Some cautionary notes about the government's e-vision

There's nearly as much balderdash talked about the emerging digital world in the '90s and now the "zeros" as was talked about HiFi in the '70s and '80s – and I'm old enough to remember.

Sure, there's plenty of promise but let's not get breathless with hype. Let's not all fall into the trap of repeating the same buzzwords to one another and nodding sagely, hoping like the dickens that we're not going to be asked a really hard question which would reveal our ignorance, when the truth is that neither of us may really know what we're talking about.

As we all know in our hearts and from bitter experience, the devil is in the detail. He's always been there and he's not been exorcised by the letter "e". While we whip each other into a frenzy of anticipation about "e-this" and "e-that" or, in this case, "e-procurement", let's remember that despite the impressive e-uptake statistics there's still an awful lot of people and businesses who are not "e-people" or "e-businesses". That so-called "regular" usage of the Internet by those who have discovered the letter "e" is still defined in most surveys as one connection a week.

Now, tell me again, what's all this stuff about e-procurement revolutionising supply chains and civilisation as we know it? In truth, I'm ready to admit and acknowledge that the digital world is having a profound effect – on us as individuals, in our businesses and schools, on our culture, on our country and our planet.

Indeed, I suspect that in one respect the hypesters are right – that when the history of this time is written it will be recorded as a revolution no less significant than the industrial revolution that preceded it by 130 years. Much has been said on that analogy and I won't take that theme any further here, except to observe that, just as business was transformed by the earlier revolution, so too will it be transformed by this one.

A hundred years from now it will probably look like this "transformation" happened in a flash and perhaps on that time scale it is happening quickly. But here and now, we're living through it and it's a journey, with its bits of hard slog, its twists and turns, its winners and losers, and a finite amount of elapsed time. The initiatives and changes involving government procurement are, in their way, perhaps an important way, one part of that transformational journey.

Generally I applaud the initiatives. ABL is proud of our very big household name members, but many thousands of members are the little guys. I know that the rhetoric surrounding all this "e" stuff is expansive and inclusive, and we all mean well, but how sure are we that what we're evolving here, and elsewhere in e-business, really is helping the little guy?

So, I'd like to sound some cautionary notes and ask some questions. But firstly, let's get our terminology right. We are hearing a lot about "e-procurement". Are any of us really sure what it encompasses? If we really had to define it, I think we'd finish up in a long discussion that ranged across web sites, email, directories, catalogues and let's not forget that other buzz-phrase "automated supply chains".

Has anyone ever seen an automated supply chain? I reckon that this is a great example of a set of words we all like the feel of on our tongues, and none of us would know one if we fell over it. We seem to think that businesses should be striving to embrace it – we say things like "they should automate their supply chain if they want the benefits of e-commerce". What does that actually mean? That they should get a website? That they should put a catalogue up on their site? That they should interact with their suppliers using email? That they should get access to suppliers' or customers' intranets?

And let's not forget EDI. I'm especially sensitive to EDI because there are lessons to be learned from 20 years of great supply chain re-engineering courtesy of EDI that have had some spectacular pay-offs but it's always been a big boys’ game. The little supplier was nowhere regarding that technology. I would like to think that, mindful of that, we make sure this digital "e-revolution" embraces the small player and provides benefits to them.

I presume that most of you would find that you warmly agree with what I just said – "embrace" the little guy. For most of the remainder of this paper I’m going to explore that theme, and will, in various ways, be raising the question – "is it a deadly embrace?"

There are a number of dimensions to this. A good place to start is with the theme of government procurement – with an emphasis on commonwealth procurement. New processes and procedures are being planned to improve speed and efficiency, reduce administration and improve procurement performance.

Laudable. Hard to argue with.

I'm reminded, just a little, of the "ISO9000 tick of quality" requirements a few years back. It was promulgated that to do business with government you had to be accredited. Despite the merits of the reasoning behind it, the truth was that this actually worked against the little business, imposing a significant compliance cost for arguable benefit.

To be fair, I think what's being promoted here is a more welcome horse of quite a different colour, but I still think there are lessons lurking in the ISO story for us today. Compliance costs are a burden and it's just a bit too pompous to make thunderous pronouncements about how getting "e-ised" is "good for business". It may be. Equally, it may not be for the tens, indeed hundreds of thousands of Australian businesses.

I know what the words say. But, I also know that governments are not above acting in their own self-interest, to reduce their costs, to reduce their inefficiencies, to streamline their processes. Is the reality, at least in some cases, that these benefits will come at the expense of imposts and issues for small businesses?

Let's say I invent Acme Vegetables, a carrot grower in Camden. Acme is a small business. It sells to government – the local army firing range. Acme also sells to Coles Myer. It sells to the local hospital and sells surplus carrots to a distributor in Sydney. They are at the entry point of four different, independent supply chains. Today they don't have a PC. They're not part of the digital economy. Apart from selling good quality produce they have no "clout", they are in no position to "re-engineer their supply chain" and still less to "automate it". Indeed, the word "it" is wrong – "them" is correct.

What are they going to do? Are they bristling with enthusiasm to get themselves onto the proposed Single Supplier Register? Are we saying to them that getting with this government strategy is about as optional as breathing and they won't be selling their carrots to the Army next year unless they join in? Is this the catalyst they need to go out to Harvey Norman and buy that PC? And what about getting themselves online? Who are they going to call when they need help – and they will, there's nothing more certain.

Do any of us believe, that the mere act of buying a PC and hitching up with this new Commonwealth Purchasing Regime is a surrogate for Acme having any form of Internet strategy, or any capability whatever to alter the balance of power in their supply chain? Could we even say we seriously believe that Acme understands these questions? I would say not.

We in ABL have grappled with these issues at some cost and with patchy results. But we've felt the urge to try and more is needed on many fronts to help the "Acmes" of Australia make sense of all this.

What about their connectivity costs? I would suggest that many of us are spoiled by being "always on" at our Internet-connected desktops. Not Acme. They have a phone and a fax. When they use the Net, they'll not receive calls or be able to make them. And they'll pay STD rates for call connection time.

And what about the fact that Acme is at the entry point of several supply chains? Let's say that each chain is undertaking a joyous engagement of the e-commerce revolution. Each is driving out costs, and administrative inefficiencies, implementing their own idiosyncratic choice of e-commerce trading hub software driven by the business nous of those higher in the supply chain who have the power to mandate the systems. There may be a balance-of-power shift, but it's unlikely to be to Acme.

Instead, Acme may well feel embattled and under "optional" pressure to comply with the technological demands of four different systems. They need to load their details four times, learn to navigate four different user ergonomics, load and maintain catalogue and price data in four systems, receive trading reports (probably by email) from these four systems, perhaps receive payments in up to four different ways and somehow integrate all this dis-integrated stuff into their financial management system (if they have one).

It's a good thing Acme's MD is a computer and e-commerce whizz, isn't it?

Maybe there's something in this deliberately bleak story that might point us to doing things differently. We hear that the government is going to create a Single Supplier Register. That's principally for the convenience of government though, I admit, there may be a few up-swings for the Acme's of the world – maybe they get found easier and sell more to government but maybe not – remember, it's not a pre-qualification tool. Maybe they get paid faster, though they still have to interact with four different systems.

So, let's turn the tables. Let's hallucinate for a moment and imagine that there's a secure repository "out there" in Australia's cyberspace managed by private enterprise that has the capability to store lots and lots of information about companies who wish to trade online. It might contain name, address, phone and fax numbers, email addresses, names of office bearers, ABNs, export certificates, and public keys. It might indicate which e-commerce systems these companies use, and what sort of message and file inter-change formats they prefer. It might contain data about which panel contracts the companies are on, and perhaps some information about their consortia relationships, the countries they interact with, the standards they comply with. It might even contain their catalogue in a standard form. There are many things this hallucination might contain, including all the things the government proposes for the Single Supplier Register. It would be the single reference point for interacting with any company on line and permit companies to enter and maintain their data in one place. That would make a difference to Acme.

Now, if this existed, would the government still be planning to create its own Single Supplier Register, or would it become a paying customer of this private sector service?

My guess is that government would think of lots of "good" reasons why it still needed to do it itself. And that would be the wrong answer. I urge you to think about that.

Now it's time to stop hallucinating. And for me to come back to reality.

What does the Government need to do in harnessing its massive buying power to encourage the uptake of e-commerce by suppliers, particularly among SMEs?

• It could consider providing some incentives for adopting e-procurement. ABL believes that as part of its e-procurement implementation program, the Federal Government should undertake speedier payments to suppliers who use e-commerce.
• Accelerating the pilot programs. Last week the Federal Government announced the first of a number of pilot and demonstration projects. The first one involves the CSIRO and the Office for Government Online. We think these pilot projects are vital to build confidence and demonstrate the benefits for all players. We look forward to the roll out of more projects.
• We need a unified e-commerce vision. At the moment, different agencies are doing their own thing on different aspects of e-commerce. NOIE is supposed to have oversight of the whole thing, but in practice we have split reponsibilities between departments and agencies. We need a single entry point where business can access all government e-commerce initiatives, whether they be regulatory or aimed at enhancing the uptake of online business.
• Make sure than rural and regional businesses don't miss out on this, given the problems they face in gaining access to competitively priced telecommunications infrastructure.
• Need for raising awareness of the benefits of e-procurement for SMEs.