How can the private sector benefit from the public sector’s e-procurement experiences?

Helena Lindskog

Department of Management and Economics
Linköping University, Sweden.

Abstract

The private sector is often highlighted as the forerunner when it comes to adoption of new technologies and new methods of work. However, in the field of procurements including e-procurement through the use of information communication technology (ICT), the public sector is probably well ahead of the private sector. There are several ways that the private sector can benefit from the public sector’s e-procurement experiences. A Swedish example is the Single Face to Industry (SFTI), which is an open everybody to everybody industry standard for e-procurement for the public sector on its way to become an international standard. The needs of the public authorities are not much different from the needs of private enterprises and in many cases the results of this work and standards could be used for Business to Business (B2B) e-procurements. Other examples are discussed in the article.

Key words: public procurement, e-procurement, ICT

1 Public sector – characteristics

The public sector makes up a big portion in all countries. At one extreme is a welfare state like Sweden where the number of employees in the public sector is some 30% of the total. In the more capitalistic US, the corresponding figure is some 17% [1]. The public sector organizations range from one person to several thousands of employees. Public organizations can be very local as kindergartens or with the responsibility to cover the whole nation as ministries. In most countries the public administration has three levels: central/federal government, regional and local governments. Responsibilities at each level can vary from country to country. However, there seems to be more similarities than differences between different countries’ public organization due to similar responsibilities, working areas and citizens' needs. To provide the best possible service at the lowest possible price is the driving force for the development of the public sector, and not profitability. This means that there is no necessity for competition within the public sector, but scope for openness even if it is not always used. This is not possible within the private sector,. The exchange of experiences between different organizations does not stop at the border. There are many formal and informal ways and fora of cooperation between neighboring countries, other bilateral groups and international fora. It is not difficult for social workers, policemen or local politicians to recognize their own needs, existing problems and possible solutions in a similar organization in another country. It is easy to learn from each other and to use experiences from other countries. The public sector typically has many contacts with individuals - citizens, companies and other organizations. Some public organizations count all citizens, households or enterprises as their customers. It is quite normal as a citizen to have contact with at least a dozen public organizations in a year's time. These contacts can be daily, weekly, monthly, quarterly, yearly or more infrequently depending on your current situation. Enterprises have obligations towards the public sector and the result is another flow of contacts some regularly and some more sporadic. The public sector is dealing mainly with service delivery to citizens and enterprises. These services typically involve direct contact with people – e.g. kindergartens, hospitals, police or judge - and cannot be as easily as the production of goods rationalized by replacing humans with machines. Production of almost all goods has been and still is dominated by private companies. However, since we are moving towards a service economy, more and more private companies are selling services. Their production pattern is becoming more similar to