State Services Minister Trevor Mallard announced last week the Government had canned e-procurement project GoProcure, writing off the $2 million so far spent on the system after a pilot lasting several months. Locally-owned CGNZ was building GoProcure using software from Oracle.
"We are disappointed," says Oracle country manager Robert Gosling. "As the minister said, the trial was successfully completed on time and on budget, and the system performed well."
GoProcure's potential benefits are significant, he says, not only in government agencies but also in areas such as health and education, "so it's a lost opportunity".
Investment in e-procurement was touted as a "no-brainer" during the dot-com boom when specialist vendors such as Ariba claimed customers would see a return on their investment in months, rather than years.
The e-procurement market is now dominated by established business software giants such as SAP, PeopleSoft and Oracle.
Oracle New Zealand marketing manager Nigel Murphy says its e-procurement software is being used successfully by the Health Alliance – a partnership between Waitemata and Counties Manukau district health boards – to save "millions of dollars a year".
Other Oracle e-procurement customers in New Zealand include Auckland DBH, the Dairy Research Institute, Livestock Improvement, National Bank, Fonterra, Vodafone, Victoria University and Solid Energy, he says.
Mr Murphy says when organisations agree to deploy shared services, merging financials and procurement and implementing e-procurement is often high on the agenda.
People are "still very interested in it", but it's like any new technology, such as Customer Relationship Management, he says. "There's a lot of hoo-ha displayed initially and then reality sets in and people get more realistic expectations about scope and scale and figure out how to make it work.
"The principle works, it is a question of finding out the right way to apply it."
Unlike some e-procurement customers, the SSC's E-Government Unit didn't envisage using GoProcure to create a dynamic online marketplace in which suppliers competed against each other to offer government agencies the best prices.
Instead, it assumed terms and conditions for supply agreements would usually be reached offline through syndicated procurement deals, with GoProcure simply automating the "paperwork" involved in purchasing.
Some governments, such as the government of Western Australia, have used e-procurement software to subtly tilt the playing field in favour of Western Australians and then other Australian suppliers.
It achieves this by ranking their offerings ahead of other suppliers when purchasing options are displayed to government buyers on-screen. This idea was also not pursued by the SSC, which failed to enthuse the small and medium-sized business community which was supposed to benefit most from the system.
Mr Mallard says the GoProcure trial showed some agencies needed to focus on "more basic procurement improvement initiatives".
He says the concept of agencies clubbing together to negotiate with suppliers will be advanced through a new Syndicated Procurement Unit, housed within the SSC.
As late as last month, the SSC's E-Government Unit was hoping GoProcure could avoid being killed off by departmental indifference, saying six to 10 agencies might be prepared to co-fund its ongoing development.
Despite a suggestion by Mr Mallard that a third-party organisation might emerge to broker online purchasing for agencies, the failure of GoProcure is likely to lead to the piecemeal deployment of e-procurement in government.
Some big agencies, including Police and Defence, have their own e-procurement systems which they use to buy from regular suppliers. Others among the more enthusiastic agencies are expected to follow by implementing their own solutions.
Quelle: Stuff, 15.12.2003
