By now, the benefits of eProcurement have been proven effective and essential for the government sector. With the right solutions in place, organisations increase efficiency, streamline processes, save money and achieve transparency. In today’s market, there is definitely no shortage of eProcurement options. So, how do procurement and IT leaders decide on the right eProcurement solution for their organisation?
To start, listen to what works and what doesn’t work for current government organisations.
In a recent Center for Digital Government survey of 138 United States government technology and procurement executives, respondents reported a number of pain points with their current procurement capabilities. More than half of the officials said they wished their Enterprise Resource Planning (ERP)-based procurement capabilities were easier to implement and offered better analytics. They also saw the need for customisation vendor management tools and built-in support for requisitions, bidding and purchase orders. Another knock: gaps in encumbrance, pre-encumbrance and expense controls.
Enter modern eProcurement, which is typically defined as an end-to-end platform that handles everything from requisitions, purchase orders and online product catalogues to vendor management and payment processing tools. The latest third-party applications are often delivered as a cloud service that integrates with existing ERP systems. What’s the draw for these so-called best-of-breed choices? Four benefits stand out.
Designed to quickly deliver value. Organisations can see long delays in seeing the benefits promised by the procurement modules accompanying ERP platforms. The reason: the finance modules within ERP suites must be implemented before the procurement capabilities can be used. By contrast, best-of-breed options layer modern procurement on top of existing operations, delivering value as soon as the integration is completed.
Ease of use. Best-of-breed modules are user friendly and tie directly into an organisation's existing core financial business processes.
Availability of in-depth cataloguing tools. Online catalogues let buyers quickly see approved vendors, compare pricing and submit online orders to speed procurements. When transaction data is sent to backend reporting systems, it helps managers perform valuable trend analyses.
Ability to more closely manage costs. Cloud-based eProcurement solutions relieve government IT departments from having to buy, implement, test and manage on-premises hardware and software. In addition, they offer predictable cloud service fees for the life of contracts without unexpected costs for upgrades, security patching or infrastructure issues.
A Best-of-Breed eProcurement Checklist
Some -- but not all -- third-party eProcurement services can help state and local governments streamline their acquisitions and provide advanced capabilities. Before evaluating potential solutions, procurement department heads should work with other senior executives, CFOs, IT managers and end users to formulate a clear set of criteria.
Next, look for an eProcurement solution designed specifically for government. After all, the procurement needs and regulatory requirements of manufacturers or energy companies, for example, don’t conform to the unique laws and needs of state and local government. Thus, government officials should analyse a solution’s ability to address special requirements, such as obtaining multiple quotes for some products and services, complying with the Americans with Disabilities Act, or making bids and transactions easily viewable for greater transparency into government spending activities. Because government procurement rules often promote supplier diversity, determine which vendors support awarding contracts to small businesses and those owned by women, minorities and citizens with disabilities.
Similarly, government leaders should evaluate each vendor’s public sector expertise to ensure the highest levels of service and continued product enhancements.
Other key features to look for include the ability to perform the full procurement cycle online. The solution should also provide catalogues for making purchases, offer sophisticated reporting and analytics capabilities, and make procurement activities transparent to the public. Also look for the ability to set up contracts in the ERP system and make payments to it to support the full procure-to-pay cycle.
Five Key Implementation Considerations
Simply finding a best-of-breed eProcurement solution isn’t enough to ensure a successful outcome. Executives must also devote time and resources for keeping the rollout on track.
- Dedicate resources for end-user training to drive acceptance.Thorough change management procedures are essential, especially in cases where buyers are asked to move from paper-based processes to online workflows. Modernisation veterans say a mix of training techniques are required for end users, ranging from Web-based instruction and small group seminars to one-on-one sessions that address specific concerns of individuals. One hurdle will be asking procurement professionals to shift from the personal relationships they’ve developed with suppliers to using online catalogues.
A fully staffed help desk is another critical resource. “There’s a lot of that one-on-one interaction happening to this day,” McGrath says. “And I think the fact that we provide good customer service helps market our products to our staff.”
- Cultivate executive sponsorship. Another must-have for user acceptance is clear and regular communications by senior leaders that the new eProcurement solution has their full support. Get executives on board with a clear business case that shows investment returns over multiple years and the ways in which streamlined procurement can reduce processing time.
- Capitalise on the support of early adopters.Limit the initial rollout to a core group of users who show positive interest in the new solution. Once these early adopters are familiar and onboard with the modernisation, elicit their help when expanding the system to others.
- Focus on vendor enablement. With all the attention on bringing insiders up to speed with a new procurement system, it’s easy to overlook vendor relationships. Set aside time and resources to notify suppliers well in advance of receiving their first purchase order from the eProcurement platform. Otherwise, an unexpected delivery mechanism and system name may cause processing delays, especially for companies used to phone calls or paper forms.
- Keep integrations simple. Limit integrations with core ERP systems to a handful of essential areas, such as general ledger and chart of accounts. Then take advantage of standard APIs, such as cXML for procurement-related communications and SFTP for secure file transfers between systems.
The Fast Track to Streamlined Procurement
In an era of tight budgets and close scrutiny of government spending, government organizations are looking for new ways to improve procurement activities. That’s leading some organisations to look beyond the standard procurement modules within their ERP suites or third-party alternatives. These best-of-breed services can be a boon for modern eProcurement operations, but only if decision-makers evaluate options carefully. Insist on an eProcurement service designed with government in mind, tools for supporting the full procure-to-pay cycle, the ability to create catalogues and advanced analytics capabilities.
Thanks to the cloud, options exist for integrating innovative eProcurement modules on top of existing operations and reaping the rewards of solutions that address the unique requirements of the public sector.
Jean Clark, FNIGP, CPPO, C.P.M, CPPB, CPM
President, NIGP Code & Consulting Services
Periscope Holdings, Inc.
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