Eduardo Bohórquez WBI / 23.04.09

1. E-procurement in Mexico: Can information systems build trust and improve governance? Eduardo Bohórquez WBI / 23.04.09

2. Back to the future: 1994-5 A group of reformers decide to create an e-trade solution for procurement in Mexico The project was part of PROMAP, the Public Administration Modernization Program; PROMAP became specially relevant for the President after the unleash of the 1995 Crisis (Tequila effect) Very few government agencies were aware of the use of IT for e-trade; a smaller number of private companies were e-trading. The group decided to create an IT solution for organizing Federal Government transactions (above 20,000 per year) but also to increase the use of IT solutions in major firms or government suppliers

3. Back to the future: 1994-5 Mexican Federal government decided to develop its own software through a combination of public and private consultancies Federal government also retained the control of software design and improvement for future versions of its e-procurement system Despite the fact of being a modernization strategy it remained associated with the Secretariat of the Comptrollership (SECODAM), which gave the reformers a wider set of tools, from incentives to sanctions Compranet program started in 1995; now operates as Compranet Plus (a web based version)

4. E-procurement reforms: sequencing Reformers were extremely cautious of rising expectations before time (Compranet did not became a hot issue until 2001) The reform sequence was crucial for its implementation; every operational aspect of Compranet was ready before the legal reforms No major public announcement was made; it was originally treated as a “technocratic” solution for government Participation of companies gradually raised, despite the legal incentives considered in the reforms This situation evolved until considering the disclosure of information through Compranet a legal obligation

5. A new frontier: keeping the pace 2001: Compranet becomes a central tool for Anticorruption efforts of the newly elected President 2001: Investigative journalists illustrate excess in prices using Compranet as a “source” (Towel-gate) Original team of public administration reformers were gradually replaced by engineers fascinated by the hardware and software problems, but poorly related to the strategic use of the info 2003-5: the paradox of innovation; Compranet becomes victim of its own success. 2006: 42% of the total bids (8600 out of 19800) was processed using Compranet

6. I love my I-phone (or my blackberry) syndrome Fascination for IT may become in a loose strategic approach to the use of information Building capacity among users INCLUDES top decision-makers and the capacity to react to EIR (executive information reports). E-procurement is about procurement and not about fashion or brands: the size of the server of Compranet is 20 times smaller than in 1995 using a XYZ technology and that means… nothing! Be aware that speed in processing or developing a user-friendly interface do not add value to the quality of indicators and analysis for improving the Procurement system in a public administration

7. EPS: are we ready for the web 2.0 version? Mexican EPS has been successful in consolidating a single information system for Federal procurement, but still lacks stable institutional capability for making strategic decisions However, problems in “change management” diverted EP from its original vision of challenging firms and citizens to move into a new frontier, and became simply a version of SAP Has proved to have a lot of potential for increasing participation of critical stakeholders (reducing costs and offering the potential for strategic interventions) but still used more by a select number of public officials, rather than incorporating private sector or civil society While the investments have been fully covered by its current use, its potential for growth is still enormous

8. Expanding our scope of e-procurement Releasing strategic information consolidated through a centralized e-procurement system is useful for supporting legal reforms It increases its potential for transparency, civic engagement and private sector productivity and competitiveness EPS are simultaneously transactional tools and information systems, but to fully take advantage of them requires two different capabilities from its end-users: its is different to reduce transaction costs in procurement, than promoting fiscal savings from a financial perspective It could also relate to paperless strategies (like Chile or Andre Pradesh in India) and other innovations as reverse auctions (Mexico)

9. E-procurement Success Factors A single e-procurement platform, rather than multiple systems Developed and managed under the authority of procurement professionals Applied to goods, capital works and services Integrates INFOSYS of contract management, development, monitoring, evaluation and financials Based at the front end; still requires user training Value-add of the system for suppliers is critical

10. E-procurement and governance EPS can provide governance improvements when aligned with a strategic use of the information systems EPS are part of an integrated strategy for modernizing public sector, increasing quality in providing public services, fostering financial capacity for investing fiscal resources Their high cost is mainly related with security reasons and a proliferation of info systems; a significant reduction of costs comes from data-crunching more than IT market conditions EPS are a central tool in consolidating a knowledge economy in emerging markets