E-Mall's Open: Will Shoppers Come?

When Massachusetts launched the E-Mall pilot in 1998, it promised to revolutionize procurement by combining the purchasing power of states to cut costs. It was successful enough that Massachusetts has made the pilot permanent.

But the question is: Will other states sign on?

Lack of money, doubts about how the pilot will scale and the increasing availability of ready-made commercial alternatives have cast doubt on the future of a multistate system.

"We have opted not to continue with the E-Mall," said Jan Cox, administrator of the division of purchasing for Idaho, which participated in the pilot. "Our share of the cost of the E-Mall as a partner would have been upwards of $200,000, according to figures Massachusetts provided to us. And it would not have helped us with the order-processing side of things, which is what we have been trying to organize through automating our procurement process."

Instead, Cox said, his office is looking at using a system by Syscom Inc. for that automation, one that will cost just $20,000 upfront and $1,500 a year thereafter. The system is being tested now and could be up and running by the end of June.

"We certainly appreciated the speed of order processing that the E-Mall provided vs. our old paper-based process, and our experience with the E-Mall did give us a better understanding of what we needed in an electronic procurement system," Cox said. "But, in the end, the projected cost of the E-Mall was the swing factor."

Other participants in the pilot were Utah, Texas and New York. They all have opted out of the production E-Mall, at least for now. And Texas has confirmed it will be going with a commercially available electronic procurement system.

In the end, the E-Mall may end up having been its own worst enemy. When the pilot began in early 1998, state governments were only generally thinking about electronic procurement. The E-Mall showed them what was possible. In the meantime, it also prompted a growth in commercial — and cheaper — solutions.

"There are a lot of private solutions out there now that are cost-effective," said J.D. Williams, Idaho's state controller and chairman of the National Electronic Commerce Coordinating Committee. "And cost is a major influencer of people's thinking. When it comes to electronic commerce, there are not a lot of extra funds available for states to spend. Legislatures tend to say that "you must do with what you have.' "

And even though the pilot answered some of the major questions about e-commerce, it also created hurdles that people felt the E-Mall would have to overcome, Williams said.

Effort was needed to get through each of the participant's security firewalls, so there were significant technology issues on that score. And the pilot "seemed to show that the Open Buying on the Internet [OBI] structure was not very stable," Williams said. OBI is a standard that enables multiple parties to take part in Internet-based transactions, regardless of what computing platform they use.

In March, Massachusetts awarded a contract to build the production version of the E-Mall to Intelisys Electronic Commerce Inc., whose off-the-shelf solution was used to provide most of the e-commerce functionality for the pilot. One of the major efforts will be to link the front-end ordering processes of the pilot with the state's back-office legacy systems including financing and accounting.

After that, the focus will be on getting state agencies onboard as well as convincing other cities and jurisdictions in Massachusetts and other states that working through the E-Mall will be to their benefit. All 154 of the state's executive agencies will be required to use the E-Mall for their procurements, according to Nancy Burke, the E-Mall's project manager. Others will have to be persuaded to join.

With no partners interested in helping to fund construction of the E-Mall — although Burke said that option "will be kept open for the future" — income will come from the transaction fees Intelisys will charge suppliers for each order that goes through the system.

"The message now for other states, cities and counties is that there is a simple purchasing solution available to them, no matter how sophisticated they are about [e-commerce]," said Joe Quigg, vice president for government sales at Intelisys. "We can provide them immediately with a free service that will allow them to buy from other states' contracts over the Web, if that's what they want. It wouldn't be a front-to-back integrated system, but it would allow them to buy a large part of their requirements through the E-Mall site."

Intelisys was to begin installing the production version of the E-Mall in the middle of April, according to Quigg.

The E-Mall will have competition from companies selling end-to-end integrated e-commerce systems and from companies offering services along a similar aggregate purchasing model the E-Mall is trying to exploit.

American Management Systems Inc., for example, introduced earlier this year its Buysense.com World Wide Web site, a subscription-based service where users pay only when they use the service to make a procurement. The intent, according to Gary Lambert, a senior principal at AMS, is to attract a buyer community to the Web site and then bring the top suppliers in to work with that community.

"We believe there is still a big interest in collaborative procurement," said Lambert, who previously was deputy state purchasing officer for Massachusetts and a prime mover in the multistate E-Mall. "But there is no interest in having just one person manage it. So our aim is to find ways to facilitate buying over the Internet and to make it accessible to people."

The major drive eventually might come from the suppliers as they see procurement happening via the Web, Lambert said, because they are being pressured now to pick the right platforms through which to do their business, "and they can't do it through numerous separate platforms for each government they do business with."

But Lambert also said that the E-Mall, AMS and others are only at the very beginning of e-procurement. "We are still mostly working with people just to describe to them what this new economy is all about," he said.

What is certain is that the pace at which governments are trying to move their procurement systems into the electronic universe is quickening. It's not so much years but months down the road that they are looking to be doing business electronically.

Utah, another participant in the E-Mall pilot, also has decided not to go with the production version, "but that hasn't dampened our desire to move into an e-procurement environment," said Douglas Richins, director of Utah's department of administrative services. "We do have plans to begin looking at how to do that, as do most states, and we want to move rapidly. It all depends on the cost."

— Robinson is a freelance journalist based in Portland, Ore.

About the Author

Brian Robinson is a freelance writer based in Portland, Ore.

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