How to Harness e-Procurement to Standardize Procedure, Maximize Spending and Drive Efficiencies
By Susan Capstack, Executive Consultant, AMS Advantage ERP Program
Taxpayers and election campaign platforms seem to be in complete agreement when it comes to government spending—reduce it! Yet the demand for government services continues to grow. Stuck in the middle of these conflicting demands are the agency leaders and procurement professionals who have to find a way to "do more with less."
To help solve this issue, government leaders are increasingly looking toward web-based procurement as a way to reduce costs and increase the efficiency of their purchasing process. Here we look at the trends toward e-procurement and examine how the Commonwealth of Virginia and CGI's award-winning eVA partnership is meeting the promises of procurement transformation.
A need for e-procurement
When raising taxes or raising sales revenues is not the easy cure, one answer for both governments and businesses has been to control spending. When the income is uncertain, make the outgoing certain. The answer has three deceptively simple principles:
- Spend what is budgeted. Standardize procedures and establish controls and accountability for everyone authorized to spend.
- Spend effectively. Don't miss opportunities to leverage the full buying power of an agency.
- Spend efficiently. Eliminate the costs associated with manual systems.
Yet while these sound simple, they traditionally have been difficult to execute.
According to the Aberdeen Group, "...the lack of spending analysis capabilities are costing businesses $260 billion in missed savings opportunities annually resulting in corporate epidemic that is keeping enterprises from controlling costs and maximizing performance." In another study by Texas state officials, researchers found that current manual systems can cost state procurement officers $75 to $100 in costs, labor and paperwork to process a single transaction. In addition to these costs, governments fragmented by different agencies purchasing separately from each other keeps the entity as a whole from leveraging potential buying power.
An efficient and cost-effective procurement solution
Leading solutions providers such as CGI have developed practical e-procurement approaches and tools to overcome these trends and to make the best use of any budget, achieving benefits that:
- Increase efficiency
- Save cost
- Reduce paperwork
- Leverage spending
- Increase competition
- Implement better purchase tracking and reporting
- Increase buyer capacity
CGI's specialty is helping complex, decentralized organizations reduce their purchased expenses and increase procurement process efficiency. We have a portfolio of proven, end-to-end e-procurement solutions that assist with all phases of the e-procurement process, from managing requests and solicitations to evaluating responses. While procurement's mission is to get the right products and services as efficiently and cost-effectively as possible, our e-procurement tools achieve this through shortened order cycle times, better overall spending visibility and the ability to guide compliance.
The solution in action
The Commonwealth of Virginia's partnership with CGI demonstrates what is possible when developing a state-wide electronic purchasing solution. Called eVA, the end-to-end system is widely thought to be the most successful e-procurement solution in the nation.
Before the partnership with CGI, the procurement process for the Commonwealth of Virginia was decentralized over their 171 state agencies, institutions and other public entities using a variety of desktop applications and manual processes for procurement. The manual processes of purchasing as individual organizations limited the Commonwealth's ability to operate in the most efficient manor in the following ways:
- No real system to keep accurate data on purchasing
- No ability to leverage purchasing power and to maximize market benefits
- High administrative costs due to lack of electronic purchasing
- Limited access for private sector businesses to take advantage of opportunities for working with Virginia
Through two of CGI's spend management offerings, e-procurement and strategic sourcing, the Commonwealth established a statewide electronic purchasing system, eVA, which funnels procurement through a single, secure, electronic portal, and renegotiated and consolidated multiple contracts to achieve best value through the VaPP partnership. These strategies and tools enabled Virginia to transform their procurement environment, which has resulted in:
- Connecting more than 170 agencies and 490 localities to 32,000 vendors selling 5 million items
- Leveraged buying power – $36.5 million annual savings and cost avoidances
- Leveraged buying power that has resulted in 90 new statewide contracts in 15 categories of goods and services, achieving 12 percent savings on an annual baseline of $309 million.
- Increased administrative efficiency with a 50% reduction in cost to process a purchase order
- Conducting business more efficiently with up to a 70% reduction in processing time from solicitation to award
- Reduced cost of goods and services with a 4-70% savings on individual purchases
- Increased competition with a 200% increase in supplier registrations
"eVA creates efficiencies for government and for private businesses by eliminating paperwork and unnecessary steps—saving both time and money," said Secretary of Administration Sandra Brown.
Rebecca Garnett, eVA's business manager, said, "We've been very fortunate; we've had support from three governors now, members of our Legislature and a lot of our agencies we work with. Another critical success factor has been our core team. The third success factor is a true partnership with your vendor. In our case we've partnered with CGI."
For more information on e-procurement and strategic sourcing and how your organization can start standardizing procedure, maximizing spending and driving efficiencies, please contact CGI at 1-800-321-0267 and www.cgi.com/publicsectorerp.
To receive a copy of a new CGI white paper on e-procurement transformation please click on the following link:
Procurement Efficiency in Government: Policy, Process, and Technological Transformation
To view CGI's Procurement Insight newsletter please go to www.procurementinsight.com.
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