E-procurement

overview
Prof. Marcella Corsi
Università “La Sapienza” di Roma

January 2006
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Why we focus on e-procurement
The basic tenet of our exercise is that e-
government and, in particular, e-procurement
programs result into an improvement of the
labour productivity of the public sector
and, as a consequence, contribute to a
number of intermediate outcomes (better
services, cost savings, time savings,
transparency), to economic rationality
(organisational efficiency, simplification) and
to GDP growth.

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E-procurement definition
„ Is the term used to describe the use of
electronic methods, typically over the
Internet to conduct transactions between
awarding authorities and suppliers.

„ The process of e-procurement covers every

stage of purchasing, from the initial
identification of a requirement, through the
tendering process, to the payment and
potentially the contract management
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E-procurement challenges
„ Organizational
‰ Many users are resistant to change, simply due to human
nature and habit
‰ Users may believe that e-procurement will make their job
more difficult or cumbersome
‰ Current roles will change due to the impact of e-
procurement

„ Economic-Legal
‰ Level of economic development
‰ Regulatory framework
‰ Technological scenario
‰ Existence of private competitor services
‰ General Education level

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E-procurement process and ICT Supporting Tools

Demand Budget Needs Contracting Supply

Sourcing and Benefits
estimation definition notificaton monitoring
Ordering

Data
analysis
tools Request
Supplier Supplier Tendering
for
scouting qualification
proposal

Electronic
Online RFx tools tender tools
scouting
tools Request for information
Request for quotation
Request for proposal

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E-procurement models
- activity based model:

- Indirect Procurement System (IPS)

- Direct Procurement System (DPS)

- organization based model:

- Centralized Model
- Decentralized Model

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Definitions
ƒ IPS
ƒ Contracting subject do not coincide with the
ordering administration

ƒ DPS
ƒ Contracting subject coincides with the ordering
administration

ƒ Centralized Model
ƒ Purchasing procedures are centralized

ƒ Decentralized Model
ƒ purchasing procedures depend on each
administration unit
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 Old Generation E-procurement: Direct Effects

Tangible
financial gains

Efficiency:
Reduced costs

Internal Benefits

Effectiveness effect:

E-proc Effectiveness: •New services

program Better services & •Increased user value
opportunities for users

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New Generation E-procurement: Direct and Indirect effects
Tangible
financial gains

Efficiency:
Back office
Better functioning
effects
PS

Increase
Increase in
in PS GDP
PS Growth
GDP
Productivity
share
Combined efficiency
and effectiveness
E-proc Effectiveness:
effect:
program Better services &
•Increased market
opportunities for users
•New services
•Increased user value

Direct
effects
Economic Impact
of Take-up &
Indirect Connectivity
effects
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E-procurement outcomes
„ Intermediate outcomes:
… better services;
… cost savings;
… time savings.

„ Final outcomes:
… improvement of the labour productivity of the public sector;
… economic rationality (organizational efficiency),
simplification, transparency and accountability;
… GDP growth.

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Further outcomes

„ Openess and transparency

„ Increased participation in the information society

„ Increased democratic participation

„ Enhanced policy effectiveness

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 E-procurement Models &Targets Matrix: Pros and Cons

Targets Economic Rationality Competition Simplification Accountability

Models
IPS Pros: Cons: Cons: Pros:
„Inventory coordination „Loss of „Lack of „Standard decision
„ Cost control competition (in flexibility making process
case of „More control due to
preselection) the reduction number
Cons:
of decision maker
„Cost of coordination units

DPS Pros: Pros: Pros: Cons:

„High autonomy of single „Access for new „Procedures „Loss of control due
Administrations suppliers (no pre flexibility to the improved
Cons: selection) number of decision
„ No budget and procedures maker units,
coordination Pros:
„No uniform solutions for „ Potential higher
standard problems control over
corruption
„More Corporate
Social Responsability

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Thank you for your attention

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