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E-Procurement Adoption in the Malaysian Public Sector:

Organizational Perspectives

Maniam Kaliannan terms of the suppliers involvement and perception

Faculty of Administrative Science & Policy towards the adoption of the public e-procurement
Studies system called e-Perolehan. Four main constructs
were analyzed namely, organizational leadership,
Universiti Teknologi MARA, Malaysia. organizational perceived usefulness, organizational perceived ease of use and organizational facilitators
involving 502 registered suppliers who are eligible to
Murali Raman & Magiswary Dorasamy supply goods and services to the various ministries
Faculty of Management and federal government agencies. The overall results
Multimedia University Malaysia. indicate that organizational perspectives play an important role in ensuring the success rate of adoption and use of e-Perolehan system. However, to achieve
greater level of adoption and usage, the government
must pursue a dual policy of coercion and persuasive.
Incentives and prompt payment to the suppliers and
AbstractElectronic government holds tremendous datelines for adoption must not be extended any
promise for improvements in internal governmental further as has been the case before.
management as much as it does for the public service
delivery. Efforts to e-procure goods and services Keywords: e-procurement, e-government,
estimated at about 12-25% of GDP from vendors since organizational leadership, organizational perceived
1999 is expected to provide significant savings to the usefulness, organizational perceived ease of use,
government. But the uptake among the vendor organizational facilitators.
community is still less than satisfactory. A study was
carried out to examine the organizational context in

I. INTRODUCTION way. In the last several years, the public sector

has become a major investor and user of
All around the world, the quest to improve information technology. The government of
government service delivery is becoming an Malaysia launched e-Government as one of the
important agenda for most governments. Multimedia Super Corridor (MSC) Flagship
Information and Communications Technology Applications with the aspiration to employ
(ICT) and the Internet in particular have opened multimedia technologies to re-invent the way the
new possibilities for the government and the government operates. E-Government will
governed. Successful delivery of online services improve both how the government operates
has rapidly become an important measure of internally as well as how it delivers services to
effective public sector management and this has the people of Malaysia. The e-Government
made many governments to deploy Electronic implementation seeks to improve the
Government (e-Government) as a tool to achieve convenience, accessibility and quality of
this vision. interactions with citizens and businesses;
simultaneously it will improve information flows
E-Government is defined as the use of and processes within government to improve the
technology, particularly the Internet, as a means speed and quality of policy development,
to deliver services to citizens, businesses and coordination and enforcement. There are eight
other entities [6, 7, 16]. The common focus is on projects launched to date under the e-
the application of ICT to improve the internal Government Flagship since it was started in
management of the government, to offer more 1997. All this projects will use ICT and
flexible and convenient services to the public and multimedia technologies to transform the way
to a limited extent, to enhance public the government operates, coordination and
participation and democracy [14, 16, 1, 8, 9]. enforcement. Table I summarizes the projects
Implementation of e-Government bring forth and its characteristics. E-Perolehan is the new
many advantages such as the reduction in procurement system allows the Government
paperwork, the provision of continuous service ministries to electronically select items to be
availability to customers, a reduction in response procured from the desktop, initiate an electronic
time and a reduction in error rate. approval process and also create, submit and
receive purchase orders, delivery orders and
The paper proceeds as follows. Section two other related documents electronically. The
presents the background of e-Government and e- vision of e-Perolehan is to ensure an effective
Perolehan implementation in Malaysia. Section and efficient electronic procurement
three provides snapshot of the methodology used management system while its mission is to make
including the research design and data collection e-Perolehan as a main procurement mechanism
methods. This is followed by the analysis and to be used by the government agencies and
research findings. The paper ends with a short suppliers. E-Perolehan objectives are [11, 17]:
discussion and recommendation to the key
stakeholders with the intention of ensuring the To ensure best value for money for
project achieves its intended objectives. Government procurement
To ensure suppliers receive faster and
II. E-GOVERNMENT & E-PEROLEHAN more accurate payment
INITIATIVES IN MALAYSIA To ensure accountability and
transparency in all Government
The public sector in Malaysia is going procurement
through period of rapid change. The To increase collaboration between the
governments leading role in spearheading the business sector and the Government
surge forward into the information rich digital
age has compelled the public sector to lead the



Projects Characteristics

Generic Office Environment Provides a new paradigm of working in a collaborative environment

(GOE) where government agencies communicate, interact and share
Electronic Procurement (EP) Links the government and suppliers in an online environment.
Government agencies as buyers procure goods/services by browsing
catalogues advertised by suppliers. Aimed at best value for money,
timely and accurate payment
Project Monitoring System Provides a new mechanism for monitoring implementation of
(PMS) development projects, incorporating operational and managerial
functions, and knowledge repository
Human Resource Management Provides a single interface for government employees to perform HRD
Information System (HRMIS) functions effectively and efficiently in an integrated environment.
Electronic Services (e-Services) Enables direct, online transactions between the public, the government
and large service providers via electronic means
Electronic Labour Exchange A one-stop-centre for labor market information, accessible to
(ELX) government agencies, the business sector and the citizens.
E-Syariah Introduces administrative reforms that upgrade the quality of services
in Syariah courts. To enhance the Islamic Affairs Departments
effectiveness- better monitoring and coordination of its agencies and
102 Syariah courts.
E-Land To achieve an updated, effective, efficient and accurate National Land
Administration System via utilization of Information Communication
and Technology (ICT), the e-Tanah project of Ministry of Natural
Resources and Environment encompasses 24 main areas in land

III. METHODOLOGY level of adoption and usage of e-Perolehan

system among the government suppliers in
The population studied was the registered Malaysia.
suppliers with the Ministry of Finance (MOF)
and who is e-Perolehan enabled. The total A.. Organizational Context
sample selected for this study is 3000
respondents, where 1,500 questionnaires were Organizations have to constantly adopt new
sent to transacting e-Perolehan enabled suppliers technological innovations one way or another in
and another 1,500 questionnaires were sent to order to improve or keep their efficiency or
non-transacting e-Perolehan enabled suppliers. competitive advantages in business. An
The reason for doing this is to capture perception organizational key factor represents factors that
regarding technology acceptance for e-Perolehan are internal to the organization, which influences
both from the current users and non-users the adoption and design of e- government
(potential users). applications [18]. Certain features of
Four main constructs were analyzed namely, organizations like organization structure,
organizational leadership, organizational climates, leadership and culture will influence
perceived usefulness, organizational perceived the adoption of IT [4, 10, 15]. These factors play
ease of use and organizational facilitators. All an important part in the adoption process of IT
constructs are measured using multiple-item within the organization since thy can constrain or
perceptual scales, using pre-validated facilitate the adoption and implementation
instruments from prior research wherever process. Table II summarizes the characteristics
possible, and were reworded, where necessary, to of the constructs within the organizational
relate specifically to the context of e-Perolehan perspectives.
adoption and usage. The aim is to analyze the


No Organizational Context Characteristics

1 Organization Leadership Study by Schepers [12] tests two leadership styles that is,
transactional leadership and transformational leadership as
antecedents to perceived usefulness and perceived ease of use of
new technologies.
Research by Gibson [5], suggests that top management support is
critical for successful planning of information technology.
Previous studies also indicated that the top managements
enthusiasm for the technology adoption is critical [2].
2 Organization Perceived Perceived usefulness (PU) is defined as the degree to which a
Usefulness person believes that using a particular system would enhance his
job performance [3].
3 Organization Perceived Perceived ease of use (PEOU) is defined as the degree to which
Ease of Use a person believes that using a particular system would be free of
effort [3].
4 Organization Facilitators It refers to the actions taken by the management that is,
conditions and events that create a positive environment for
technology adoption such as training and education,
organizational technical support and infrastructure support etc.
can be seen as elements of organizational facilitators [13].

IV. RESULTS total of 266 suppliers (53 percent) out of 502

firms have used at least one of the e-Perolehan
Table II depicts the characteristics of sample modules, that is, central contract, direct
surveyed in this study. Most of the firms are purchase, tender and quotation, whereas 236
Private Limited (90 percent) and fall within the suppliers have not used the e-Perolehan system.
Small Medium Industries (SMI) definitions. In However, about 91 percent of the latter has
terms of number of employees, most of the firms indicated that they will adopt e-Perolehan in the
employed less than 20 workers (75 percent). A near future.


Type of Organization Frequency Percent

Private Limited 452 90

Limited 9 1.8
Sole Proprietor 41 8.2
TOTAL 502 100

No. of Employees Frequency Percent

Less than 10 workers 259 51.6

11-20 workers 118 23.5
21 30 workers 40 8.0
31-40 workers 10 2.0
41-50 workers 23 4.6
more than 50 workers 52 10.4
TOTAL 502 100

Number of users / non-users Frequency Percent

Yes 266 53.0

No 236 47.0
TOTAL 502 100

Factor analysis was carried out for the worth considering, this study adopts loadings
purpose of questionnaire content validity and 0.50 as significant. The independent variables
reliability. The primary purpose of factor are organized into three sub-groups. The first
analysis is to analyze the interrelationships sub-group describes the organizational
among large number of variables that are highly perspective as influencing factors towards the
interrelated (Hair, et al., 2006). A total number adoption and usage of e-Perolehan and it consists
of sixty six items or questions were used for the of four constructs.
purpose of constructing factor analysis and out
this, two items were deleted and hence sixty four Table IV depicts that there are four constructs
items which has loading factor more than five under the organizational perspective that is,
percent was included. Also, the items were organizational leadership with five items,
categorized into ten constructs as shown in the organization perceived usefulness with twelve
following tables. items, organization perceived ease of use with 6
items and organization facilitators with six items.
The observed higher levels of correlation All together there are twenty nine items
among measurements for the same than different measured and grouped for measuring
constructs suggested that the instrument organizational perspective. None of the items
exhibited adequate convergent and discriminant from the original questionnaire were deleted for
validity. The criteria used for this study is to this section.
adopt a cut-off loading point for factors with
eigenvalues greater than 1.0. In interpreting
factors to determine which factor loadings are



Variable Items Factor Loading

Organizational Leadership 1. Management support 0.82
2. Lead role by management 0.84
3. Invested time, effort & money 0.72
4. Proactive about e-Perolehan 0.75
5. Stresses on importance of e-Perolehan 0.71
Organization Perceived 1. e-P is useful 0.66
Usefulness 2. e-P supports selling requirements 0.74
3. e-P improves selling efficiency 0.81
4. e-P simplifies selling process 0.81
5. e-P reduces financial costs 0.78
6. e-p increases administrative savings 0.80
7. e-P increases overall job performance 0.80
8. e-P increases overall job productivity 0.84
9. e-P is effective than manual system 0.71
10. e-P improves information management 0.77
11. e-P is fast 0.54
12. e-P improves inventory management 0.67
Organization Perceived 1. e-P is easy to use 0.73
Ease of Use 2. e-P is flexible to interact with 0.71
3. e-P is easy to learn 0.83
4. e-P is user friendly 0.77
5. e-P can be easily understood 0.84
6. e-P skills can be acquired easily 0.74
Organization Facilitators 1. Sufficient training for IT is provided 0.65
2. Sufficient training for e-P is provided 0.77
3. Sufficient technical support is available 0.77
4. Management encourages use of e-P 0.57
5. Management provides information on e-P 0.70
6. Management rewards staff to use e-P 0.69

A. Descriptive Profile of Organizational

Factors Organizational perspective is divided into four
sub-factors, that is, organizational leadership,
Responses based on a 5-likert scale are grouped organization perceived usefulness, organization
into three categories using neutral response as perceived ease of use and organization
the middle point: facilitators. Based on Table V, all the five items
Response 1 respondents disagree with the under the organizational leadership shows mean
factors influencing the adoption and usage value greater than two. Therefore, we can say
of the e-Perolehan system. that the respondents have high perception on
Response 2 respondents are neutral, that is organization leadership as a supporting factor for
neither agrees nor disagrees with the factors adoption of e-Perolehan. The highest mean value
influencing the adoption and usage of e- obtained is for management support (mean =
Perolehan system. 2.69) and the lowest mean value is for
Response 3 respondents agree with the management stresses on importance of e-
factors influencing the adoption and usage Perolehan (mean = 2.53).
of e-Perolehan system.


Table V: Influence of Organizational Leadership on e-Perolehan

Organizational Leadership Mean S.E. Mean Std.

Management support 2.69 0.03 0.575
Lead role by management 2.68 0.03 0.580
Invested time, effort & money 2.55 0.03 0.645
Proactive about e-Perolehan 2.56 0.03 0.625
Stresses on importance of e-Perolehan 2.53 0.03 0.640
Average mean score 2.601 0.022 0.505

This is evident by the descriptive profile of

On perceived usefulness, respondents generally organization perceived ease of use in Table VI.
agreed that organization perceived usefulness All the items show that the mean score is above
plays an important role in the adoption of e- two with the highest mean score for e-Perolehan
Perolehan. In other words, they supported the is useful (mean= 2.59) and the lowest mean
idea that by adopting e-Perolehan, they can score for e-Perolehan improves selling efficiency
derive a lot of benefits. (mean = 2.25).


Organization Perceived Usefulness Mean S.E. Mean Std. Deviation

e-P is useful 2.59 0.03 0.638

e-P supports selling requirements 2.41 0.03 0.723
e-P improves selling efficiency 2.25 0.03 0.730
e-P simplifies selling process 2.33 0.03 0.708
e-P reduces financial costs 2.26 0.03 0.766
e-p increases administrative savings 2.33 0.03 0.747
2.31 0.03 0.717
e-P increases overall job performance
2.29 0.03 0.723
e-P increases overall job productivity
2.41 0.03 0.728
e-P is effective than manual system
2.45 0.03 0.669
e-P improves information management 2.46 0.03 0.708
e-P is fast 2.36 0.03 0.689
e-P improves inventory management
Average mean score 2.372 0.026 0.572

On perceived ease of use, respondents generally (mean = 2.57) and the lowest mean score is for
viewed that e-Perolehan is easy to use, easy to e-Perolehan is user friendly and flexible to
learn and user friendly. The highest mean score interact with (mean = 2.42 / TableVII).
was recorded for e-Perolehan is easy to learn



Organization Perceived Ease of Use Mean S.E. Mean Std.

e-P is easy to use 2.53 0.03 0.661
e-P is flexible to interact with 2.41 0.03 0.714
e-P is easy to learn 2.57 0.03 0.627
e-P is user friendly 2.42 0.03 0.699
e-P can be easily understood 2.50 0.03 0.668
e-P skills can be acquired easily 2.47 0.03 0.658

Average mean score 2.484 0.025 0.556

In the case of organization facilitators, the mean (mean = 2.54) and the lowest score is for the
scores for all the items were above two management rewards staff for using e-Perolehan
(TableVIII) with the highest score for system (mean = 2.02).
management encourages the use of e-Perolehan


Organization Facilitators Mean S.E. Mean Std. Deviation

Sufficient training for IT is provided 2.42 0.03 0.687

Sufficient training for e-P is provided 2.34 0.03 0.703
Sufficient technical support is available 2.37 0.03 0.699
Management encourages use of e-P 2.54 0.03 0.639
Management provides information on e- 2.33 0.03 0.705
P 2.02 0.03 0.770
Management rewards staff to use e-P
Average mean score 2.337 0.024 0.547

In summary, organizations have positive system. The following points highlight the key
perception regarding the organizational factors in issues inherent within Malaysias e-Perolehan
terms of adoption and usage of e-Perolehan initiative that prevents the government and the
system. All the mean scores were above two and service provider from maximizing the value
this indicates that the suppliers who have potential of the system:
responded to the study are either agree or
strongly agree with the factors influencing their Application hiccups
behavior towards the adoption and use of e- Limited commitment and ownership to
Perolehan in Malaysia. Therefore, we can support and push e-Perolehan
conclude that all the factors tested in implementation at Ministries/ Agencies
organizational perspective are positive hence Ministrys local area network (LAN)
contributes to the adoption and usage of e- and firewall posed additional
Perolehan among the registered suppliers. unexpected dependencies to the rollout
V. ISSUES & CHALLENGES IN Ministry/Agency IT department was not
IMPLEMENTATION OF E-PEROLEHAN involved directly from the beginning of
the implementation.
The finding shows that the suppliers who are Successful interfacing to eSPKB for
using e-Perolehan have indicated a positive budget check is reliant on external
attitude towards the system in terms of their factors EG*Net, availability of IB
organizational perspective. However, there are Gateway and LFEP servers, etc.
still large numbers of suppliers who have not Intermittent EG*Net connectivity
registered for e-Perolehan and among those who issues.
have registered, have not used the e-Perolehan


Suppliers are adopting a wait-and-see Perolehan adopters currently exist. First is the
attitude on e-Perolehan enablement. aggressive adopters who are involved fully (6
Low IT literacy amongst suppliers. 000 suppliers). These suppliers seem to
Perceived high cost of enablement (PC, benefiting from e-Perolehan and are trying to
Smartcard, Smartcard Reader, Digital achieve competitive advantage by using IT in
Certificate etc.) their procurement process. Nevertheless, there
Suppliers contact information not up to are the conservative adopters (the laggards) are
date. taking wait and see approach, before they are
Ignorance over the importance of willing to actively become part of the system. On
electronic catalogue. balance, the general consensus amongst both the
Lack if confidence over informations buyer and seller communities is that e-
security and confidentiality. procurement will become an important
management tool to enhance the performance of
supply chain especially in the public sector. In
One of the main challenges for an e-Perolehan this regard, we expect that between the next three
project is the establishment of an appropriate and to five years, more suppliers will grab the
context tailored strategy. Every project or opportunity and benefit fully from the e-
initiative needs to be rooted in a very careful, Perolehan initiative in Malaysia.
analytical and dynamic strategy. This seems to
be a very difficult task, requiring a focus on The success of e-Government initiative in
many aspects and processes, a holistic vision, general and e-Perolehan in specific depends not
long-term focus and objectives. Many public only on the government as policy maker and
institutions limit their activities to a simple policy implementer but also requires
transfer of their information and services online commitment and cooperation from all
without taking into consideration the re- participating agents such as responsibility
engineering process needed to grasp the full centers, service provider and suppliers in
benefits. The government must have a clear adopting and using IT application systems in
strategy to overcome the barriers to change. Part doing their business with the government
of the strategy is to engage in a rigorous agencies and departments.
assessment of the current situation, the reality on
the ground and the inventory of projects,
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