Federal Agency CIOs Could Save Your Tax Dollars Through Supply Chain Automation. They Don't.

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Government officials say they also face special technical problems. Until recently, e-commerce software like that offered by Ariba and Commerce One required extensive customization to incorporate procurement practices that are unique to government, like audit trails that provide public accountability as to why a particular vendor’s bid was accepted. Early software products were hard to integrate with the agencies’ financial systems, which support government-specific accounting rules. "I don’t think [vendors] fully understood public sector purchasing," says Forrester’s Sharrard. "At first, I think these companies were only talking cost savings; the government wasn’t interested."

But even when software supports the agencies’ requirements, they don’t integrate easily with older, back-end systems. "I look at those solutions, and they put me in the business of being a system integrator," says Litman. "We need a product where they integrate it all without me having to do it." Litman notes that the DOT tried unsuccessfully to link its new purchasing systems to the old financial systems. It didn’t work, and now the department is installing a new financial system. Supply chain integration was an impetus for buying the new financial system, he says.

Meanwhile, Guerra has been working with NIH CIO Alan Graeff to expand the IntraMall’s capabilities to include purchases that require more approvals than the credit card purchases it currently handles. One option is to build payment applications into the existing IntraMall, another is to buy a new system that includes purchasing and financial functions. A new system could take at least a year to redesign all that the agency has done on the IntraMall, Guerra says. "We could have an integrated IntraMall system up and running in six to nine months." Graeff was unavailable for an interview.

Now What?

Clearly, the federal government has to do much more to make e-commerce the rule rather than the exception. CIOs say they believe full supply chain automation offers government the same bottom-line benefits as it does the private sector. The billions they would save could be used?depending on your political philosophy?to cut taxes or spend more money on government programs. The question is whether political leaders who set agencies’ priorities and the rank and file who would have to use new systems will start giving e-commerce more than lip service.

Guerra likens the impact of supply-chain integration to the days when PCs landed on everyone’s desk. "Everyone asked themselves, ’Is this really a benefit? I have to change everything. Do I want to?’" she says. "From a business perspective, it was the right thing to do, but that doesn’t mean it’s easy."

Can they succeed?

"I don’t think they have any choice," says Soloway.

Copyright © 2001 IDG Communications, Inc.

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