E-procurement do's and don'ts
- By Larry Stevens
- Jan 26, 2003
There are certainly benefits to buying products via the Web — speed and convenience, to name just two. But as many now-defunct dot-coms have discovered, moving users off their old purchasing methods requires more than a build-it-and-they-will-come strategy. Successful e-procurement sites have to make life sufficiently easier in order to entice customers away from their well-worn catalogs and friendly customer-service representatives. And the site must be developed and maintained in a way that helps, not hinders, the purchasing department.
Below are examples of successful government-related e-procurement sites that illustrate how certain best practices can lead to success.
Integrate online catalogs
The Defense Department's EMall gives military buyers a single access point through which to buy many commercial off-the-shelf products. It provides items from a growing list of vendors, currently more than 200. But while the site's development was a major undertaking, adding new product catalogs is not, because DOD doesn't actually maintain the data.
"If someone has a catalog hosted somewhere, we have no good reason to re-host it on our own site," said Don O'Brien, EMall's program manager. "We just connect to it." Not only does this approach save DOD time and effort, it also improves the accuracy and currency of the product database. When the vendor is responsible for maintenance, changes tend to be made more quickly, O'Brien said.
The integration effort is relatively straightforward. DOD places an off-the-shelf software module from PartNET in Salt Lake City on each vendor's database server.
The product data is sent to the EMall server, where a second software module aggregates the product information and presents users with a single view of all products. The only setup work is to map each vendor's database fields (such as item number, description and cost) to those in the EMall site. But because EMall lists only seven fields, the job takes little time.
O'Brien pointed out that EMall doesn't have to standardize the data in the database fields because DOD customers generally know what they're looking for and simply use the search engine to find it. "Most of our users don't shop as you would at Land's End," O'Brien said. "So we don't have to worry about putting all the blue shirts in one place."
Keep the personal touch as an option
Although a Web-based procurement site can streamline the buying process, over-reliance on technology may be a mistake, many experts believe. As anyone who has been frustrated trying to find information on a commercial Web site knows, sometimes it's easier to simply call customer service. Acknowledging that fact, CDW Government Inc., a leading technology reseller to government agencies and educational institutions, has incorporated live interaction as part of its e-procurement site.
Lt. Col. Jim Mark, supervisory information technology manager for the 84th division Army Reserve, uses CDW-G's Web site for most technology purchases. He likes the way it is arranged with drill-down menus, and he finds the search engine, which can intelligently recognize most product numbers from the manufacturer or from CDW-G, quite useful. But with all those features, "I still need to contact my account manager often," Mark said. "And the site lets me know when she's available."
"As easy as we try to make the site for customers, we know at times they'll need to turn to a live body," said Kurt Baldassari, CDW-G's e-commerce director.
Accordingly, whenever an account manager "punches in" at work, the customers associated with that manager can see his or her availability on their extranet page. They can then either call the manager or click a button to have the manager call them.
CDW-G officials believe so much in the importance of the human element and people's ability to catch ordering errors that they are willing to interrupt their automated order process to accommodate it. Even though all online orders are automatically entered into CDW-G's processing system, they cannot be completed until the account manager reviews and approves them.
Build best practices into software
The Marine Corps Systems Command's (MCSC) Acquisition Center for Support Services (ACSS) was created to provide consistency in the way operating offices buy technical support services, a process that is complicated by a continual barrage of regulation changes.
On top of that, the military staff at the center was on a constant learning curve, because the command loses about 40 percent of its acquisition professionals every 18 months. Consequently, MCSC project officers "didn't always have a good idea of what they should be paying for technical services," said Mark Hoyland, ACSS director. "Often, decisions are based on the most expeditious solution, rather than one reflecting the best business judgment."
The center was not the only one facing a challenge. On the other side of the fence, vendors had difficulty dealing with the seven business models of the command's various operating activities.
To address those problems, the ACSS team developed its Electronic Procurement Portal, a set of Web-based tools that brings together vendors and government buyers online and provides a structure, based on known best practices, to the procurement process.
The portal, developed by Appian Corp. of Vienna, Va., and released in August 2002, includes functions to manage workflow throughout the competitive procurement process and analytical tools to assess risk vs. performance elements. The portal provides ACSS staff with the ability to develop accurate cost estimates, evaluate vendor proposals, and map the necessary workflow of approvals and reviews to complete the procurement. It also includes functions that support post-award administration, such as invoice tracking.
By automating and standardizing the procurement process, Hoyland said that ACSS was able to "leverage the best commercial practices" to better match the service's needs with vendor offerings.
Hoyland said that because of the portal, the turnaround period for support services procurements has been cut from more than 45 days to less than 20 days. And the improved competitive process has generated more than $40 million in awards from August 2002 to January 2003, realizing more than $9 million in cost avoidance and $2 million in actual savings.
Standardize data whenever possible
Virginia officials developed the state's e-procurement site, eVA (www.eva.state. va.us), partly to solve a vexing problem: Virginia has no central repository of purchasing data from the 170 organizations and more than 350 local governments that purchase through state contracts.
"Because we didn't know what we bought and who bought what, we had a hard time negotiating [prices] with vendors," said Bob Sievert, eVA project manager. For example, if state leaders wanted to know how many computer tables had been bought, they would have to call the larger agencies, check numerous databases "and end up with a figure that we had little confidence in," he said.
But a central repository would have limited benefit for reporting purposes if information such as quantity codes and customer and vendor addresses were not standardized. Accordingly, the implementation of eVA, based on Enterprise Spend Management software from Ariba Inc. in Sunnyvale, Calif., included three standardization tasks.
First, commodity unit symbols, such as "ea" or "lb," were standardized using a message broker and formatting engine that changes the quantity symbols that the user types into the standard set.
The second standard involved identifying the vendor's location. In the paper-based system, vendors were identified by tax identification number. If vendors had more than one location, the customer would simply look up the address and place it on the form. But an automated system required a standard vendor ID system that pinpointed location, whether as a URL or a street address. eVA developers opted to standardize on Dun and Bradstreet Inc.'s widely used DUNS Number, which includes this location information. Users don't have to know the number. They just select the vendor from a drop-down menu.
Finally, for suppliers, state officials developed a standard for customer shipping and billing addresses.
Tie purchasing to inventory
In the purchasing world, love and marriage may not be as apt symbols of compatibility as procurement and inventory control. Virtually everything entered into an e-procurement system will eventually wind up in an inventory database. That's why the Air Force re-engineered its e-procurement site for IT products, called Air Force Way (AFWay) in November, so that it automatically sends data to the Information Processing Management System (IPMS), which tracks IT assets.
Before the integration, when a product was received, the equipment control officer would have to look it up on the procurement system and then manually enter the product number, price, description and other data into IPMS. "Our primary goal in the integration was to eliminate the extra work and inevitable errors resulting from double data entry," said Pat Beasley, AFWay program manager.
Now, after a customer places an order using AFWay and the vendor accepts it, all the data about the product is automatically transferred into the IPMS. When the product arrives, the receiving officer logs on to IPMS and indicates as such. The only data entry required is the serial number, which is usually not available at the time the order is transmitted to the vendor.
Because the integration is new, figures on cost or error reductions are not available. But Beasley expects the project will provide a good deal of benefit relative to the amount of work it required. "It was a fairly simple interface to pass the data from one system to the other," she said. n
Stevens is a freelance journalist who has written about information technology since 1982.