Be All That You Can "e"

Our country's fighting forces are winning the battle against the bottom line. It's still early in the campaign, but it's fairly clear that the U.S. Army has established an e-procurement stronghold, and the enemy is in full retreat.

[From iSource Business, December 2000] Mention the U.S. Army and you conjure up images of sweaty recruits slogging through a mud bog in their olive drabs or tactical operations on a positively Wagnerian scale. Psychologically, "Army" just doesn't equate to high-tech procurement solutions. The Army is one more lean, mean, fighting machine, but it is part of the government, isn't it? How efficient can it be?

This Is Not Your Father's Army

Pretty darn efficient, it turns out. The Army, in conjunction with Frictionless Commerce and Moai Technologies, recently launched a best value marketplace and reverse auction pilot program that involves some 500 purchasers and is already resulting in cost reductions of 15 to 45 percent.

Edward G. Elgart, director of the Army's CECOM (Communications-Electronics Command) Acquisitions Center, says that once his department was asked by the Department of the Army to look into e-procurement, they chose a software package from Frictionless and Moai that was able to meet their unique needs, particularly the ability to evaluate other qualities in addition to price. "The power of their particular tool is that it enables you to give certain attributes other than price to a product, so that when the software goes out and looks for products on the Web, you can then run a reverse auction, and the software will take into consideration those other attributes."

What is Your Mission Soldier?

This ability to specify attributes other than cost allows the purchaser to find the best product, which is not always the cheapest one. In the same way that a home computer user might opt for a slightly more expensive model in order to handle high-resolution graphics (or a bachelor might snag a Porsche rather than a Kia in order to make dazzlingly impressive road trips), the Army sometimes has requirements that are more important than price, such as length of warranty or transmission speed of electronic equipment. This software allows purchasers to factor in those attributes.

According to Elgart, there are four major concerns for the Army when it comes to purchasing  concerns that the software is handling well. "The first thing is we want to make sure that whatever we buy actually does meet the user's requirements. That's absolutely number one. Secondly, we want to get it into the hands of the user as quickly as possible. In many cases the users are soldiers who are out in the field, and when they need something they need to get it now, and the ability to get it quicker is definitely a benefit. Third, as the keeper of the taxpayers' money, we want to make sure we get a very good deal for what we buy. Fourth, we would like to establish good working relationships with our business partners out there."

A Tactical Shift

In an organization as old as the Army, with a set of standard operating procedures as rigid as a cadet's spine, this tactical shift in purchasing was not without peril. Arnold Waldstein, vice president of Marketing and Strategic Alliances at Moai (pronounced "moh-eye" after those ominous Easter Island monoliths), puts it this way: "We set out to help the Army revolutionize its e-procurement process. In doing so, Moai is aware that the Army, like most organizations, has a very specific way that it looks at buying things, whether they are hard goods or MRO. Our solution for the Army was not designed to supercede their existing operating procedures, but to enhance them and save considerable time and money in the process." Factor in the sometimes stifling inertia found in most large organizations, and there are scads of potential obstacles to be overcome.

Using their combined expertise, Frictionless and Moai were able to supply a package that overcame those obstacles and also smoothed the transition. The results are more than a little impressive. Frictionless Chief Technical Officer Robert Guttman says, "It has been pleasantly surprising to see how active our government is in taking a very serious look at some of the latest e-procurement technologies. It has really introduced tremendous cost savings across the board for our tax dollars. To be part of that effort is exciting for us."

The program has even had some unexpected benefits. Elgart says, "The [Frictionless] software goes out first and "spiders" the Web, which is sort of an advanced search engine; and since we're able to give attributes to a particular product, we've actually been able to find some sources of supply that previously we had not done business with, so that increases our competition, and it also increases our knowledge of certain products that can actually give us more value. Those two things are certainly pleasant surprises, and they're adding to the tremendous capability the tools are already giving us."

Elgart has big plans for the Army when it comes to e-procurement. "I believe we should be able to buy most of our commercial products using this type of technique. Due to the fact that Web technology has changed so much in the last few years, it enables us to get a number of different Army locations and put together their requirements for the same item; and because we can buy larger quantities using the reverse auction technique, we think that we'll be able to use our leverage on the marketplace to get very reasonable prices for those particular goods. Secondly, there are a number of sustainment parts for our weapons systems, parts that basically are hardware we've bought before, and we believe we should be able to use a reverse auction tool to buy a lot of those parts as well, and that's going to enable us to save dollars." Elgart also said there are plans to involve other branches of the armed services in procurement programs such as the one employed at CECOM. With efficiency and cost-savings permeating the military, it might not be too long before they're as well known for their smart purchasing as they are for smart bombs.