10 success factors for implementing e-procurement system

Public procurement needs to be more transparent, efficient, and accountable to tackle the major social and economic challenges faced by governments across the world. But governments’ digital transformation of their systems to better achieve these goals are at varying stages of development and maturity. 

I have had opportunities to support more than 60 countries across the globe in reviewing and advising their e-procurement (e-GP) initiatives. Based on my research and this wide-ranging experience, I have identified a number of critical factors to successfully implementing e-procurement systems, from its design to implementation. 

1. Governance principles

Fundamental principles of good governance also apply to public procurement. These principles include transparency, accountability, efficiency, effectiveness, equal treatment, rule of law, sustainable procurement, and engagement with the private sector and civil society. Unfortunately ,they often have not been adequately integrated into the design of e-GP systems. Most existing e-GP systems compromise on those principles, focusing only on a few aspects. The design and implementation of e-GP systems need to ensure engagement of the private sector and civil society.

2. Transparency on legal and regulatory frameworks

To make e-GP systems work effectively, it’s essential to have supportive legislative arrangements in place. Outdated or inadequate procurement laws can hinder the successful implementation of e-GP, and provisions in existing laws and regulations governing the paper-based public procurement environment may be irrational or counterproductive. Governments should review and amend their legal frameworks to accommodate the requirements of electronic procurement. For example, provisions in public procurement laws and regulations that do not require publishing information on small procurements hinder transparency and fiscal discipline, creating opportunities for fraudulent practices. Using e-GP systems can help reduce the bureaucratic burden to publish information, so ensuring that all procurements adhere to transparency standards regardless of size is crucial. A policy directive mandating all contracts to be exclusively carried out through the e-GP system can ensure a unified approach to procurement.

3. e-GP strategy ownership and sustainability

e-GP strategies should be aligned with the national development agenda and wholly owned by the government. The sustainability of e-GP systems is a vital aspect often overlooked during the initial implementation phase. Sustainable e-GP systems should not be seen as short-term projects, but rather they require long-term planning, funding, and commitment from the government. Most of the time, international development partners make resources available under a project, or the government allocates a project implementation budget. A sustainability strategy must be worked out upfront to ensure it remains functional, effective, and used by key stakeholders even after the project funding concludes. 

4. Implementation and integration challenges

Government entities often lack the strategic vision to harness the full potential of e-GP systems for long-term procurement improvements. This includes integrating e-GP with other government functions, such as financial management systems, to streamline operations and reduce redundancy. The fragmented implementation of e-GP systems can exacerbate these challenges, as when manual and electronic procurement processes run in parallel or when only select functionalities of the e-GP system are activated. Inefficiencies, data duplication, and reduced transparency often result. A holistic approach to e-GP implementation, wherein the entire procurement process is digitized and streamlined, can help overcome issues associated with fragmented implementation.

5. Technical infrastructure and SaaS-based e-GP systems

Technical infrastructure, including cloud policies and data centers, plays a significant role in successful e-GP implementation. Software as a Service (SaaS)-based government e-GP systems can offer cost-effective and efficient alternatives. At the same time, the availability of SaaS solutions designed to cater specifically to public procurement needs is limited. While SaaS solutions have garnered attention for their ease of use, scalability, and cost-effectiveness, their challenges in fully complying with intricate public procurement laws and regulations often become apparent upon closer examination.

Most commercially available SaaS-based e-GP solutions are unable to accommodate the intricate and often region-specific legal frameworks governing public procurement. As a result, governments looking to implement such solutions may find themselves confronted with a complex and challenging set of compromises including legal compliance, customization limitations, data security and privacy concerns, interoperability challenges, and long-term sustainability issues. To navigate these complexities, governments must carefully evaluate the suitability of SaaS-based e-GP solutions and determine if their benefits, such as ease of implementation and cost savings, outweigh the compromises required to ensure legal compliance and data security. 

To effectively serve the needs of governments and procurement agencies, SaaS vendors should prioritize several critical considerations. Chief among these is the necessity to align their solutions closely with the intricacies of public procurement, offering greater flexibility in developing and deploying their systems. Ultimately, the decision to adopt SaaS-based e-GP solutions must balance the conveniences they offer and the need to uphold the integrity of public procurement laws and regulations. A recent report by the World Bank on e-GP system implementation types in Africa analyzes risks and benefits for different implementation types.

6. Training and capacity building

Weak in-house capability within government organizations is a common challenge, including a shortage of specialized knowledge, skills, and resources within government agencies to effectively design, implement, operate, and maintain e-GP systems. This limitation can significantly hinder the effective deployment and use of e-GP systems.Several factors can contribute to this limitation, including budget constraints, a shortage of skilled IT personnel, and limited exposure to modern e-GP technologies and best practices.

Implementing e-GP requires training and capacity building for procuring entity officials and suppliers, auditors, evaluators, contract managers, and oversight bodies. Comprehensive and ongoing training programs can be a game-changer in ensuring that users are well-equipped to use the system. Governments must invest in capacity building and training to enhance their in-house capability by developing and retaining a skilled workforce that understands e-GP technologies and practices.

7. Engage stakeholders actively

Involving all relevant stakeholders, including the private sector and civil society, is crucial for the success of e-GP reforms. Some countries have learned that failing to engage stakeholders adequately can lead to resistance and challenges in the adoption process. Engaging stakeholders early and regularly can help identify and address concerns, such as a lack of access to procurement opportunities. For example, bringing a coalition of smaller business and aspirant government contractors who are locked out together to customise the system and so increase accessibility, competition and fairness.

8. Align with international standards

Countries should align their systems with international standards and best practices including guidelines by the MDBs or the OECD’s MAPS Core and e-GP Supplementary modules. Systems that follow international standards build trust and credibility in the procurement process. 

Another example is the Open Contracting Data Standard that is emerging as the de facto standard to publish data on the full public procurement process. As governments and organizations recognize the benefits of transparency, greater openness, and accountability in public procurement, the OCDS ensures that all procurement-related information, from tender notices to contract awards, is readily accessible to the public and potential bidders. 

New e-GP developments provide an opportunity to adopt OCDS as a backbone data standard. Its global reach, interoperability, community-driven development, and demonstrated impact drive its widespread adoption, making it an essential tool for those committed to open, accountable, and efficient procurement practices. 

9. Clear communication and change management

Governments must effectively communicate e-GP requirements, benefits, processes, and expectations to all stakeholders. Comprehensive communication strategies can ensure that everyone involved understands and supports the e-GP system. Effective change management requires a clear plan and sustained effort throughout the project.

10. Data security and privacy

The increasing reliance on electronic systems makes safeguarding data security and privacy critical. Countries should invest in robust cybersecurity measures and ensure that sensitive procurement data is protected from unauthorized access and breaches from both internal and external intruders.

Conclusion

By incorporating these factors and best practices, governments can maximize the benefits of e-GP systems. This will lead to better governance and improved public procurement outcomes -such as saving governments time and money, increasing business for the private sector and spurring local economic development, deterring fraud and corruption, and ensuring better goods and services for citizens. As the evolution of e-GP systems continues, each lesson will contribute to further success and I look forward to sharing my insights.

For further analysis and specific tools to address some of these challenges, as well as examples of good practices, read our guide Fulfilling the promise of e-procurement reform.