The pace of e-procurement reforms is picking up momentum in New Zealand. There is direct support at the highest levels of government about ways to streamline the buying and selling of goods and services. The challenge for agencies is ensuring the roll-out of e-payment systems is consistent and integrates work within finance and procurement divisions.
Peter Fitness, acting director, defence commercial services, New Zealand Defence Force (NZDF), shared insights about e-procurement trends, noting that integrated e-payment systems support an ongoing journey to streamline the purchase of goods and services.
The use of purchasing or pcards is seen as a “step in the right direction,” enabling goods and services to be procured without using a traditional purchasing model.
Pcards are issued to staff, while complying with strict organisational policies and procedures. These factor in reviews and approvals involving transactions. Built-in checks enable each card to be assigned to a cost-centre. This helps track transactions, and ensures a responsible use of allocated cards.
Being able to track transactions through cost centres offers an “overarching overview” of the way funds are spent, Mr Fitness noted. Staff also has access to the requisite tools to spend money, while tracking expenditure, and taking direct responsibility.
Organisations can implement controls for each pcard. These include single-purchase dollar limits, monthly limits, as well as merchant category code restrictions. These tracking mechanisms enable a cardholder’s activity to be reviewed by someone independent of the cardholder.
Mr Fitness noted that his agency is working with the NZ Defence Industry Association to ensure that “payments systems are sorted out” at all levels of transactional processing.
Member agencies can band together to share information, knowledge and expertise about procurement practices.
Aditi Cook, acting category leader, Ministry of Business, Innovation and Employment (MBIE), observed that the transition to e-procurement must to be considered “using a staged approach.”
She added that e-procurement is not mandated by government. Regardless, she noted that agencies are “getting there through e-government and other on-line initiatives.”
To embrace e-procurement across organisations, there must be a change in behaviour and perception, she added.
The challenge, according to Ms Cook, is aligning the work of finance with procurement. “These are two separate entities that need to work more closely together.”
Agencies can offer career tracks where finance and procurement teams work “hand-in-glove,” while ensuring staff retain and build on existing skills.
“We have to be in a situation where we can encourage business to go directly to a commodity (purchasing) manager, ensuring that teams work together at all levels of business.”
The MBIE integrates the functions of four former agencies. These are the Ministry of Economic Development, Ministry of Science and Innovation, Department of Labour and the Department of Building and Housing.
As a lead agency, the MBIE offers a one-stop online shop for all government advice and support to businesses. It seeks to reduce the effort businesses invest in, when dealing with government, while raising performance ratings for government savings.
In October 2012, the MBIE won two awards at the Australasian 2012 Procurement Professional Awards, held in Melbourne. These awards were for Best Process Improvement Initiative – e-Auctions, and Best Infrastructure and Capital Works Project – Canterbury Earthquake.
This agency was also shortlisted for a “Best Example of Socially Responsible Procurement – Meet the Buyer.” These projects are part of highly-successful e-procurement reforms programmes.
These initiatives encourage agencies to ‘buy-better,’ while reducing the costs. The focus is on improving buying decisions and making it easier for companies to tender for government work.
MBIE’s overall procurement initiatives are slated to save NZ $353 million, with initiatives being rolled out over the next three years. These additional projects offer a potential to save another NZ $180-$300 million a year.
The e-marketplace offers many tools to maximise the benefits of e-procurement, according to Olivia Leong, Regional Head, Enterprise and Government Payment Solutions, Commercial Products, AP & CEMEA, Visa Worldwide.
Ms Leong noted that “embedded virtual cards” offer benefits to end users, over and above standard purchasing apps. For example, children can be offered pre-paid virtual cards to control spending.
Parents can decide how much money they want loaded onto a virtual card when they purchase it. This pre-purchasing decision helps track and control spending — while encouraging young consumers to be responsible and financially-savvy, she noted.
Ms Leong added that “we will never get a one-size fits all” e-procurement package — but the intrinsic success lies in the way offerings are used, modified, and adapted for individuals and organisations.
For government enterprises, the idea is to “optimise existing investments,” she added. Moreover, a recent survey showed that less than 5 per cent of an organisation’s budget is spent on financial management technology. “We need to continue adding value across the eco-system.”
The aim is to leverage existing systems — while helping government manage its procurement and budgeting process. “There are different categories of experience, at different levels,” she said.
“We need the ability to build platforms, and take these to another level. The idea is to use existing tools more efficiently. At the industry level, we encourage peer-to-peer group bench-marking, and partnerships with key stakeholders.”
Laurence Millar, a former New Zealand government CIO, noted that New Zealand’s payment and settlement system “is in a good place.” Support for e-procurement reforms comes from the upper echelons of government, including Prime Minister John Key.
“There is a huge opportunity to streamline end-to-end transaction processing,” Mr Millar added. The over-arching focus is on transparency, innovation and efficiency. These themes drive New Zealand’s interest in e-procurement — while galvanising all levels of government.
Participants at the Wellington briefing represented the Treasury, Ministry of Business, Innovation and Employment, Accident Compensation Corporation, New Zealand Defence Force, New Zealand Post Group, Department of Corrections, Victoria University, and Wellington City Council.
• Focus on “being smart” about innovation and technology.
• Ensure e-procurement platforms deliver organisation-wide efficiencies.
• Track global standards and interoperability – ensuring that suppliers and end-users “speak the same language.”
• Support a transparent, accountable, and information-savvy environment.
• Galvanise and gain buy-in across divisions, including finance and procurement.
• Maximise use of e-sourcing and e-catalogues for informed decisions.
• Influence perceptions about e-procurement and benefits this platform delivers.
• Improve e-tracking systems to manage timelines for contracts and project delivery, billing and invoicing, and allocation of staff and resources.
• Reduce the number of suppliers providing goods and services, while improving the effectiveness of sourcing and payment systems.
• Tackle the risk, and look more closely at how billing and payment systems are managed.
• Consolidate partnerships with banks, suppliers, agencies, end-users and industry bodies in a peer-to-peer, open, and collaborative environment.