Impact of E-Procurement Systems on UAE Government Services - Dissertation Example

Impact of E-Procurement Systems on UAE Government Services (2661 words) This paper aims to explain the current status and investigate the progress of the Internet services companies in UAE especially in the area of e-procurement in the government sector. The study starts with an introduction that illustrates how UAE government began encouraging all the government institutions to use the modern technology in all areas especially in e-procurement. A case study about one of the famous companies in UAE is examined and several interviews were conducted with the business and IT managers in this company, also several interviews with some of Tejaris customers in the government sector were conducted. The paper provides an insight into how the company developed their business and how it is progressing in the field in terms of their own strengths and target markets. Some of the critical success and failure factors are discussed also in the paper. Keywords: Critical success factors, e-government, e-procurement, e-procurement framework. 1. Introduction The explosion of the Internet and growth in e-commerce has changed the services industry in the late twentieth century. This fact led to changes in online transaction and Internet-based services. Driving by the competition for services sustainability, governmental institutions have developed and implemented the e-commerce strategy. Public sector organisations can achieve significant savings by managing their procurement and commercial activities in an effective way [7]. According to LaVigne [5], there are five kinds of skills for a successful e-government: analytical, information management, technical and communication/presentation skills. There is growth of research interest and experiences in relation to the success and failure factors for electronic markets [2], [6], and [10]. In UAE, a steering committee of the UAE Federal Government was set up under a cabinet resolution to provide the road map of e-government and it is facilitated by the Ministry of Finance and Industry [15]. The e-government project is expected to improve the efficiency, accessibility, information flows and quality of interactions between the Federal Government, business and the people residing in UAE. This e-government project is undertaken and measured by its benchmarks while several projects, such as e-procurement project, can work in parallel. The experience of implementing similar projects has been incorporated from those in USA, Hong Kong, and the UK. This paper is organised as follows: evaluation of the good practices in developing e-procurement systems will be discussed in Section 2. To extend the experience, a suitable e-procurement system for the UAE government will be proposed in Section 3 where critical factors for the development of the system are discussed, and finally conclusions in Section 4 will be drawn with future work towards a successful development of the e-procurement system. 2. E-Procurement And Its Evolution There are eight types of e-government [4] which can bring significant benefits to the government, citizens, business, employees, and other non-profit organisations. E-government initiatives should focus on five consumer-to-government relationships: Citizen-to-Government, Business-to-Government, Government-to-Non-profit, Government-to-Government and Government-to- Employee, see Table 1. Table 1. Descriptions for characteristics of e-government. Items Information Communication Online Transaction G2C and C2G Information requests of a firm or the citizen regarding taxes, business licences, registers, laws, political programs, administrative responsibilities, etc. Information requests and discussion regarding administrative processes and products; communication with politicians, authorities etc. Online delivery of service and posting of results; electronic voting, providing solution online, and participation online, etc. G2B and B2G Information requests of a firm or the citizen regarding taxes, business licences, registers, laws, business programs, business policy, administrative responsibilities, etc. Information requests and discussion regarding administrative processes for business and products; communication with politicians, authorities, etc. Online delivery of service and posting of results; electronic transactions of accounting, e-auditing, e procurement, e-shopping, etc. G2G Exchange of information among different authorities and different hierarchical levels, regarding administrative acts and laws, policy making, data, projects or programs, background information to decisions, etc. Information is exchanged among different authorities and different hierarchical levels; discussion forum; communication in negotiation and decision making; interaction regarding administrative acts and laws, projects or programs, etc. Inter-organisational workflow and exchange of data, exchanging policy and solution online, information and knowledge management, etc. N2G and G2N Exchange of information regarding administrative acts, administrative policy, data, registers, laws, political programs, background information to decisions etc. Information is exchanged among different organizations and agencies; discussion forum; communication in negotiation and decision making; interaction regarding administrative acts Intra-organisational workflow, and exchange of policy and solution, data, information and knowledge Management, etc. G2E Exchange of information regarding works and performance, personnel policy, data, and notice for career management and development of government employees, etc. Information is exchanged among different department or persons; discussion forum; communication in negotiation and decision making; interaction regarding works and performance, etc. Interpersonal workflow, and exchange of personnel policy and solution, data, information and knowledge management, participation online, etc. The UAE government has realised the strategic value of e-government for streamlining procurement processes which enables lowered procurement administration costs; improved data gathering and reporting on company expenditures; improved compliance with corporate contracts; shortened requisition and order fulfilment cycles; enhanced negotiation leverage with suppliers; and enablement of procurement professionals to focus on more strategic tasks. The experiences from USA, Hong Kong and the UK have been evaluated and adopted in developing an e-procurement system initiated by the UAE government. The supply chain of the giant US aerospace and defence Boeing [12], [8] involves 20 disparate procurement systems and 40 unique supply chain and business processes which handle 8bn transactions annually. The company integrated the supply chain in what is called eBuy@Boeing initiative, to automate it and connect it to Exostar; the aerospace trading exchange. Boeing business units realized an average savings of 32 percent over traditional negotiation techniques from hundreds of electronic auctions in 2002. Hong Kong’s [11] strategy sets out a vision, initiatives and targets of how government, business, industry and academia can work together to make Hong Kong a leading digital city in the globally connected world. Hong Kong’s Digital 21 strategy presents an all-encompassing strategy based on four enabling factors, such as, developing a high-capacity communications infrastructure; establishing an open and secure common interface for electronic transactions; empowering people with the know-how to use IT; nurturing a culture, this stimulates creativity in the use of IT. The UK government sector [9] implements its e-procurement programmes through the Office of Government Commerce (OGC), an office of HM Treasury, responsible for improving value for money by driving up standards and capability in procurement, the (OGC) works closely with other procurement advisory bodies to provide advice and guidance to the public sector on the successful adoption of e-procurement. In autumn 2002 the OGC published e-procurement: Cutting through the hype, as a guide to e-procurement for the public sector. Since autumn 2002 there have been significant developments for e-procurement: legislative changes have encouraged greater use throughout the European Union; new techniques such as electronic reverse auctions (e-Auctions) have become common practice; and the government has launched its drive for greater public sector efficiency following HM Treasurys publication of Sir Peter Gershons Efficiency Review, Releasing Resources to the Frontline, in July 2004. 3. The Impacts of E-Procurement in UAE Since its commencement, there are visible indications that E-procurement has produced great impacts on the UAE governmental approaches to carrying out its commercial operations. Some of these invaluable benefits are outlined below [16]: Cost-effectiveness: UAE E-procurement system has resulted in unprecedented cost reduction through substantial savings as the onus of procurement has been overtly simplified: this entails that elaborate paperwork and time-consuming procedures that usually frustrate the traditional procurement activities have been summarily removed. Transparency and Corruption Control: Transparency International, a watchdog that monitors the activities of governmental agencies and sovereign states in order to detect, publicise and renounce every act of corruption has canvassed for the establishment of E-Government around the globe [17]. In UAE, E-procurement mechanism has made inter-governmental dealings less secretive, efficient and properly documented. This is against the backdrop of politically-motivated under-dealings and procurement activities shrouded in mystery, which usually promoted corruption in traditional commercial activities. Explosive Information Markets: Like in other economies, the introduction of E-Government has helped to create more centrally-regulated Information markets [18]. Inexpensive businesses have sprung up in UAE on the strength of the involvement of UAE Government in ICT/Internet; a revolution that has given rise to small pockets of information markets across the country. These explosive ICT markets wouldn’t have existed if UAE hadn’t set up its E-Government system in the first instance. 4. Development Of UAE E-Procurement System Dubai E-Government initiative, which was launched in 2000, had identified e-procurement as high priority project because of the quick implementation and quick wins which can be used to demonstrate the success to the management and decision makers. Part of this high priority initiative (i.e. the e-procurement), Dubai e-government [1] decided to outsource this service to Tejari who offers all services: Framework for development: Tejari Supports both seller and buyer online Auctions (Reverse and Forward Auctions), to fully maximize the value of B2B transactions conducted through the e-Marketplace. Customers can create new auctions, to meet specific purchasing requirements in a transparent and efficient manner; auto-extend Auctions, so that auctions extend if new bids are received in the closing minutes. Consultancy: Tejari’s procurement expertise enables the company to provide world-class standards of procurement consulting ranging from analysis to suppliers adoption strategic plans. Integration of the systems: Tejari has come up with the ideas of building a national directory which includes the information about all the companies in Dubai. This directory will enable them to promote or ask for trade leads. Tejari Security and Integrity: Tejari is powered by Oracle, which provides technology and scalability to provide a safe and reliable environment for conducting business. In order to aid the decision making for the UAE government, various assessment over Tejari have been conducted by the use of SWOT, see Table 2. Table 2. The key features of Tejari for decision making. Strengths: Financial resources of Tejari to build brand. Leading edge technology and partnerships. Weaknesses: Perceived value far below those of traditional B2B firms. Limitations from Tejari culture and difficulties. Opportunities: First move onto Internet among major B2B firms. New markets through Dubai E-Government. Threats: Increasing numbers of online B2B ecommerce firms. Market entry by other services institutions or Internet portals. The results provide the decision maker the long-term strategic viability of Tejari. Furthermore, B2B e-commerce faces the following challenges: Change Management: Buyers (end users) are using their traditional or electronic procurement system for some time. They are asking questions as to: why to change? The challenge lies in convincing the buyers the value of change. Trust (Security & Privacy): Buyers and suppliers need to be sure that their transactions have high level of security and privacy. In addition. The challenge is: how can trust be created in the minds of buyers and suppliers of B2B. Laws and regulation: Buyers and suppliers need to be sure that their transactions are accepted legally by the court. The challenge is: how are these ensured in the minds of buyers and suppliers. Infrastructure: Buyers and suppliers need to have at a minimum, internet connection in order to start using any e-commerce web enabled application. The challenge is: how to increase internet penetration by buyers and suppliers. There are many factors that have had direct impact on the success of Tejari according to its customers, Tejari have the following success factors: A firm commitment and backing by the Government Organizations for its procurement needs, hence Dubai e-government initiative is fully supporting Tejari and has shown full commitment towards it. A strong and experienced management team led by an accomplished CEO. A well orchestrated marketing campaign to establish a strong and well known brand around the region. A successful business model which leveraged existing trading partner relationships and demonstrated immediate savings. Saving time for suppliers and dramatically reducing procurement costs for buying organizations. Increase e-commerce awareness level and educate the community on how to convert to e-procurement system. The revolutions of technological and information are sweeping the world as its becoming cheaper and more affordable to adapt technology [14]. In the past many development and e-government projects have failed, the main reasons for success and failure are (these factors are reproduced here from [3]. Why e-government projects successes, examples from UAE: External pressure: UAE is situated at the crossroad of Asia and the Middle East providing a potential market to almost 2 billion people, the country is making investments in the latest infrastructure technologies. Internal political desire: The countries ten free zones and Dubai Internet City offer unique advantages. Overall vision and strategy: Strong government support of the telecommunications industry and infrastructure. Policies aimed at inviting foreign technology firms into free trade zones. Effective project management: There are unlimited educational opportunities in IT, the major universities and education facilities around UAE are offering programs in telecommunications and IT. Furthermore, UAE is beginning to make basic computer skills a key curriculum in lower education institutions. Adequate technological infrastructure (Encouraged through appropriate telecoms policies): Cyber security laws were passed in UAE in 2002 and 2006 and no significant trade barriers to the presence of foreign competitors in the software market or hardware market. Why E-government projects fail, examples from UAE: Lack of vision and strategy: In some of the government departments there is a lack of link between ends and means. Poor/unrealistic design: In some government departments they began adapting the e government strategy inappropriate way. Lack of requisite competencies: In some districts the cost of Internet access is still very high. Inadequate technological infrastructure: Locally no significant manufacturing of hardware or software. UAE eProcurement system will provide: Compliance: centrally negotiated contracts comprise the only goods and services available to buy via the system. Control: automation of processes ensures that approved business rules are enforced (e.g. financial authorisation for purchases above certain amounts prior to placing the order). Efficiency: improved procurement processes (identification of requirement through to payment) facilitate a more effective use of staff time. Improved value for money: more detailed management information for future contract negotiations. Information on spend: the systems collect and report on transactional data; how much is spent, who spends it, what they spend it on, when they spend it and who they spend it with. Modernisation: use of the latest technology to bring procurement into the 21st century meeting existing government targets. The UN Social & Economic Councils Committee stated that public sector organizations should become learning organizations with the objective of exploring [13]. 5. The Public Sector and UAE E-Procurement E-procurement was implemented in UAE to primarily institute qualitative and effective operational systems in the public sector. In other words, to sanitize the public sector. However, has the public sector been always receptive to the procedural changes engineered by E-procurement [19]. As evident in other countries where E-Government is in existence, UAE has witnessed some kinds of friction as it worked towards perfecting its E-Government objectives. Some of the setbacks include: Institutional Rigidity: Bureaucratic bottlenecks and inflexible institutional structures have always threatened the success of UAE E-procurement. Technically, it would take sometime for the public officials to change their attitudes towards restricting access to the complete information or data the systems contain [20]. The public sector has been traditionally run as a secret governmental powerhouse that allow only the high and mighty in the country to have unfettered access. In other words, ordinary citizens are barred from knowing what the government has got in the offing until they are publicly announced. On the contrary, the benefits of E-Government include making all information about UAE government managerial activities known even to the poorest citizens, as long as he/she has a functioning Internet connection and a computer [20]. So, UAE public sector is still grappling with how to make its activities accessible to all the citizens, while maintaining the appropriate confidentiality and protecting the privacy of all governmental agencies. The extent of adaptability of the public officials to the new challenges of E-procurement is so significant to perpetuating the known integrity and reliability of public “bidding” process during procurement exercise [20]. External Interferences: Even though the public service is expected to be neutral and insular to any other external influences, but the public service in several countries as well as UAE still comes under intense or subtle external influences [21]. Some of these interferences could be political, inter-departmental and pressures from financial institutions that turned Dubai into the centre of world services. It is believed that such influences, if unchecked, could affect the overall efficiency of E-procurement in UAE. The integrity of E-Government is measured by the veracity of the information it makes available to the general public; data and facts that are unaffected by external pressures [21]. Structural Re-engineering: The evolution of E-Government in UAE requires dramatic re-engineering of the pre-existing organisational structures in all branches of the public service exposed to the E-system in order to guarantee encouraging outcomes [21]. The cost of carrying out this organisational transformation is expensive, and it is one of the reasons nations shy away from implementing E-Governance in their jurisdictions. But UAE has been able to implement this re-engineering to some extent using the finances available from several sources for its commercial expansionism. But how much re-engineering these UAE public services’ Departments have achieved really? 6. The Appropriate Model for E-Procurement for Public Services There are different models of E-procurement, but only one of them is precisely useful for procurement activities at the public service. This model entails that there is a Central Information Unit that would act as a portal from which all citizens/buyers and suppliers could freely interact together, share data and enter into commercial transactions [22]. In the case of Indonesia, this central portal is in the form of a single, integrated, Internet-enabled National Electronic Procurement System (NEPS), which connects all buyers/citizens with their suppliers by acting as a master light panel from which both parties (buyers and suppliers) could access the needed data and participate in the processes [22]. However, UAE doesn’t run its own governmental central portal but contracted it out to Tejari, which is powered by Oracle. The common procedures for this public model of E-procurement is as follows: * The system administrators will create certificates and passwords, and assign quotas for using the system resources [22] * The public administrations register/subscribe to the system and organize their electronic environments by identifying the system type and the characteristics of tenders; by assigning users’ profiles and associated access levels to the subscribed bidders; by activating the search engines that will make it easy for the tenders to find the right keywords; by activating tracking mechanism for certain period of time in order to monitor the use of the available resources; by using time-stamps on all the documents submitted during the tender processes [22] However, this public model has its own inherent risks in the course of implementation. These problems are associated with the use of the public model of E-procurement system. * the difficulty of converting electronic forms to hard copy * Modern Bureaucratic dependencies * The problem of computer viruses being introduced into the systems from the computers of both the buyers and the suppliers. * the difficulty of appropriating nonelectronic bids that come along the electronic ones; that is, how to arrive at a consensus that would be favourable to everyone. * Lack of enough space on the system to accommodate more bids as the deadline approaches while the system’s bandwidth becomes limited. * How to make the submission of bids available by establishing an independent service for this. * Encouraging increased participation in the bids process. * Establishing private channels of communication in order to check the flow of information from non-governmental sources. If all these risks/problems could be handled properly, there is every possibility that the E-procurement model for public service would be efficient [22]. The efficiency of the Central Information Unit or Portal depends largely on how much information is available for the buyers/citizens and the suppliers to access; and it also depends on the monitoring of the information/data as they are passed from one end to other, whether through the governmental or private channels. 7. Security Concerns About E-Procurement Systems For E-procurement to be adjudged a success, the following security measures must be carried out. A typical E-procurement system involves a large volume of electronic activities that carry enormous danger with it. Some of the risks include the transmission of viruses and system breakdown. It is important that security is managed in the areas of confidentiality, integrity, authentication, Non-repudiation, access control and digital signature [22]. Hence, these security operations would help to maintain high quality in UAE E-procurement system in the areas discussed below: Confidentiality: The strength of UAE E-procurement system relies on how successfully the information/data that are being exchanged between the buyers/citizens and their suppliers/sellers are seriously protected. This information could be protected by making sure that the entire system is made unaffected by viruses or external hackers by suing encryption [22]. Encryption has the possibility of keeping sensitive data safe from being violated and put the whole E-procurement process into mess. Integrity: For users to keep utilizing the E-procurement, they need to be assured that the system has been performing properly. There is no way to do this other than making sure that the integrity of the system is guaranteed. This implies that the messages communicated through the system have not been intentionally or unintentionally tampered with so that either party could rely on the final data at their disposal [22]. The best approach to maintaining the integrity of the messages is by using a software called Hash Function. This helps to verify the originality of messages by using its algorithm to detect any alterations in the messages between the buyers and the suppliers. Authentication: There must be an authentication mechanism in place so that when a user signs in, it will be immediately identified to avoid confusion of users’ identities. Lack of this mechanism may reduce the users trust in the process, thereby causing a problem of integrity to the system. Non-repudiation: This will prevent an occasion of denial even though the buyers have received the things they ordered for but denying their receipt. There are instances when some dubious people would like to cheat the system by circumventing the procedures; however, the use of digital signatures, transactional certificates, time stamps and confirmation services would be instrumental to reducing the rate of occurrence of such problems [22]. Access Control: It is very important that the access into the system must at all time be controlled. This would prevent external hackers and other unauthorized users from breaking into the system. The best approaches would be the use of time-locking electronic tender box, the opening of tender box with secure digital permission (private key) and public key infrastructure (PKI) support and using digital signatures. Digital Signature: This device is very helpful in securing any electronic transaction in the sense that it works exactly like a personal signature. Using digital signature can enhance the integrity of the E-procurement, while preventing the problems of authentication, confidentiality and illegal access [22]. 8. Measuring the Performance of E-Procurement Initiatives Establishing the E-procurement system is not enough in itself, UAE needs to implement some performance-measuring techniques in order to constantly monitor its operational successes. UAE would be highly interested in knowing how its E-procurement system has been able to contribute to its objectives of efficient government, better customers’ satisfaction and good societal implications. Hence E-procurement process could be adjudged whether it is successful or nor based on the following outcomes: * High Rate of Efficiency: UAE strategists may want to know if this process helps to increase the efficiency of governmental activities or not. Is it reducing corruption? [23]. Are all the governmental organizations involved in the process success-oriented? Have the introduction of this system been able to improve the overall activities of UAE government? These and many other questions are necessary to determine whether E-procurement has worked the wonders UAE planners hope it would. * Cost Reduction: The most important reason why countries adopt the use of E-procurement is to make sure that their overhead cost of doing business is drastically reduced, in as much as the line of traditionally processes have been removed [24]. UAE government should have expected a huge savings from restructuring its workforce and positioning them for maximum production that would invariably lead to cost-efficiency of each agency or organisation of the government. * Greater Access: An E-procurement system has failed if it doesn’t provide an opportunity for wider use by everybody in a single locality: what this signifies is that E-procurement should be made available t every citizen of a nation, to the bidders and the suppliers. The cheapness of Internet has also made this medium readily available to most people living in a country. There is no doubt the citizens of UAE have access to the Internet and they could participate in the E-procurement processes of their country. [25] * Confidence-Building: It is believed that E-procurement is successful if the citizens could now rely on their bureaucrats as a result of transparency in the bidding/tendering processes: a system that was traditionally done in secret many years before. E-procurement helps to eliminate corruption through bid-rigging, bribery and illegal pricing system. The openness of the system allows the citizens to participate more in the bidding/tendering processes knowing fully that there would be no shady deals. 9. Conclusion And Recommendations E-procurement practices are an ever more important part of government purchasing decisions and processes. Early experiences by governments at all levels, all across the nation show that well-thought out and implemented e-procurement can provide purchasing agencies a wide range of benefits. Investment in national IT infrastructure is required to implement e-government applications. The government must also conduct self-assessment to measure the e-readiness aspects including human resources, economic stability, education, public/private sector, legal framework and security issues. The leaderships involvement is highly recommended with the necessary monetary and political influence. Also conviction has to be passed down to public and government department. The project of e-government should be divided into milestones, each one must be evaluated and more support and encouragement should be given for the departments. The government should encourage privet sector to participate in e-government development, however it should insure the protection of privacy and security to the consumers. Government should try to plan locally but think also globally, starting small and simple, and always involve internal and external stakeholders; employees have to be convinced of the important and potential of e-government, also involvement of high-tech companies; software houses and banking sector is recommended. The government should have the willingness to allocate sufficient resources to technological upgrading at the highest decision making levels, also try to reduce the digital divide by adapting a computer literacy training programmers in all educational institutions. E-procurement in UAE is still in its initial stage for the Federal Government, while Dubai local Government is using e-procurement for more than 5 years. More training and awareness campaigns are required for UAE Federal Government to increase the understanding level and demonstrate the benefits of e-procurement. For future, more research studies should be done for both UAE Federal Government and Dubai local Government, such as, detailed analysis of measure the Return-on-Investment (ROI) of e-procurement; evaluate some of the e-procurement trends (like: Strategic Sourcing and Out-sourcing); set e-procurement operational measures: e-procurement systems provide both operational and strategic benefits. The operational benefits are related to improve the efficiency of procurement process which will reduce procurement total cost of ownership (TCO). In such study we need to evaluate the TCO. References: [1] to [15] , I have the references, please complete the references you will add as follows: [16] S.C. Bhatnagar, E-Government: From Vision into Implementation; A Practiical Guide with Case Studies. SAGE Publications, 2004,pp.25-66 [17] R.B. Ventura, E-Government in high Gear. Nova Publishers, 2008, 99-102 [18]H. Rahman, Handbook of Research on E-Government Readiness for Information and Service Exchange: Utilizing Progressive Information Communication Technologies. Idea Group Inc. (IGI), 2009, pp. 419. [19]K.V. Andersen, E-Government and Public Sector Process Building: Dilettantes, Wheelbarrow and Diamonds. Springer, 2004, pp. 177. [20] D. Griffin, P. Trevorrow and E.F. Halpin, Developments in E-Government: A Critical Analysis. IOS Press, 2007, pp. 45 [21]Organisation for Economic Cooperation and Development (OECD), Integrity in Public Procurement: Good Practice from A to Z. OECD Publishing, 2007, pp. 59-61. [22]Organisation for Economic Cooperation and Development (OECD) and Asian Development Bank (ADB), ABD/OECD Anti-Corruption Initiative for Asia and the Pacific. OECD Publishing, 2008, pp. 132-180 [23]A. Shah, Performance Accountability and Combating Corruption. World Bank Publications, 2007, pp. 70-74 [24]D. Neef, E-Procurement: From Strategy to Implementation. FT Press, 2001, pp. 163-165 [25]N.F. Kock, Encyclopedia of E-Collaboration. Ideal Group Inc. (IGI), 2007, pp. 18-20. Read More