E Procurement,

E - Commerce,
and Online
Financial
Reporting
 Procurement is acquisition
of goods and services.

E - Procurement
use of the Internet and other information and
communication technologies to carry out all stages of the
procurement process such as search, sourcing, negotiation,
ordering, receipt, and post purchase (Vaidya et al.,2006).
 E - PROCUREMENT
BACKGROUND
Traditional procurement is a paper-based process
characterized by fragmented purchasing, off-contract
buying, and lack of control over expenditures. The paper based
procurement process has managers spending most of their time
chasing paperwork rather than managing their supplier base or
negotiating better prices (Reddick, 2007).

The traditional procurement process is very labor intensive,

where much of the time is spent on filing reports and getting
signatures, which now can be done online.
 E - Procurement
1960s 1970s ENTERPRISE RESOURCE PLANNING
ELECTRONIC DATA INTERCHANGE
is a software system that helps you run your
- an automated purchasing
entire business, such as supporting
transaction between buyers
and processes in finance,
and sellers.
manufacturing, supply chain,
services, procurement, and more.

1990s
the Internet, and more specifically the Web, again
changed the procurement process, making it much
more accessible to governments of any size. IT has
greatly impacted the procurement processes of
government, especially with the growth of the
Internet
3 FACTORS TO CONSIDER IN GOVERNMENT
PROCUREMENT
Globerman and Vining (1996)

TASK COMPLEXITY
the degree of difficulty in specifying and

monitoring the contract. A high degree of task

complexity makes it more difficult to justify

contracting out to reduce costs,

giving the information asymmetry.

3 FACTORS TO CONSIDER IN GOVERNMENT
PROCUREMENT
Globerman and Vining (1996)

CONTESTABILITY
is a market that has many firms bidding

for contracts. This reduces costs and is a justification

for contracting out because costs are known from

the competition.
3 FACTORS TO CONSIDER IN GOVERNMENT
PROCUREMENT
Globerman and Vining (1996)

ASSET SPECIFICITY
it becomes more difficult to contract out because

there is a unique nature of the product or service

being offered.

IT has traditionally been a market with limited

contestability because of the nature of the

specific technology to meet

the needs of the public sector organization.

4 PURCHASING FACTORS UNDER
SCRUTINY AND E - PROCUREMENT

LOWEST BIDS WINS

the view that efficiency is the primary goal of
contracting goods and services. Competitive
bidding reduces the price and lowest price
wins the contract.
However, the reinventing government
movement in the 1990s showed that effectiveness was
also an important criterion to consider when
procuring.
4 PURCHASING FACTORS UNDER
SCRUTINY AND E - PROCUREMENT

VALIDITY AND APPROPRIATENESS

the validity of the separation of vendor and user and its appropriateness
for modern day procurement. Governments have tried to keep purchasing
agencies as far apart as possible from vendors to avoid the appearance
of favoritism. New IT can be used to inform vendors and government about
the needs of each other. E-procurement involves tracking the movement of actual
supplies to having interaction between vendor and government, which may
challenge the traditional way of doing this. Too often government contracts have
difficulty when there is lack of regard for the end user.
4 PURCHASING FACTORS UNDER
SCRUTINY AND E - PROCUREMENT

FIXED PRICE AND FIXED

TERM CONTRACT
there is a preference for a fixed price and fixed
term contract. There are benefits of this in terms
of economies of scale, but the disadvantages are that
they do not take into account the differences in
organizations, which is often the case when
purchasing IT.
4 PURCHASING FACTORS UNDER
SCRUTINY AND E - PROCUREMENT
OPEN ACCESS IN ALL SITUATIONS
open access in all situations is a challenge for procurement.
There is the traditional notion that with public financing
the contract is open and accessible to the public and press.
Government cannot expect to maximize vendor participation in
e-procurement programs without security policies in place.
MacManus (2002) believed that protecting personal
privacy should be given more weight than just openness
to government and that there is still ongoing debate
on what the impact of these initiatives will have on the
procurement movement and e-procurement specifically.
Adoption of
E-Procurement
Adoption of
E- Procurement
In an analysis of critical success factors that are predicted to
indicate the success of e-procurement initiatives, there seems
to be no single factor that stands out as being predominant in the
literature (Vaidya et al., 2006).

These critical success factors of e-procurement adoption can

be divided into human factors and technology factors.
Human issues depend on human behavior and expertise, whereas
technological issues depend on technologies used. Examples of human
factors are end user uptake and training, supplier adoption, project
management, and top management support. Technological factors
in e-procurement can involve system integration,
security, and authentication.
OTHER FACTORS
INFLUENCE THE
ADOPTION OF
E-PROCUREMENT

One is supplier participation and

intentions.
Second, suppliers can also
Some suppliers apply pressure on
exert pressure on their
their customers to use e-procurement customers to use these systems.
to reduce costs and improve
communications. Powerful suppliers may stipulate
that their buyers must use the
Suppliers may provide
e-procurement system or they
encouragement, possibly through
financial means, will not supply them.
to use e-procurement systems.
OTHER FACTORS
INFLUENCE THE
ADOPTION OF
E-PROCUREMENT

Third, there is internal organizational Fourth, in network connectivity/

support that drives organizational integration, suppliers’ systems
efficiency and lowers the cost of are well integrated and
conducting business. Internal compatible with buyers’ systems.
organizational support is vital If this is the case, a transaction
if e-procurement is going to be
is automatic and gets full
implemented successfully.
benefits from e-procurement.
OTHER FACTORS
INFLUENCE THE
ADOPTION OF
E-PROCUREMENT
▪ Fifth, e-procurement is said to
reduce the time spent on administrative
tasks for purchasing, allowing
this person toconcentrate more
on strategic issues.

Empirical results indicate

the major suppliers’ willingness to transact
online is adriving force that influences
buyers’ intentions to use e-procurement,
with internal managerial support
and perceived benefits having an
impact on a government’s
willingness to adopt e-procurement.
There are numerous barriers and critical
success factors to e-procurement (Padhi
and Mohapatra, 2010).
•Technical issues
•Inadequate technology
•Budget constraints
•Lack of leadership at the top
of the organization.
Suggested Benefits of
E- Procurement to
the Government
(1) lower transaction costs,
(2) faster ordering,
(3) wider vendor choice,
(4) standardized and more efficient payment process,
(5) greater control over procurement spending and less
maverick buying,
(6) More accessible Internet alternatives for buyers,
(7) less paperwork and fewer administrative procedures
(which can be automated),
(8) reengineering procurement workflows.
 GOVERNANCE
STRUCTURES
& TECHNOLOGIES
USED FOR
E- PROCUREMENT
PUBLIC WEBSITE
- buyers have the opportunity to use the Web
to search for opportunities to purchase with
potential suppliers. Buyers can use standard search
engines such as Yahoo.com and Google.com or specialist
trading search engines.

EXCHANGE
eBay is the most common e-commerce auction site for
consumers whereas sites like Synerdeal are most common
for business-to-business e-commerce. These websites
allow buyers and suppliers to bid for contracts. Online
reverse auctions are a way of reducing the purchasing
price for goods
MARKETPLACE
multisupplier/multiproduct catalog often maintained and hosted by a
third party who provides access to both supplier and buyer online,
often through a secure connection.

COMPANY HUB
is similar to a marketplace but the buyer hosts and maintains
the multisupplier and multiproduct catalog.

EXTRANETsecure and security-protected Internet link

between buyers and seller.
 SHARED SERVICES
Shared services involve consolidating administrative
support services across organizational units. They
are used to create greater effectiveness in service delivery
(Miranda and Kavanagh, 2005).
 OUT SO UR CING
ORM ATI ON TE CHN OLOG
INF Y
Management is important for outsourcing of
e-government projects regardless of size and complexity
of projects (Chen and Perry, 2003). When IT projects
are properly managed, better performance
is achieved for the organization.
 BEST
PRACTICES
OF INFORMATION TECHNOLOGY AND
OUTSOURCING IN THE PUBLIC SECTOR

FIRST
Public managers need to take a long-term
perspective, a strategic approach to IT outsourcing.
Public agencies need to understand their service needs
and the strengths and weaknesses of vendors, in which
both parties understand the long-term benefits of the project.
 BEST
PRACTICES
OF INFORMATION TECHNOLOGY AND
OUTSOURCING IN THE PUBLIC SECTOR

SECOND
Public managers need to shift their focus from
traditional procurement systems to use a more relationship
management approach. This means that instead of looking just
for the lowest bidder, public agencies should ensure quality
also is included in the procurement of IT.
 BEST
PRACTICES
OF INFORMATION TECHNOLOGY AND

THIRD
OUTSOURCING IN THE PUBLIC SECTOR

Performance measure and service-level contracts are important for the

management of IT outsourcing projects. Performance measures need to be
specified early in the request for proposals. Service-level agreements
must allow public managers to track the performance of the contact. In an
empirical examination of IT outsourcing, public management and external
factors impacted the final outcome. The external factors are the political-
regulatory environment and public management factors, which are the
capacity of management to deal with outsourcing.t.
 Philgeps
Philippine Government Electronic Procurement System

owned and operated by The Government Procurement Reform Act (Republic Act No.9184 s. 2003)

Procurement Service - With the passage in January 2003 of the Government Procurement Reform
Department of Budget and Act (GPRA) or Republic Act No. 9184 (RA 9184),
Management (PS-DBM), the Philippine procurement system was
rationalized and harmonized with international standards and best
serves as the central portal for practices.
all procurement information
and activities of the RA 9184 espoused the principles of transparency, competitiveness and
accountability. It also mandates the use of streamlined procurement
Government of the processes
Philippines. and monitoring of government procurement activities by the public.
 Public
Sector
E-Commerce
 PUBLIC SECTOR E-COMMERCE
Public sector e-commerce can be
defined as any process or transaction
conducted by a government organization
over a computer-mediated network that
transfers ownership or the rights to
use goods, services, or information (Reddick, 2007b).
 HOW DOES E-COMMERCE WORK?

E-commerce is powered by the internet,

where customers can access an order
online store to browse through, and place
orders for products or services
via their own devices.
 E-COMMERCE
ADVANTAGES
1. Availability
2. Speed of access
3. Wide availability
4. Easy accessibility
5. International reach
6. Lower cost
7. Personalization and product recommendations
E-COMMERCE
DISADVANTAGES
1. Limited customer service
2. Not being able to touch or see
3. Waiting time
4. Security
 Electronic Commerce Act of 2000
This is in line with Section 29 of Republic Act (RA) No. 8792 or

LAW
the Electronic Commerce Act of 2000, which gives the DTI the
authority to direct and supervise the promotion and
development of electronic commerce in the country with
relevant agencies.
THAT GOVERNS
E-COMMERCE IN
THE The Electronic Commerce Act of 2000 (Republic Act No. 8792),
PHILIPPINES signed into law June 14, 2002, provides for the recognition and
use of electronic commercial and non-commercial transactions
and documents. RA 8792 is commonly referred to as the E-
commerce law.
REGULATORY FRAMEWORK
 O NL IN E
F IN A N C IA L
RE PO R TI NG
 ONLINE
FINANCIAL REPORTING
The Internet has become a low-cost
mechanism used to report online financial
information to the public and businesses
and an important area of IT and public
administration. The emerging research on
this topic examines factors that explain
whether a government places financial
information online.
The Internet for financial reporting for local government
authorities in New Zealand
In an examination of the Internet for financial reporting for local
government authorities in New Zealand, an empirical analysis showed
that leverage, municipal wealth, press visibility, and type of council
were associated with Internet financial reporting practices (Laswad et
al., 2005). Leverage is the use of debt to finance public activities, which
is an incentive to reduce costs through Internet financial reporting.
Municipal wealth and the disclosure of financial information indicate that
poorer local governments decrease the likelihood of disclosure. An active
press provides an incentive for municipal governments to disclose
financial information on the Internet. The type of council should have an
impact on financial disclosure with councils in more urban areas having
more interest groups and pressure to disclose financial information.
Best practices in budget presentation and financial reporting
through the Web.
In an examination of best practices in budget presentation and financial
reporting through the Web, Justice and colleagues (2006) found some
interesting results. Governments that had award-winning budget documents
through preparation of the traditional budget and financial reports did not
necessarily have exemplary online budget reporting. Essentially, many
governments have not exploited the potential of the Internet for financial
reporting. Therefore, the award-winning budgets seemed more for the
reporting to peers and bondholders rather than encouraging citizen
participation. These findings are consistent with governments outside of the
United States, where the disclosure of financial information has not been
directed at citizens to any great extent (Bolivar et al., 2007). However, fiscal
transparency and direct citizen involvement in the budget process is
understood as necessary for ensuring accountability of the public sector
resource allocation. E-government provides a means of ensuring a greater
degree of transparency in financial reporting, but it is being underutilized by
governments in the Internet age (Justice et al., 2006)..
Best practices in budget presentation and financial reporting
through the Web.

Empirical research shows that use of the Web for financial disclosure is rooted
in a country’s administrative culture (Bolivar et al., 2006). Countries that have
different administrative cultures have different views on the disclosure of
financial information. Countries in North America scored the highest in terms
of disclosing financial information. Anglo-Saxon countries are characterized
by separation of power; therefore, accountability is important for the
disclosure of performance information. Therefore, more open countries lead
the way in facilitating access to financial information compared with
continental European and South American countries, which have more
restricted views on financial disclosure. The reporting of financial information
online is a growing agenda for governments as a way of providing greater
transparency and outreach to citizens.
SALAMAT !