E-procurement will save EUR414m: Roche Thursday, September 11 2003 by Frances Gleeson
Dick Roche TD has claimed that e-procurement in the public sector could save the exchequer millions, but one expert says a lot of work is still needed.
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The government is expecting EUR414 million in savings over five years with the implementation of its e-procurement strategy, said Roche, Minister of State with responsibility for Europe, speaking in Dublin at the launch of a seminar on e-procurement, or automated electronic purchasing, in the public sector.
According to Roche, the government is expecting, after the five-year period, additional ongoing savings of EUR177 million per annum.
"E-procurement is in fact about the creation of an environment," Roche said, "an environment where there are appropriate organisational structures, healthy relationships with suppliers and fully transparent business processes in place."
He said that the government recognised that if it did not implement an e-procurement strategy based on sound procurement practices with appropriate organisational structures it would not reap the expected benefits.
"I'm not trying to negate the figure (EUR414 million), but each department needs to do its own assessment of what savings will be made in automating its purchasing processes," said Colm Kennedy, CEO of EPC, which hosted the seminar.
He said with the government is making EUR8.8 billion in purchases per annum and that saving 5 percent on this figure, which would be EUR440 million, would be welcomed, but a savings of just 1 percent, or EUR88 million, would still be great. "In fact I think the figure is conservative, there is a lot of inefficiency on the buy side, and probably on the sell side as well," Kennedy said
He also advised that the government's e-procurement strategy be focused on the supplier and highlighted the fact that some of the government's smaller suppliers might not be able to avail of e-procurement. The Internet must be the bridgehead, allowing smaller suppliers to check and accept orders on-line and removing as much of the paper chasing and checking process as possible, Kennedy said.
Procurement projects will be undertaken in nine departments and sectors over the next twelve months. The government says the new measures will complement the existing eTenders Web site, which has been running since March 2001. This site currently has 10,000 suppliers in Ireland and from abroad who use it to access all Irish public sector tenders.
Case studies of e-procurement at Kerry County Council and the North Eastern Health Board were presented at the seminar. Both are further along in their strategy than any other areas of the public sector, with parts of the e-procurement process already up and running on a pilot basis. However, Kerry County Council and North Eastern Health Board have said that they still have much work to do in terms of integration and are still talking in detail with suppliers to facilitate it.
"The feasibility of e-procurement is further along than it was," said Kennedy, "but e-procurement is just one component of the e-government strategy."
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