Cold feet on e-commerce
- By Patrick J. Walsh
- Nov 05, 2000
State and local IT shops have come a long way with electronic commerce.
As the hardware and software necessary to build robust, reliable applications
have become more widely available, government agencies large and small have
developed Web-based procurement systems that work as well as, and sometimes
better than, their commercial counterparts.
But agencies are finding that a well-designed system and a good business
case are not enough to get buy-in from some business partners.
Perhaps not surprisingly, given the amount of attention garnered by
viruses like "Melissa" and the "love bug," security concerns often top the
list of vendor concerns.
Accustomed to finding solicitations in newspaper ads and submitting
bids via mail, many vendors struggle to adapt their long-established routine
to an online environment. For some, the added discomfort of supplying proprietary
business information, including the specifics of their bids, can make the
prospect of participating in a municipality's electronic procurement scheme
seem downright scary.
The extent to which security fears can affect even a textbook e-procurement
implementation was amply demonstrated in Wichita, Kan., when the city's
purchasing office launched its e-procurement site in August.
Wichita began planning for the site in 1999. Faced with a daunting Y2K
dilemma that would have required massive programming changes to the software
in its mainframe, the city decided to end-run the problem by switching to
a client/server environment. That in turn paved the way for a major upgrade
of the municipality's financial services software.
Supplied by longtime consultant KPMG LLC, the financial software suite
includes modules for accounting, budgeting and cash management as well as
"This module moved us onto the Internet,'' said Melinda Walker, purchasing
manager for the city. "It's much more than a simple Internet bidding package.
Vendors can see the check number and the date that a check was issued, so
they can actively track their interaction with the city."
The site was designed to be easy to use, and it provides step-by-step
instructions to guide vendors through the process of registering or updating
their registration with the city. It enables registered users to submit
and view bids, track invoices and payments, and receive immediate notification
of open solicitations.
The department expects to give vendors the option of making direct-deposit
payments next year.
Because the software is new and Wichita is one of the first municipalities
to use it, the city tested the package thoroughly before going live, Walker
"We tested it in theory, but of course, there's still some apprehension
when you launch out there in the real world," she said. "With new software,
you don't have the comfort that you would have with a system that's been
live for awhile, with people using it every day.''
Despite careful planning and testing, the city was surprised by the
volume of inquiries it received from vendors about the site's security.
Although the simplicity of the system made it possible for most vendors
to register online, the degree of concern that many expressed about protecting
their privacy and the details of their online transactions became a stumbling
block. After all, one of the project's goals was providing better service
to vendors without increasing operating costs.
To ease vendors' minds, a team from the city's purchasing and engineering
departments demonstrated the system at several vendor facilities, Walker
said. And although the goal is for everyone to eventually submit all bids
electronically, the city made clear it would still take bids by mail for
the foreseeable future.
Of course, the fear factor is likely to subside — in Wichita and elsewhere — as vendors become more accustomed to using e-procurement.
"During the first month, the response to the system has varied depending
on the business section and the goods that are being purchased,'' Walker
said. "For instance, with items like grass seed, there will be two vendors
who will bid online and four others who will bid the traditional way. But
with computer technology, the bids will be 100 percent online.''