E-procuremnt lessons offer opportunity

Summit, Mar 2001 by Bray, Richard

Whenever someone does business on the Internet, chances are good that Oracle software is involved in the transaction. Six out of nine provinces have selected Oracle applications for their financial and materiel management needs, which affect roughly 85 percent of Canadians. Not only has Oracle Corporation built a global, $10-billion (US) business, they have also accomplished the startling feat of stripping $1 billion out of their operating expenses, using their own products to manage the business.

Today, Oracle employees and their customers get up-to-date information through Internet browsers from a single source and manage their own transactions. Jim Stonehouse, Oracle Canadas national business development manager for the public sector, explains the strategy.

"It was all around self-service, self-service for our customers, selfservice on the procurement side and self-service on the inside," he said. And he would dearly love to see his government clients begin applying some of the company's lessons. Stonehouse says the procurement solutions available to government are not only cost-effective, but are available right now.

"We absolutely believe procurement is amenable to an off-the-shelf solution. When you look at a supply chain in a government setting, quite honestly, there are a lot of similarities with any other corporate structure. People just haven't looked at it that way." Like a lot of businesses, he points out, many government procurement organizations don't know who their customers are, and even when they do they may have twelve records for that customer. "Once organizations learn who their customers or the citizens are that want services then you can get a grip on the supply chain to provide those services," he said. "Then I can tie it to my internal systems and provide self service to the buyers of services."

From there, he said, governments can collaborate with suppliers so that demand becomes more predictable. "Self-service on the supplier side is letting that supplier look in to my inventory and know when to place the order," he said, "because he or she knows what their back order times are."

He describes today's systems and tomorrow's possibilities. "There is really no particularly good reason for a manager to fill out a paper requisition, send it to somebody else who is the assistant for the procurement person, who then transfers it to another piece of paper, and on and on all the way up the line. Using a Web browser, you should be able to access catalogues, place your requisition, automatically check for encumbrance and availability through the finance system and issue either a purchase order or a fully authorized requisition to PWGSC [Public Works and Government Services Canada]. PWGSC maybe then have to go and procure on your behalf, depending on levels of authority.'

He points to several reasons why governments have not yet automated procurement. Y2K obviously soaked up a lot of resources, but that was a short-term issue. More important, in his view, have been priorities. "For at least 15 years there has been great talk about FIS [Financial Information Systems] and FIS changes. That took a lot of money and if you can't get it done in 15 years, it is obviously a pretty big thing. The materiel management guys are quite honestly like the HR [Human Resources] people, second-class citizens in terms of getting those funds. Too many of the ERP [enterprise resource planning] systems at a federal level and provincial level at this juncture have only got to the finance piece - they are really not doing an excellent job of procuring. Momentum was lost; they spent the budget. That really does need some redress again to solidify the foundation."

While Stonehouse believes Canada's procurement community has a long way to go, he also makes it clear that he does not consider it that far behind anyone else. "World-wide, in the public sector, very, very little is going on - yet," he said. "There are pilot activities beginning in Ontario and Quebec, but really it's pretty limited."

"We will be shocked if you couldn't save 20 percent of your `buy.' We've certainly done that, by transforming our business to an e-business," he points out. "If a corporation such as Oracle can buy everything we need to run our corporation world-wide using reverse auctions on the Internet and self-service procurement with our vendors, I am hardpressed to think that most government organizations couldn't do the same thing."

Richard Bray is a Nepean-based freelance writer specializing in the IT sector. He has been published in magazines and newspapers in Australia, the US and Canada and is now editor of Ottawa Computes. Before freelancing he worked as a producer, reporter and senior writer for CBC in Toronto.