Road to successful e-commerce begins with a paper chase

Road to successful e-commerce begins with a paper chase

Zip Brown

It's up to procurement officials to make the most of online transactions that save money, time

By Zip Brown

Special to GCN

The federal government is a large and diverse enterprise that is on the verge of revolutionizing its procurement practices through the deployment of new systems and technologies.

There is no question that something has to be done to improve the government's procurement processes. Recent research estimates that between $75 and $175 is spent per transaction on the traditional paper-intensive request, approval and order process used by most organizations. If all you need is a box of copy paper, this clearly is not the way to go.

Some agencies have simplified the process by giving employees purchase cards they can use for buys up to a certain dollar amount, usually $2,500 or less. Using the cards eliminates the request and approval steps for such small purchases, but employees still have to spend time finding the best supplier and keying information into the accounting system that records the purchases.

Agencies that want to take advantage of the Internet for procurement will discover that software providers offer many options. There are, for example, vendors in vertical electronic markets that sell only information technology, and there are front-end portals backed by a network of sellers that offer a range of products.

Some of these networks offer only commercial products, and others combine government-specific catalogs with commercial suppliers. Some have systems that integrate well with existing procurement processes, and others require extensive re-engineering and re-entry of data. There are even online auction sites that let buyers identify sources and determine prices before contracts are negotiated offline.

So much easier

Electronic commerce, done properly, saves money and time. Price comparisons are easier to make, as are paperless transactions with pre-approved spending limits and electronic forms. Even the complex transactions in requests for proposals and competitive bidding can be done electronically.

A distributed procurement system can help an agency economize even more if the system can aggregate the agency's purchases for volume discounts.

The days of generating a mound of paper for each government purchase must end. With staff sizes decreasing and accountability requirements increasing, every federal agency should make using the Internet and electronic-commerce tools part of its procurement strategy.

Taking advantage of the Internet requires financial managers to work with procurement and contracting officers to examine how their agencies buy. Some questions to ask are:

''What does the agency buy?

''How many people have purchasing card authority or small purchases? How many people are in the approval process for large purchases?

''Is almost everything off-the-shelf, or do you procure high-value, one-of-a-kind items based on a bidding process?

''Does the agency need to have purchasing capability in many locations? How much time is spent handling orders?

''How do you transmit information about purchases to the back-end financial management systems?

''Who needs information about expenditures, and when?

Technology has already changed the way some agencies handle procurement. The Bureau of Alcohol, Tobacco and Firearms uses a distributed purchasing system that is virtually paperless, and many of its field employees have access to it. The General Services Administration's Federal Supply Service has launched the GSA Auction Web site to sell surplus items to any bidder.

Government-to-business e-commerce will bring about even more changes, and it will be the job of agency financial managers and procurement officers to figure out which of the many options is best for their agency's situation.

E-commerce promises to change the essence of sourcing, purchasing and contract management within the federal government. Federal financial managers seeking to harness that power should surely work hard to find an end-to-end solution that makes their procurement processes efficient and effective.

The author is vice president of the e-government solutions group at American Management Systems Inc. of Fairfax, Va. E-mail her at zip_brown@ams.com.

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