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IJSTE - International Journal of Science Technology & Engineering | Volume 2 | Issue 09 | March 2016

ISSN (online): 2349-784X

A Study to Identify Factors That Affect eProcurement Implementation


Prakash Patel
Assistant Professor
C K Shah Vijapurwala Institute of Management, Vadodara

Dr. Satrndrakumar
Head
PhD Research Centre, C. K. Shah Vijapurwala Institute of
Management, Vadodara.

Dr. Rajesh Khajuria


Director
PhD Research Centre, C. K. Shah Vijapurwala Institute of Management, Vadodara

Abstract
Information Technology (IT) is very powerful in todays age and it is the backbone of the Indian Industry. It had a great impact
in almost all aspects of life such as economy, business, enterprise etc. The global economy is currently undergoing fundamental
transformation in which IT plays a key role. Information Technology has change the way of doing Business. Advancements in
information and communication technology (ICT) have made possible fundamental changes in the methods of practice of all
businesses and industries. The importance of proper management of procurement is highlighted by the fact that it account for
substantial portion of firms resources and time. In such a highly competitive environment nowadays, it is necessary for every
firm to maintain an efficient and effective procurement to cut administration cost and to keep abreast of the market condition to
procure material and services at the right price, quality and time. Hence, use of Information technology in procurement process is
highly required. Therefore, the present study makes an attempt to identify factors that affect implementation of e-procurement.
Keywords: Information Technology(IT), Information and Communication Technology(ICT),Procurement, e-Procurement,
e-Tendering
________________________________________________________________________________________________________
I.

INTRODUCTION

Advancements in information and communication technology (ICT) have made possible fundamental changes in the methods of
practice of all businesses and industries. The amount of business conducted electronically has reached hundreds of billions of
dollars, and there is little doubt that the emergence of the internet is continually revolutionising access to communication and
information (Kajewski & Weippert, 2004). The importance of proper management of procurement is highlighted by the fact that
it account for substantial portion of firms resources and time. In such a highly competitive environment nowadays, it is
necessary for every firm to maintain an efficient and effective procurement to cut administration cost and to keep abreast of the
market condition to procure material and services at the right price, quality and time. Traditionally, firms use paper based system
to procure materials and services by searching for material from paper based catalogue provided by suppliers through telephone
and fax. The traditional material procurement process involves generation, copying and transfer of many paper documents.
Electronic procurement is an electronic version of traditional procurement process. It convert traditional acquisition, purchase of
goods and services, supply of goods and services into the Electronic process such as e-tendering, e-awarding, e-auction, esourcing, by using Internet. E-procurement is basically an expression used to describe the dissemination and receipt of tender
information, indication of interest in tendering, receipt of tender documents, submission of tender sum and final selection of
successful tender for contracts via the internet.
II. RESEARCH OBJECTIVE
1) To identify the common drivers and barriers for adopting an E-Procurement.
2) To identify the Factors that affect implementation of e-procurement.
3) To identify the possible ways to raise the attractiveness of e-procurement.
III. LITERATURE REVIEW
E-Procurement:
E-Procurement is the internet enabled procurement process. E-Procurement is a suit includes e-Requisition, e-Tendering and eAuction module. Croom & Brandon-Jones (2004), E-Procurement refers to the use of Internet-based (integrated) information and

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A Study to Identify Factors That Affect e-Procurement Implementation


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communication technologies (ICTs) to carry out individual or all stages of the procurement process including search, sourcing,
negotiation, ordering, receipt, and post-purchase review.
Roadmap for E-Procurement Implementation:
Kalakota and Robinson (2001) have discussed the following roadmap for e-procurement Clarify your goal: Businesses should
make sure that the business problem or goal is well defined and understood.Construct a process audit: After setting the goal
businesses should analyze their current procurement process. Create a business case for e-procurement: Setting up a business
case for e-procurement implementation, as it forces the company to systematically analyze the business. Develop a supplier
integration matrix: Without supplier commitment and involvement, the e-procurement project is useless. Select an e-procurement
application: According to Smeltzer (2001), by categorizing the products and services purchased, companies can more easily
decide on the required procurement strategies and e-procurement applications. Remember: integration is everything: Integrating
the e-procurement solution with suppliers and companys existing back-office systems is the most important thing in eprocurement implementation. Educate, educate, and educate: Change tends to generate resistance and managers should deal with
it by communicating and encouraging employees to comply with the new guidelines.
Technology Requirements for Participation in E-Tendering / E-Procurement:
Submarian and Shaw (2004) define e-procurement system as a Web based client/ server application used to replace the manual
procurement process. According to him, E-procurement solutions cover three major procurement areas: Procurement
transactions, Procurement management and Market-making. It also impacts four major operative procurement activities, which
are: Searching of products or services, Order processing, Monitoring and control, and Coordination of relevant information. On
the buyer side the e-procurement solution is usually connected to other existing information systems, such as ERP. On the
supplier side, the solution is mostly connected to the suppliers order fulfilment system or product catalogs on the website of the
supplier. Olukayode et al, The facilities required for the implementation of a viable e-tendering system may be grouped into
three separate categories: Hardware, Software and Internet/network facilities: Dial-up networking, Radio link and VSAT.
E-procurement Tools and Applications:
Electronic systems to support traditional procurement, EDI (electronic data interchange), ERP systems, Internet as a support or
complement to traditional procurement , Electronic mail (e-mail), Web enabled EDI, Extensible mark-up language (XML),
World Wide Web (www), Internet tools and platforms that replace traditional procurement
Form / Types of E-procurement:
Kalakota and Robinson (2001), a large number of different applications and systems of e-procurement are identified in the
literature are: e-MRO, web-based ERP, e-sourcing, e-tendering, e-reverse auctioning, e-informing. According to Kishor Vaidya,
A. S. M. Sajeev and Guy Callender, there are various forms of e-Procurement that concentrate on one or many stages of the
procurement process such as: E-Tendering, E-Marketplace, E-Auction/Reverse Auction, and E-Catalogue/Purchasing.
Benefits of E-procurement / E-tendering:
Brack (2000), Buyers indicated that the conversion from paper-based to e-purchasing resulted in a reduction of purchasing price,
reduction at inventory level, a 5-day reduction in cycle time, a US$77 saving in per requisition administrative cost. Thai &
Grimm (2000), The implementation of e-Procurement initiatives should be seen as an effort to improve the procurement goals,
which normally include quality; timeliness; cost; minimizing business, financial and technical risks; maximizing competition;
and maintaining integrity10. In a similar vein, CGEC (2002) has identified cost, quality, program management progress measures
(on-time, on-budget, and issue management), process performance factors, and Return on Investment as the most relevant
measurements. According to Min & Galle (2003), Main e-procurement benefits are (a) Cost savings and subsequent increase in
return-on-investment (b) Enhancement of supply chain efficiency by providing real-time data regarding product availability,
inventory level, shipment status, production requirements (c) Facilitation of collaborative planning among supply chain partners
by sharing data on demand forecasts and production schedules that dictate supply chain activities (d) Effective linkage of
customer demand information to upstream SCM functions, while also facilitating pull (demand-driven) SCM operations.
Robert Eadie, Srinath Perera, George Heaney, Jim Carlisle, This study examines the drivers and barriers for E-procurement in
construction within Northern Ireland. Findings shows that the two highest ranked drivers by the contractors were improving
communication and reduced administration costs, while the two most important barriers were security of transactions and the
uncertainty surrounding the legal issues of e-procurement.
Challenges and Risks Of E-Procurement:
A study by Angeles and Nath (2007) identified three important challenges to e-procurement implementation are (1) Lack of
system integration and standardization issues (2) Immaturity of providers of e-procurement services and the lack of supplier
preparation, and the resistance of solutions end users. (3) It is very difficult to change purchasing-related behaviour among the
companys employees. Darlington (2006), the major risks factors relating to electronic transactions on the internet include
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hacking, viruses, pirating, illegal trading, fraud, money laundry, defamatory libel, among several others. All of these have very
destructive impacts on trust and transparency in the process of tendering. In a research by Davila et al. (2003) four risks
associated with adopting e-procurement technologies were identified. (1) Internal business risks: Businesses have to be careful
while integrating e-procurement technologies with other business applications such as accounting, human resources, accounts
payable and cash management. (2) External business risk: e-procurement solutions also need to be able to cooperate with
suppliers IT-infrastructure. (3) Technology risks: Many companies are unsure about which e-procurement solution best suits the
specific needs of their company. (4) E-procurement process risks: This risk relates to the security and control of the eprocurement process itself. Robert M. Arasa1, John O. Achuora, the study examined the factors that affect implementation of eprocurement within the textile and apparel firms in Kenya. Specifically it sought to investigate the effect of organizational issues,
environmental factors and technological factors on the implementation of e-Procurement. Kishor Vaidya, A. S. M. Sajeev and
Guy Callender, This paper will assess the CSFs that are likely to influence the success of e-Procurement initiatives in the public
sector. Olukayode S. Oyediran, Adeyemi A. Akintola has addressed challenges about e-tendering among Nigerian construction
industry professionals. Marianna Sigalaa, research examining the factors influencing the use and adoption of e-procurement
systems by foodservice operators is minimal. Viljami Vanjoki, research aimed to identify reasons why have not more
companies adopted e-procurement for indirect purchases; and how can e-procurement vendors make e-procurement more
attractive for companies. According to Rezgui (2004), Organizational and human issues have also been highlighted as key
factors affecting the use of technologies in the construction sector. Williams, Susan P. Hardy, Catherine A, presents the findings
from a recent survey of e-procurement in Australia. The survey is designed around the OECD model of e-business adoption and
provides a picture of the readiness, intensity and impact of e-procurement in Australian organisations.
Findings and Conclusion:
Based on available Literature the followings are the common drivers and Barriers of E-Procurement.
Common Drivers:
-

Optimize strategic sourcing policy


Support spend savings targets
Establish common processes
Standard platform for managing procurement spend
Knowledge sharing between business units
Move procurement managers from transactional to strategic activities
Improving productivity of purchasing personnel
Spend compliance
Visibility of global spend
Improved supplier management and selection
Integration with suppliers
Auditable spend management data
Auditable spend management data
Achieve buying leverage
P.O. (Purchase order) cost reduction
Efficient payment and invoice settlement
Centralize control
Reduce supplier numbers
Raise standards within procurement function
Common Barriers:

Unclear original business case


Poor legacy systems and data
Visibility on spend not solved
Need to use suppliers systems to get best deals
Change management
Training requirements
Different accounting / reporting rules globally
Misunderstanding of what the technology could deliver
Finding new people with right skills
Integration to external platforms
Wrong targets set initially
Re-defining task and roles
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role of internal communications


Not possible to add all suppliers
Buying systems not user-friendly
Software needs updating over time
Reducing supplier numbers proved difficult
Factors that Affect Implementation of E-Procurement:

Based on the available literature the factors that affect implementation of e-procurement are divided into following
Organizational Factors:
-

Budgetary allocation: Budgetary allocation is defined as the availability of the needed budgets for adoption of eprocurement
Top Management Support: organization policy are perceived as the of the most important factors that hinder Information
System (IS) growth in many organizations
Skills and Knowledge: skills and knowledge of employees influence the future adoption of a new technology.
Environmental Factors:

Supplier Support / Commitment: E-Procurement System adoption decision may also be influenced by how ready its trading
partners along the value chain adopt an EPS
Government policy and Regulations: E- Procurement system has to base on the Government rules and regulations.
Competitors actions: Firms that face stiff competition in pricing, market size and market leadership are likely to turn to
automation as a way of achieving competitive edge in terms of price leadership, efficiency, market scope and flexibility in
business processes.
Technological Factors IT Infrastructure: IT infrastructure means the hardware, software, and all, the related network which
enables both forward and backward linkages of the IT systems.
Information Security Risk, Rapid Change of Technologies
How to Raise the Attractiveness of E-Procurement:
E-procurement solution vendors need to address the above common barriers/problems and find solutions how companies could
avoid them. The followings are the way by which attractiveness of e-procurement may be raise.
1) E-procurement solution vendors should address is how to make the integration process simpler and less time-consuming.
2) Solution vendors should develop tools that make the integration of the system easier and faster, while allowing the solution
to work seamlessly with other systems of a company.
3) E-procurement vendors should also concentrate on how to integrate all of the companys suppliers into the solution.
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