E-procurement has the potential to be the biggest money-saver in the e-government spectrum — but it has to face the challenge of a “digital divide” between e-savvy suppliers and those more traditional, says David Hosking, a partner at consultancy Accenture.
E-procurement promises a rapid return on investment, he says, though he was unable to provide firm figures on savings for previous clients, such as the North Carolina state government. There is “anecdotal evidence” that North Carolina has saved on the cost of supplies and streamlining of processes, he says. North Carolina conservatively estimates, on the basis of industry averages, that its e-procurement initiative will save it between 3% and 10%. Purchase order processing costs will be reduced by 67% or more, the state government’s studies indicate.
The state of California, which has also used services of Accenture, the renamed Andersen Consulting, in implementing e-procurement, says it achieved 5% savings in the inital stages of its implementation, which is yet to be completed.
Accenture is part of a consortium planning to bid for the New Zealand government’s e-procurement project. The request for proposal for this is due out shortly, possibly this week.
Any disappointing outcomes and resulting scepticism about e-procurement’s value are likely to have arisen from poor implementation and change management, Hosking suggests. “Those who might say that possibly haven’t addres-sed the key issues properly.
One of the biggest challenges is getting suppliers online. You need to put a lot of effort into bringing some suppliers across a kind of digital divide.
“We have a few [tools and procedures] to tackle supplier enablement,” he says. “But I’m not saying what those are, because we believe it’s a competitive advantage for us. I can say we’re recruiting specific expertise into Accenture New Zealand; people with good contacts in the supplier community.”
Accenture, with its long term partner and now subsidiary Epylon, which specialises in public sector e-commerce software, has moved heavily into the e-procurement space, particularly with government. One of the partners in its New Zealand bid is US-based marketplace operator Ariba, which has recently backed out of New Zealand. The consortium does not depend on a local Ariba presence, Hosking says; in fact the absence of a New Zealand office means Accenture and Epylon can deal directly with Ariba’s “stronger people” in Australia, he says. “The New Zealand office had primarily a sales function.”
The New Zealand government has taken “a very prudent approach” in putting e-procurement out for a six-month pilot first, he says.
One of the key challenges for such a project is proving the business case, and the pilot will allow government to do that, he says.
An Andersen Consulting report last year showed slow progress in e-government worldwide, but a subsequent survey in March this year showed some improvement.
“There’s been a lot of good groundwork laid since that survey, and hopefully we will find a very positive picture in our next survey, due to be published early next year,” Hosking says.
New Zealand slipped back from eighth to ninth in the rankings between the two published surveys, but this was due largely to major progress by the Netherlands and Norway, particularly on the portal front.
Accenture will not be reducing staff in New Zealand to match its 2% reduction worldwide, but its FlexLeave sabbatical scheme — those participating receive 20% of their salaries and continuation of their employer-provided benefits — applies in New Zealand and Australia and has already been accepted by some staff here, he says.