Government agencies have a poor reputation for taking advantage of Internet technologies. To date, few have used technology to automate and streamline their activities to any great extent, and paper-based communications still dominate public sector activities.
But could this be about to change with the rise of so-called ‘e-government'? While much excitement surrounds the provision of online services to the public, such as filing tax returns over the Internet, the initial cost savings from such initiatives are likely to be small, says analyst Hellen Omwando at Forrester Research. Real cost efficiencies will only be derived by government bodies when they streamline their interaction with external suppliers and partners, and more importantly, across internal departments, she says.
This is where web-based collaborative applications such as e-procurement, inventory management and e-sourcing could help governments to achieve their online goals.
e-government in action: MOD
One UK government agency actively embracing collaborative commerce is the Defence Logistics Organisation (DLO), the Ministry of Defence (MOD) body responsible for providing joint logistic support to the Royal Navy, Army and Royal Air Force. Created in 2000, the DLO delivers a broad range of logistics services from procuring and repairing submarines to delivering food and providing postal services.
In order to meet its 2005 target of reducing operating costs by 20%, the DLO is implementing an extensive change management programme. This involves co-ordinating and integrating about 34,000 staff, 1,053 disparate information systems and around 130,000 PCs and other client devices.
“We are a ‘can-do’ organisation, but we are also a ‘can’t fail’ organisation. Problems in Bosnia and the Gulf revealed the legacy of trying to provide logistics in a sub-optimal fashion. We now need investment in new systems so we can do the job of managing assets and goods better,” explains Commander Guy Dabell.
Fundamental to this objective are several collaborative commerce initiatives. The first is the DLO’s ‘e-portal’, the Defence Electronics Commerce Service (DECS). DECS provides the DLO’s employees with a single interface by which they can connect to other industry portals and trading exchanges such as aerospace hub Exostar, as well as individual suppliers via a range of mediums, including the Internet and electronic data interchange (EDI) systems. The first service on DECS, Interim Purchasing, went live in August 2001. Already around 20 of the DLO’s key suppliers are using the service, which is being expanded to encompass further MOD purchasing groups and contracts.
The DLO is also linking DECS into its back-end systems, and those of key suppliers. “The ability to connect into a supplier’s enterprise resource planning system and the ability to automate, via workflow, buying decisions are where the benefits lie,” says Dabell.
He adds, “The final step is to integrate our ecommerce systems with our financial systems [incorporating online accounting information] by August 2002. Currently, it takes up to 65 days to before accrual information filters through onto our general ledgers – in the future this will happen overnight. This will improve our forecasting and budgeting enormously.”
In addition, because DECS has enabled the DLO to perform enterprise-wide buying and to rationalise its supplier base, the DLO has also set up a non-project (specific) procurement organisation (NPPO) to purchase fast-moving, general items such as “tools, paint and fasteners”. Already this programme has delivered substantial benefits, claims Dabell. “Under this programme we have placed six orders worth over £350 million (€568m), replacing some 270 previous arrangements with over 150 different suppliers.” The DLO, he adds, anticipates savings in excess of £100 million over the life of the contracts.
Finally, the DLO has established integrated project teams, or IPTs, which comprise personnel drawn from key specialisms from the Armed Services, the civil service, and industry. The idea behind the IPTs was to forge closer links with between the DLO’s customers and suppliers over the lifecycle of a project such as logistics services for the Chinook helicopter or the Nimrod submarine.
For these IPTs, secure email is a vital medium for collaborating with industry partners. For example, currently, nine IPTs have direct access into aerospace manufacturing specialist BAE Systems’ (formerly British Aerospace) Integrated Engineering Database to share configuration data within a secure environment, says Dabell. This also enables the DLO to look at the inventory of BAE Systems’ products.
Overall, the DLO’s change management project will, and already is, delivering substantial benefits, claims Dabell. “Our customers benefit from increased confidence, enhanced reliability and timely delivery, while we benefit from not needing to hold anywhere near the present volumes of stock (assets) and lower staff costs.”
