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E-procurement to focus on transaction hub

E-procurement to focus on transaction hub

State Services Minister Trevor Mallard announced today that the evaluation of the first phase of GoProcure, the proposed whole-of government online requisitioning system, has led to a decision to focus on creating a ‘core transaction hub’.

The State Services Commission’s E-government Unit had advised the Government that this focus would deliver the most benefits for government agencies requisitioning supplies online, and for the businesses that sell to them online.

A transaction hub allows suppliers to maintain only one catalogue, and establish only one interface to sell electronically to many government agencies.

This reduces costs for many businesses involved or wanting to get involved in e-commerce, as compared to the alternative cost of building individual electronic links to many government agencies.

GoProcure phase one commenced in December 2002 and is scheduled to run to November 2003, when a decision is expected to be made on whether and how to continue to the next phase of introducing more agencies to the transaction hub.

“The project was deliberately broken into a number of distinct phases and decision points. This is good practice with complex or large information technology projects,” Trevor Mallard said.

“It gives the Government the opportunity to limit its risk exposure whilst trying out innovative solutions in an environment that does not involve a long-term commitment.

“The purpose of the first phase was to determine the feasibility of implementing different system options for e-procurement. Evaluation of this phase however showed that agencies are better implementing internal requisitioning systems, which some agencies have already done, and using the GoProcure transaction hub for updating catalogues and passing transactions to suppliers,” Trevor Mallard said.

The transaction hub has always been at the core of the GoProcure project because of its role in facilitating the growth of e-commerce, and reducing costs for agencies and suppliers.

“Work will now continue with New Zealand Police and the University of Auckland as the first users of the GoProcure transaction hub,” Trevor Mallard said.

Questions and Answers

What is a transaction hub? A transaction hub holds supplier catalogues of goods and services and multiple price lists. It passes transactions electronically between buying organisations and suppliers.

The advantages of a transaction hub are that it allows suppliers to establish and maintain (e.g. make price changes or add new items) only one catalogue, and establish only one interface to sell electronically to many government agencies.

Why is the project focusing on the transaction hub? The transaction hub is and was intended as the core GoProcure product for agency use.

The first phase of GoProcure involved two options (both of which incorporate the transaction hub) for agencies that have not yet implemented internal requisitioning systems. These were:

The “Full Suite” option – which was to deliver internal requisitioning systems to agencies over the Internet. This was to be trialled in Department of Internal Affairs and Ministry of Agriculture and Forestry. The “Exchange Purchasing” option which was to deliver a ‘cut down’ requisitioning system, primarily for smaller agencies.

The evaluation of the first phase quickly revealed that the Full Suite option was more difficult to implement and operate than initially scoped. Systems testing revealed that the degree to which agencies could customise their requisitioning to meet their needs was limited. Hence the decision to focus on establishing the core transaction hub.

The original triallers of the ‘Full Suite” option, the Department of Internal Affairs and Ministry of Agriculture and Forestry, will now evaluate their other options for implementing e-procurement, using the knowledge gained during the first phase.

How has project funding changed? The project funding has not changed. Funding for the trial phase is capped at $2 million and no additional funding will be sought to complete the trial.

What does this mean for the suppliers of goods and services to agencies? Suppliers to the New Zealand Police and University of Auckland will continue to be involved in the first phase trial. Other suppliers will be able to participate in the transaction hub if the project is extended to other government agencies.

What does this mean for the contract with CGNZ? Negotiations have been held with CGNZ over these changes, and appropriate arrangements are being finalised. These are commercially confidential.

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