More than two years in planning, the EC4P service charges state departments with buying goods and services through a centralised purchasing portal that will be hosted by GE ecXpress. Departments can customise portal views to suit contractual requirements, with individual buyers only able to see the products they're allowed to buy.
Designed as an open service, EC4P is being particularly marketed to SMEs as a way of accessing competitive government marketplaces. The system gives suppliers a range of options for getting involved, ranging from phone orders to more sophisticated XML-based order interchange. Suppliers can pay GE a nominal one-off fee (approximately AU$200 for 20 items) to set up a standards-compliant online catalogue, or can simply have EC4P point to specific products and services on their own Web site.
Nearly 200 companies are already online, having supplied the Victorian Department of Natural Resources and the Environment since it went online a year ago. Of those, more than half never had a Web page previously - suggesting that the EC4P model is gaining traction amongst the massive SME sector.
In July, the Department of Human Services joined EC4P, while the Department of Education & Training went online in August. All told, seven core Victorian government departments are being herded online, each charged with pushing its various subagencies onto the system. John Lenders, Victorian Minister for Finance, believes the number of EC4P users will grow sharply, passing 5000 by year's end and reaching some 17,950 by the end of calendar 2003. This adoption will see the system break even after four years; from the fifth year onwards, it's expected to trim purchasing costs by $11 million annually.
EC4P is the latest in a string of procurement portals designed to link buyers and sellers online, and almost to a one all have been miserable failures. Not even CorProcure, despite many millions invested and the backing of 14 of Australia's largest companies, was able to make the model work; it was unceremoniously sold to Australia Post in January.
Michael Beckett, EC4P project director with the Department of Treasury & Finance (DTF), acknowledged problems with earlier efforts but believes they failed because they were designed to let buyers join forces and strongarm suppliers into lowering prices. EC4P, on the other hand, is more about streamlining high inefficient government purchasing.
"We've learned from the failures of others," Beckett said. "They focused on reducing the costs of the items being sold, but this set up in suppliers' minds that it was just an exercise in trying to reduce costs [to buyers]. We've pitched it to suppliers by pointing out that they get a number of benefits - reducing the cost of handling orders, reducing the time it takes us to pay, and linking directly into suppliers' ERP systems. We find savings of from 59 percent to 74 percent by processing an order inside the department online."
There are signs suppliers are buying the government's arguments: in one of 15 informational forums run for prospective suppliers, 99 of 105 attendees said they were keen to participate.
"Almost every single supplier comes to the realisation that they've got to be [online] or they're not going to be competitive," said GE ecXpress business development manager Peter Chambers. "We don't preach the message, but let them come to that conclusion themselves. We're trying to find an accessible front end that will allow them to play in this space."
Victoria isn't the only state moving into e-procurement. NSW is currently rolling out a similar system, launched in March and spearheaded by the Department of Public Works and Services, while Western Australia and Southern Australia are also progressing. The variety of approaches is necessary to suit each state's individual buying patterns: NSW, for example, has a centralised procurement policy with most tenders managed centrally; in Victoria, individual departments manage their own contracts.
Although each state is pursuing its own model, DTF e-procurement manager Andrew Ferrarese said the group will next week begin discussing potential interoperability between the states' marketplaces. Such interoperability will be guided by the Australian Procurement and Construction Council's Government Framework for National Cooperation on Electronic Procurement, a procurement framework that was updated in June to reflect changes since its first release in 1999.
