As the New Zealand government works towards creating e-government services it might heed the experience of a near neighbour.
Within three years, the Western Australian government has implemented a B2B electronic marketplace for buyers and suppliers and a B2C portal for citizens that enables them to pay rates and other bills. Dr Paul Schapper, who heads WA’s Department of Contract and Management Services, says foreign governments and large banks are now seeking advice from his department because of the success and speed of its implementation.
WA suffered “some grief” from suppliers because it used open standards in developing its groundbreaking GEM — government electronic market — effort. Schapper didn’t name the suppliers but says his organisation is now “winning that battle”. He says having to deal with multiple closed standards is a “living nightmare” for small firms. Schapper says there was also resistance from general industry to the marketplace, but that has now almost receded. The open standards were decided on at governmental meetings with standards body the Australian Procurement and Construction Council (APCC), meetings that New Zealand was party to either as a member or an observer, Schapper says.
E-government is an “extremely complex” process, says Schapper, who recounted WA’s story at a recent iPlanet Sun-Netscape alliance conference on the Gold Coast, and no one can do it in one hit. Most private e-marketplaces have a naïve business model, he says. They assume that buyers only want to know where they can best source a product at the cheapest price. “Government doesn’t work like that.” Governments have wider issues such as the meeting of public policies and a need for complete transparency. They may want to recognise suppliers who, for instance, offer apprenticeship schemes, he says. WA also needed a system which could handle hundreds of buyers and sellers from day one. Most private marketplaces are built for few-to-many, he says.
While many issues came into the project, a key one was potential savings through electronic procurement. WA believed GEM could save the state more than $A100 million per year out of its multibillion-dollar budget for goods and services by automating and streamlining its materials, operations and repairs (MRO) spending with suppliers. GEM (“Where you can virtually buy anything”) was to be made available to all government state agencies including schools, hospitals, prisons, government trading enterprises, police, health and any third-party purchasers who buy on behalf of the government. Products and services were to include groceries, stationery, temporary personnel and IT-related services.
WA started its proof of concept pilot in June 1998. By February 1999 it found that buyers and suppliers were keen but not ready and set about educating industry. In the second pilot GEM was created with 251 buyers, 119 “entities” and 60 common-use contracts. $A1.5 billion of business was done through the department. A new e-business division was created and DCMS was restructured. In March 2000 a tender was issued for “the real thing”. WA’s original plan was to have 50,000 online buyers within four years: Schapper says it is already far ahead of that target.
All suppliers for the marketplace, including New Zealand ones, have to register. The budget for the project was $A3.9 million. This was hit, although developments and enhancements since have added to the price, Schapper says.
Schapper offers several reasons for implementing an e-marketplace. Cost reduction, for example. If you can reduce the costs of procurement from $100 to $5 through using technology for an item — typically items purchased are valued under $500 — this can massively cut overheads, he says. The marketplace was also a clever means of instituting government policy and fulfilling national initiatives. It permitted the creation of a knowledge base. And in the end, it was a clear issue of business survival. “You’re either ahead of the game or you’re out of business.”
Ironically, Schapper says his team thought they were merely keeping up with conventional business strategy. But when they had gone through the first few stages of the project, they realised “there was no one behind us”. DCMS has now been consulted by the World Bank, Asia Development Bank, the UK and South African governments, as well as “20 to 30 countries”.
IPlanet was the leader of the successful consortium, which included Australian firms Alphawest and DMR, a management consulting company, a sign that iPlanet saw that management issues would be pivotal, says Schapper. “You have to drive cultural issues over and over and over.” In government there are a lot of “reluctant participants” who fear losing their jobs, and much “upskilling” was required.
The technology is relatively easy, he says. Strategy should be the first driver, followed by technology, which implements the processes. Driving it out of the IT department is “certain death”. The iPlanet suite of products used to develop GEM included BuyerXpert, ECXpert, TradingXpert, Portal Server and Application Server, according to an iPlanet statement.
In future, the marketplace will be rolled out to bodies outside government such as non-profit organisations and universities.
Mark Broatch attended the iPlanet conference courtesy of Sun.