure that all parties using the system understand the benefit of have it. In addition, periodic surveys have to be carried out on training as well as acceptance of the system.

2 – Supplier Interest – Display commitment to suppliers in the private sector on the type of tools and technologies that will be used since the investment can be large and suppliers can be assured of the benefits they will receive.

3 – Utilize Best Practices – Using best practices ensures that standards and forwards compatibility are maintained which potentially also increase the life span of the technology that is used.

4 – Systems Integration – Maintain compatibility with current systems. Moving data around can be a very complex task.

5 – Security & Authentication – Is a very important issue in e-procurement as the details of buyers and sellers need to be kept safe from fraud. Therefore it is important that both parties agree on the security infrastructure that is being used.

6 – Process Re-engineering – The benefits of an e-procurement system can only realized to the maximum capacity if underlying process are functioning correctly. In these cases, the processes themselves may need to revised or re-engineered to take advantage of the e-procurement system.

7 – Performance Management – Ensure that performance measures are being used. Determine the correct KPIs to be used from the first release.

8 – Senior Management Support – For developing and overall strategy and vision of what is required and making clear to others of issues relating to policy and procedure management.

9 – Change Management Programs – Keep clear records of the benefits received by the changes and continual improvements to processes.

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