Procurement for Government Agencies Made Easy with Digital Technology/IT

When it comes to business, digital is now the primary determiner. Contrarily, the lack of it often becomes a deterrent for growth. The domain of public procurement or purchase of goods, services and works by governments is no different. Notably, public procurement accounts for a substantial portion of the taxpayers’ money. Hence, the public expects the governments to carry it out efficiently and with high standards to ensure high quality of service delivery and safeguard the public interest.

The use of Information Technology (IT) and the internet in delivering government services is not new. Globally, more and more countries have adopted digital procurement systems for many benefits[1]. The advancement of digital procurement systems ensures efficiency and savings. The key benefits include transparency, an open marketplace for procurement needs, and reforms managing procurement activities.

Audet conservatively estimates the procurement expenditure (including defence expenditure) of the EU at 9.24% of GDP, whereas a study conducted by the European Commission estimates public procurement at a higher percentage. [3] Hence, actual expenditure on public procurement is likely to be higher than the estimates prepared by Audet.(Source - e-Government Procurement Handbook - Asian Development Bank).

Eliminating physical barriers of space and time

Procurement for government agencies is integral to the development of a nation. Digital procurement has facilitated greater transparency and broader access to information and markets. It enables bots to automate and streamline manual, routine procurement tasks. It also ensures that the buying agents make the best purchasing decisions and add value to the business. [2] With IT-enabled digital procurement, common challenges in and around traditional procurement have given way to simple and intuitive buying experiences that users readily embrace.

Digital technology creates innovative measures by harnessing information and communication technology (ICT) to simplify procurement. Additionally, adopting digital tools also strengthens governance and reduces corruption. The impact is more when Digi-tech gets integrated with different government functional areas, including a budget, tax, and audit.

In more concrete terms, digital procurement can automate all repeatable tasks to enhance efficiency and trim down costs. It also arms stakeholders with real-time insights and analytics using artificial intelligence (AI) and online tools. Even more interesting is that it makes way for new and more imaginative ways to infuse data models. Such models improve everyday business operations and decision-making processes. Moreover, digital technology creates new collaboration levels, transforming buyers’ interaction with suppliers and third party members. While the above is valid, available data reveals that the procurement process has largely lagged in digital transformation. It is time to change that. [4]

Some key benefits of digital procurement

• More and more bidder participation as a result of greater awareness and access to opportunities.
• The digital process creates a better and open competition. It ensures savings on procurement spend by availing lower bid prices. It is very typical for businesses to save 10%.
• The digital procurement process means there will be enhanced reporting and procurement analytics. It will facilitate improved monitoring of the procurement experience.
• The procurement process will be faster due to the online workflow.
• Highly advanced tech tools will address fraud and corruption.
• There will be an immediate decrease in the need to print, distribute, and store physical documents.

Benefits of digital procurement for local governments

Information technology (IT) has also emerged as a significant spend category in local governments worldwide. It helps the provincial government to demonstrate:

• More effective delivery
• Value for money public services
• Improved business processes
• Support for shared services, partnerships, mobile working
• Support for the digital transformation of services, connectivity and smart technology

Building an effective digital procurement strategy

Let us now see what an effective digital procurement strategy is. Here are the critical points for creating an effective digital procurement strategy -

1. Data -Data ensures clarity on “what” was purchased at what price and the reason (“why”) behind the purchase.
2. Technology toolbox –Accumulated data is of no use unless it is analysed. An effective digital procurement strategy implements the right tech tools like AI, natural language processing, analytics and bots.
3. Intuitive user experience –The procedures ensure intuitive user experiences encouraging stakeholders to opt for online procurement tools.
4. Skills and talentDigitally enabled procurement strategy creates actual value through a cross-functional team. Members of such a team include data scientists, AI specialists, category experts and IT & design professionals.

The evolution of digital procurement

Digitising the procurement process is evolving, and in the next couple of years, it will evolve into next-generation digital procurement. Once that is achieved, data procured from outside a business’s network will enable better and advanced decision making. Time is ripe for organisations to initiate the digital procurement process immediately. Otherwise, they might lag in the race for competitive edge and advantage. [5]

Procurement entities are fast moving towards adopting such strategies, which have accelerated further growth. Notably, Korea has already put into practice advanced, fully integrated end-to-end digital procurement models. Canada, Chile, Indonesia, Malaysia, Mexico, the Philippines, and Portugal have implemented such systems for 7-8 years.

Way forward

A full-fledged digital procurement process cuts across the entire government agency and supplier communities. Hence, shifting from manual handling of public procurement to digital demands planned and sustained efforts. Efficiency levels of using IT systems vary widely among government officials and suppliers. [6] Comprehensive training will be necessary to address this, which will bridge the gaps in IT efficiency.

Existing policies for governing procurement need to be duly adjusted to adopt digital technology. The government should also address the gaps in network connectivity and IT infrastructure in government offices and design solutions to address technological challenges in digital implementation.

The digital procurement methods will differ from one country to another as implementation circumstances, and motivations are diverse. [7] Hence, there cannot be a ‘one size fits all solution. Contrarily, the underlying situations can provide vital inputs to determine the appropriate digital strategy for a particular country.

Digital is the future! Embrace it now!

References:

• [1] [2]Digital Procurement Processes
• [3] [4]e-Government Procurement Handbook
• [5] [6]National technological and digital procurement category strategy guidance
• [7]OECD Journal on Budgeting