Cold feet on e-commerce

State and local IT shops have come a long way with electronic commerce.

As the hardware and software necessary to build robust, reliable applications

have become more widely available, government agencies large and small have

developed Web-based procurement systems that work as well as, and sometimes

better than, their commercial counterparts.

But agencies are finding that a well-designed system and a good business

case are not enough to get buy-in from some business partners.

Perhaps not surprisingly, given the amount of attention garnered by

viruses like "Melissa" and the "love bug," security concerns often top the

list of vendor concerns.

Accustomed to finding solicitations in newspaper ads and submitting

bids via mail, many vendors struggle to adapt their long-established routine

to an online environment. For some, the added discomfort of supplying proprietary

business information, including the specifics of their bids, can make the

prospect of participating in a municipality's electronic procurement scheme

seem downright scary.

The extent to which security fears can affect even a textbook e-procurement

implementation was amply demonstrated in Wichita, Kan., when the city's

purchasing office launched its e-procurement site in August.

Wichita began planning for the site in 1999. Faced with a daunting Y2K

dilemma that would have required massive programming changes to the software

in its mainframe, the city decided to end-run the problem by switching to

a client/server environment. That in turn paved the way for a major upgrade

of the municipality's financial services software.

Supplied by longtime consultant KPMG LLC, the financial software suite

includes modules for accounting, budgeting and cash management as well as

procurement.

"This module moved us onto the Internet,'' said Melinda Walker, purchasing

manager for the city. "It's much more than a simple Internet bidding package.

Vendors can see the check number and the date that a check was issued, so

they can actively track their interaction with the city."

The site was designed to be easy to use, and it provides step-by-step

instructions to guide vendors through the process of registering or updating

their registration with the city. It enables registered users to submit

and view bids, track invoices and payments, and receive immediate notification

of open solicitations.

The department expects to give vendors the option of making direct-deposit

payments next year.

Because the software is new and Wichita is one of the first municipalities

to use it, the city tested the package thoroughly before going live, Walker

said.

"We tested it in theory, but of course, there's still some apprehension

when you launch out there in the real world," she said. "With new software,

you don't have the comfort that you would have with a system that's been

live for awhile, with people using it every day.''

Despite careful planning and testing, the city was surprised by the

volume of inquiries it received from vendors about the site's security.

Although the simplicity of the system made it possible for most vendors

to register online, the degree of concern that many expressed about protecting

their privacy and the details of their online transactions became a stumbling

block. After all, one of the project's goals was providing better service

to vendors without increasing operating costs.

To ease vendors' minds, a team from the city's purchasing and engineering

departments demonstrated the system at several vendor facilities, Walker

said. And although the goal is for everyone to eventually submit all bids

electronically, the city made clear it would still take bids by mail for

the foreseeable future.

Of course, the fear factor is likely to subside — in Wichita and elsewhere — as vendors become more accustomed to using e-procurement.

"During the first month, the response to the system has varied depending

on the business section and the goods that are being purchased,'' Walker

said. "For instance, with items like grass seed, there will be two vendors

who will bid online and four others who will bid the traditional way. But

with computer technology, the bids will be 100 percent online.''