Electronic Commerce and Electronic Data Interchange in the Public Sector

The State Government in California has recognized the value of Electronic Commerce (EC) and Electronic Data Interchange (EDI) technologies in reducing the cost and improving the efficiency and effectiveness of purchasing and contracting transactions, as well as furthering its other social and economic goals [5]. The State was also encouraged by the successful implementations of EC by the State of Oregon (VIP Program) [2], by the Federal Government (The GATEC Project) [1], the developments in Singapore [3], and elsewhere in the public sector in North America. tronic edits and audits, and approves payment. Subsequently, the approved invoices are transmitted electronically to the State's accounting system for payment scheduling. The cost of processing these invoices in a manual system ranges between $75.00 and $100.00. The time required to process these invoices in the manual system ranges from 30 to 80 days. It is expected that the invoice processing costs in the EDI system would drop to $25.00; processing time would drop from an average of 61 to 6 days. This is a very limited size pilot and statewide implementation poses a significant reen-gineering and organizational challenge. There is a fundamental difference between the public and private sector use of EC/EDI technology; private corporations are generally relying upon fewer high quality and compatible suppliers in each area; the public sector has the social responsibility of increasing its outreach for suppliers and especially targeting small business and other disadvantaged emerging business (eg. women/minority/disa-bled/veteran-owned business enterprises). This basic distinction leads to a substantially different approach to planning and implementing EC/EDI in the public sector. The normal corporate practice of coopting one's suppliers to become EDI ready takes a different dimension. For example, the State of California has in excess of 70,000 suppliers for goods and services. While in all likelihood, 90% of the goods and services are provided by 10% of the suppliers, the EC/EDI readiness of the remaining 90% of the suppliers remains a critical issue, as the State has to deal with many objectives other than those of fiscal and operational efficiency. From an EC/EDI viewpoint, the public sector procurement process can be divided into six distinct segments; bid advertising and dissemination, bid response , bid award, purchase order issu-ance, invoicing, and payment. to advertise sends a paper or FAX containing the advertisement to the office responsible for publishing the CSCR. The important lesson of this pilot is that a reengineered advertising …