An entrepreneurial look at e-procurement by public sector bodies could be the answer to putting them on track for 2006 savings, according to Peter Robbins.
Procurement won itself an audience at the highest levels of government with Sir Peter Gershon's report efficiency review, followed by Gordon Brown's demand that the entire public setor saves £2BN on its total procurement spend by April 2006.
Councils spend £25 billion on 38 million purchases from 800,000 suppliers, according to local government think-tank, the Improvement and Development Agency (IDeA). Clearly, the savings are there for the taking.
Big figures, big demands, but for local government departments there is a significant window of opportunity in which entrepreneurship and a look at the private sector could ensure public sector bodies (PSBs) are on track for big savings and key targets.
But there is a considerable amount of education to be done in terms of what makes a good e-procurement solution, the process of technological change and how to select the right solution for the job. This may take time but with pressure rising for savings, the PSB culture of inertia will change to reward 'Path Finding' entrepreneurs.
PSB's argue that private-sector purchasers have it easy, their job is to make money, and if switching to e-procurement makes that easier, the adoption process is far simpler to rationalise.
England's near-400 local authorities have different and sometimes conflicting priorities when it comes to procurement. Whilst they must serve the public, they must also demonstrate best value and maximum return on budgets. The shift to e-procurement is a technical and managerial challenge for any organisation, but councils must also take account of political and local economic factors.
But Sir Peter Gershon's report and the inherent pressure it has applied means PSBs' approach to e-procurement has been variable and inconsistent, as they look for the perfect solution. And even government led reverse auction technology has seen poor adoption according to research by Stephen Ashcroft. Yet big savings still have to be made and this is where the private sector can deliver.
In the private sector environment, advanced purchasing solutions exist that will return considerable value given they are proven with large complex corporate entities.
Importantly, and in direct comparison to government, the private sector is the only arena in which e-procurement has been able to develop, exist and thrive as organisations have striven to gain control of their spending through enhanced efficiency, adding value to the bottom line and retaining or developing profit margins. Here it's a matter of business survival that has focussed attention towards the development of the most efficient solutions.
As a result, robust, tried and tested advanced e-procurement solutions already exist in the private sector that entrepreneurial local government buyers can adopt tomorrow. More benefits, faster, means more resources to satisfy PSB stakeholders and hit targets. However, there is a real perception that the private marketplace is a complex maze of inadequate undeliverable solutions. This is simply not true.
This is where private sector professionals can really add value in terms of advising and educating PSBs towards an informed solution selection that meets their needs. Be it a simple electronic purchasing card or something more advanced that goes well beyond P2P propositions to offer purchasing facilities through cross supplier, by-product price and availability comparisons. Afterall, any public sector over-spend will be redeemed through the private sector purse in the end and this is why it is in our collective interests to offer expertise and encourage entrepreneurship.
E-procurement and the more advanced private sector solutions will no doubt spread more rapidly as PSBs are forced to take an entrepreneurial approach, becoming more familiar with the marketplace due to added pressure to make savings. But industry professionals can facilitate this process to get e-procurement on the strategic agenda.
Winners will be the early entrepreneurial adopters of cohesive solutions as part of a best practice approach.
Peter Robbins is MD of Probrand Ltd