Where e-commerce is a reality
- By Dan Caterinicchia, Dan Caterinicchia
- Mar 18, 2001
While most other companies are struggling to make 5 percent of their procurements with federal agencies through completely electronic means, ProcureNet Inc. earned about $100 million in revenues in the federal space last year, 90 percent of which was through Web-based systems, said the company's executive vice president, Ken Farber.
ProcureNet serves as a single procurement source for its customers, offering a customized suite of solutions that allow them to procure everything from office supplies to maintenance, repair and operational goods. To do that, the Great River, N.Y.-based company offers a three-tiered system to handle everything from the marketplace selection through content logistics and fulfillment, to requisition and check processing.
The three tiers are Order Place, a customer-specific internal electronic catalog; Purchase Place, the Internet-based purchasing and procurement portal; and Service Place, which offers an Internet spot-buying capability.
ProcureNet — the first private company to receive former Vice President Al Gore's Hammer Award — has done about 42 million transactions and processed $21 billion in procured items during the last five years. "We're growing at 40-plus percent a year in the federal space," Farber said.
"The two things that have been keys for us are the blending of new and old technologies, and having our people at the agencies to work with the end users to show them how to use the system."
The company helps its government customers streamline their purchasing processes by offering them two choices. They can either log on to the company's Web portal to do business or integrate their systems into that portal. That second option puts ProcureNet ahead of other companies that assume agencies will completely abandon their legacy systems — an approach Farber calls "absurd."
"We're synergizing old ordering systems with a new Web-based technology," he said. "It's an integration — and automation of — systems in use today."
Some of ProcureNet's federal clients include the departments of Defense, Transportation, Energy and Agriculture; the Defense Logistics Agency; U.S. Navy; U.S. Army; Fresno County, Calif.; and San Diego. And the company has a 100 percent renewal rate with its government customers, Farber said.
Although DOD customers have led the way in Web-based procurements, he said no agency is averse to using it. "There's no shying away at all. Anything that makes their lives easier, expedites the requisitioning process and is shown to their benefit, they will readily adopt."
Most of ProcureNet's Web-based deals are valued at less than $25,000, but that is due to the fact that 85 percent of DOD's budgeted buys are at that level, Farber said. However, that doesn't mean the company isn't capable of doing much larger deals without any paper or phone calls.
In a "spot-buy" situation where an agency needs a specialty item not found in a catalog, ProcureNet receives the request electronically. It then uses the Web to create a requisition and send it on to a sourcing organization to do a reverse bid for the item. Those deals can be valued as high as about $800,000, "and 60 percent of the time, there's no paper in the process," Farber said.