Should Public Bodies Build or Buy Their E-Procurement Systems?

E-sourcing has very different levels of adoption in different parts of the public sector across Europe. When we say e-sourcing, we mean electronic processes for advertising, allowing suppliers and buyers to exchange documents, and running tendering.

The market is also fragmented in terms of the vendors involved. The large ERP providers are, of course, involved in many countries, but are far from dominant. Other players have differing strengths at a regional level, so BravoSolution is a market leader in the UK, strong in other northern European countries and Italy, but less so in Spain, for example. And there are national-level players that can dominate in one country but are almost invisible elsewhere.

Back to adoption… The European Commission has now mandated the use of “e-procurement,” as it calls it (we might say e-sourcing), across all public organizations. You probably have until 2018 before you are going to get beaten up for not having the capability, but clearly it is better to get going with your plans now if you’re not in position yet. In some countries, like the UK, this isn’t a big deal, and the vast majority of public bodies have at least some basic functionality already. But in some parts of the EU, there is more work to do. That’s why we have written and published a report on the issue, which you can download here free on registration. It is titled “Implementing the E-Procurement Mandate – Technology Choices and Key Decision Factors.”

Vortal, the leading software firm in the Portuguese public sector e-procurement market, has sponsored the paper, although as usual with Spend Matters papers, it played no part in determining the content. In the document, we consider the issues that those organizations will be investing in e-procurement for the first time need to consider and the requirements that need to be met. Actually, much of the material could also be useful to those looking at upgrading current systems, too, and we might even suggest that many private sector firms would find something of interest in there too.

One of the fundamental decisions to be made for first-timers is whether to build their own platform or buy a proprietary system. On that issue, we come down very clearly on the side of buy versus build. We outline the reasons for that verdict in the paper, which seem to us pretty conclusive. For example, here is one of the points from the paper in favor of an “off the shelf” offering:

“Future-proofing: an-off-the shelf solution from a reputable provider will be virtually “future-proof.” Providers will pick up on new EU regulations and other new requirements, with an automatic upgrade path with costs defrayed across multiple users. An in-house developed system has unknown and almost limitless potential costs for upgrades and changes.”

So why do some organizations choose to develop their own system? Is it perhaps sometimes the vanity and self-serving thinking of managers (IT, finance or procurement) who see the chance to launch an exciting project to guarantee themselves a job for years to come? You may think that, I couldn’t possibly comment!

Anyway, do download the paper here and read more.

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