Eyebrows rise at dept choice

By ADAM GIFFORD

The Department of Work and Income's choice of two solutions for its electronic procurement pilot has raised IT community eyebrows.

Chief financial officer Gary Lewis said terms of reference were being finalised, and concurrent three-month pilots should be live next month.

The successful tenderers were an EDS-Solnet consortium, which offered the iPlanet BuyerXpert solution developed by the Sun Microsystems-Netscape alliance, and Cap Gemini Ernst and Young with Oracle, offering an Oracle eprocurement system.

"They met the requirement specifications better than the other three on the short list," Mr Lewis said.

He said ease of use was critical to the choice.

"It has to be accessible to suppliers. We have operated a workflow system for four years, but you have to be an expert to use it."

Under the terms of the pilot, the vendors will build and host a solution at no cost to the department.

The pilot will involve executive assistants from the national office in Wellington ordering from suppliers directly over the internet, reducing the workload on staff at the department's shared service centre in Rotorua, who normally process procurement requests.

The idea is that once a system is installed throughout the organisation, Rotorua staff will have more time to negotiate with suppliers.

"A lot of the savings will be out of strategic sourcing," Mr Lewis said.

The pilot is free to the department, but could cost the suppliers, and those costs will double to cope with two systems to interface with.

Suppliers in the pilot referred questions to the department. They include stationary supplier OTC, furniture company Optim Group, Communication Arts and Filecorp.

The contenders who missed the cut were SupplyNet, Accentia (formerly Andersen Consulting) and e:\\volution, which went into the bid with banker Westpac and marketplace software provider Metiom.

Suspicion exists that the e-procurement exercise won't deliver full benefits.

"They are worried if they go to ministers and say they can save $80 million by doing this, Treasury will take that from their budget up front," said an observer.

Mr Lewis rejects that. "Government clawback is a policy issue, but there have to be incentives for departments to do this."