Information Technology in Public Procurement
Most public procurement organizations are under constant scrutiny because they are tasked with spending taxpayer money, and must therefore maximize every dollar spent by their procurement staff. Even a simple, inadvertent, mistake by staff has the potential to make headlines in local media, resulting in ignominy for an organization. In this information-hungry age, managing the lifecycle of any public procurement in an effective and transparent manner requires careful attention to details. Strict adherence to stringent federal, state, and local guidelines to ensure integrity, transparency, and inclusion in public procurement is a must. Starting from the time a need is identified to buy a good or service, to the time it is procured, the process is scrutinized by various stakeholders exercising their right to request all associated documentation under The Freedom of Information Act. Even after contract award, the perpetual management of contracts can easily spiral out of control if proper tools are not utilized—manually handling the complexity, volume, and reporting needs of a public procurement organization is insurmountable. Consider, for example, the volume of public records requests received by a procurement organization: if the organization has automated procurement systems in place, it can significantly reduce the time and effort spent fulfilling stakeholders’ public records requests, thereby allowing staff to focus on core procurement responsibilities.
At Miami-Dade County’s procurement operation, we manage nearly 1,000 Goods and Services contracts at any given time and issue purchase orders in excess of $1 billion each year. An effective public procurement organization that administers and efficiently manages contracts worth billions of dollars must have a reliable, robust, and fully automated procurement system. Slowly but surely, the adoption of electronic procurement management systems is gaining momentum in the public sector as procurement systems are increasingly being developed with a better understanding of public procurement needs. Although several procurement systems are currently available in the market, few systems adequately meet the transactional needs of large public procurement organizations.
Translating existing business processes verbatim into an ERP system is not a viable option because it costs more to customize, difficult to integrate and upgrade in future
Pressed by ever-increasing information needs, most public procurement agencies actively seek end-to-end technology solutions that can enable their procurement operations to match growing demands. Quite often, procurement organizations lack suitable resources to help determine the best technology solutions for their own operations. The biggest challenge lies in proper analysis of current business processes of the organization and realigning them according to the industry’s best practices. Public procurement agencies with fewer complexities can easily adopt technology tools that are based on best practices because it is easier for them to change their existing processes to complement the requirements of the new system. However, due to the complexities of bureaucracy and the ramifications of the potential change, altering existing business processes in large procurement organizations is an arduous task. For example, adopting electronic signatures in public procurement, which is supported by federal and state guidelines, is still met with resistance in many public procurement organizations.
Many automation options are available to choose from, including, but not limited to: implementing an out-of-the-box system; implementing an out-of-the-box system with significant modifications; or building a fully customized system. The best procurement technology solution for one organization may not necessarily be appropriate for another organization. For example, while the functionalities offered in many commercially available procurement systems fare no better than the existing technology solutions that Miami-Dade County has been using for years, other agencies that use paper-based processes or have limited procurement technology tools may find the same products quite beneficial for their operations.
While it is important to analyze industry trends and learn from other procurement organizations, the decision to implement new technology solution should be made solely based on the business environment and unique needs of an organization. The complex lifecycle of every public procurement involves decision points that can be simplified if the organization’s procurement system matches the business processes and operational needs of the organization. Analysis of the business rules of an organization and identification of the most suitable technology solution is an important decision that requires significant knowledge of both the business processes and the capabilities of the available technology. It is imperative that an organization adopt the best industry practices first, and then utilize technology tools to automate procurement operations. Implementing technology solutions to existing business processes without first re-engineering and streamlining current processes results in unnecessary future costs, waste of time, and operational difficulties. Although large and complex procurement organizations may resist the recommended approach to adopt best practices, it should nonetheless be a prerequisite for automation efforts.
Lessons Learned from a Great Start
Almost two decades ago, during the earlier days of Internet boom, Miami-Dade County developed a procurement technology strategic plan to automate its procurement operations in order to reflect the County’s mission of delivering excellent public service. At the time, the sole objective was to automate our paper-based procurement processes by utilizing the power of the Internet. In 2002, during the first phase of our procurement automation, we rolled out a web-based Bid Notification System and called it eProcurement. The success of our online bid notification system quickly led us to automate the entire procurement process. By the end of 2010, we had converted most of the paper-based procurement processes into a highly efficient and fully integrated web-based procurement system. The IT department worked hand-in-hand with the Procurement Division to incorporate desired electronic workflows and electronic signature capabilities.
Embarking on procurement automation in 2002, and having a fully integrated web-based system ahead of most others in the industry was a great start and significant accomplishment in terms of value gained from the automation of paper-based processes, but it was not necessarily the best approach! Instead of first performing a comprehensive analysis of our entire business process, streamlining it according to best industry practices, and then applying technology solution, we automated our as-is business processes that did not follow best industry practices. In other words, we “applied electricity” to the paper without optimizing the business processes.
Learning from our experiences, we are conducting an extensive business process analysis to get ready for our Enterprise Resource Planning (ERP) implementation. Translating existing business processes verbatim into an ERP system is not a viable option because it costs more to customize, difficult to integrate and upgrade in future, and on top of it all, it is not the best practice. Our upfront investment in business process analysis and re-engineering will lay the foundation for an even better, fully automated procurement organization for the next generation of procurement professionals at Miami-Dade County.