E-PROCUREMENT.
Group 5 Assignment.
Challenges of E-Procurement in relevance to Kenyan Industries
Introduction
E-procurement systems contribute significantly to national productivity growth through the
removal of non-value added activities in procurement processes. However, the adoption has
been slow in Kenya and there is still a lack of studies assessing the impact of E-procurement.
This class assignment paper aims to explore the barriers of E-procurement adoption in Kenyan
Industries and to understand why E-procurement success has not been achieved.
Definition; E-Procurement is the automation of procurement and purchasing processes or
activities by integrating buyers, suppliers and other stakeholders using IT systems.
Although, E-procurement is still in its infancy, some industries have made impressive savings
through radical streamlining of their buying activities. The automation of the end to end
procurement work flow has taken over the traditional purchase order software since it helps
to improve the organizational efficiency and control of the procurement activities and the
need.
Despite the merits envisaged with adoption of E-procurement, Kenyan industries irrespective
of their differing procurement activities still encounter the following Challenges:
Challenges of E-Procurement in relevance
to Kenyan Industries
• High Costs. These are costs involved in the acquisition and installation of
proper IT system to have all the benefits of E-procurement process. Computer
equipment and their software’s are very expensive to acquire. It also comes
with a high cost of training the staff involved in the E-procurement system of
the organization. The challenge is that in a capital-tight environment, the cost
of acquisition and fielding of an E- procurement system can seem prohibitive.
• Cyber Security. The global cyber threat continues to evolve at a rapid pace,
with a rising number of data breaches. The E-procurement business is
conducted online through the internet and hence making the system exposed
to threats such as hacking, computer viruses, phishing, Trojan horses among
many other online threats.
Cont…
• Resistance to change. Resistance to change is common in all organizations. People generally find
it convenient to continue doing something as they have always been doing. Making them learn
something new is difficult. This is because; change always brings about alterations in a person’s
duties, powers and influence. Hence, the people to whom such changes will affect negatively will
always tend to resist, for example, in the acceptance and implementation of E-procurement
system in Kenyan industries. People are adamant on maintaining customs instead of taking risks
and doing new things will always resist changes. This can happen either due to their insecurities
or lack of creativity and will.
• Skills, Knowledge and Expertise gap. Procurement is a very specialist department, which has put
it in the spotlight and created massive demand these days. Lack of proper expertise in the
company makes it impossible for the company to operate its IT operations (Freddie et al, 2007).
Cascapera (2007) observed that lack of E-Procurement knowledge can occur when the company
has an older generation of employees that are change resistant regarding IT related issues, relying
on traditional forms and means of procurement. Firms need to keep their staff aligned with the
coming age technologies and keep working on employee development to retain specialist people
and continue their procurement process.
Cont…
• Fraud. Procurement is the function most commonly targeted by fraudsters. Many
organizations have already transitioned to, or are considering moving to an E-
procurement (E-tendering) system in the hope of reducing fraud risks. However,
while certain risks are reduced in an electronic environment, others simply change
and new ones emerge.
• Loss of Control to some strategic processes. Apart from security issues associated
with E-procurement, industries can also lose control or reveal most of their
operational activities as they strive to integrate with suppliers or other
stakeholders. These could be exhibited during data transmission. Integrated
systems such as VMI, ERP, MRP or JIT can expose industries to external entities.
• Continuous changes in Technology. Technology keeps on changing so often and
industries have no choice but to change theirs as well to the modern demanded
technology. This may be too costly for the industries especially the new/infant
industries in the market, often large costs involved with using the latest technology.
Cont…
• Culture change. E -procurement faces challenges in many local organizations in Kenya,
resistance to change being one of them, due to limited resources and problems in sharing
information and collaboration, managers are afraid of changes that E-procurement will
bring and they don’t have the resources needed (money, time, skilled personnel) for the
adoption and implementation process. Implementation of E-procurement does raise culture
change issues and many organizations are not prepared for change.
• Failure to Onboard and Batch Supplier Support. Procurement solutions that allow us to
onboard all the suppliers in batch deployment provide us with greater scalability in supplier
enablement. To achieve this, your business should capitalize on the centralized hub and
must connect the buyers and suppliers. The supplier connection is generally made from
integration or through web portals that connect via the hub. Hence, network providers of
your business will take the burden of finding out the suppliers that should be enabled
through web portals and the suppliers that should be enabled through direct integration.
Cont…
Legal Challenges. E-procurement comes with its own fair share of legal challenges. Some of these
challenges are lack of alignment in jurisdictions, confidentiality and legal liability.
• Alignment In Jurisdictions. The ease of performing transactions regardless of geographical
distances is enhanced with the use of E-commerce. However, one is subjected to unforeseen
exposures when doing business electronically as different countries have different jurisdictions
and variations in their legacy systems. Each country has taken different approaches in tackling E-
commerce legal issues, and companies that are unfamiliar with foreign laws may face unexpected
liabilities. Variations in the legacy systems of different countries could give different outcome in a
dispute.
• Confidentiality. Confidentiality issues are magnified with the use of IT as leakage of digital
information is easily done, for instance, forwarding emails and copying e-documents. This may
have serious impact such as mistrust and financial loss on a company. For instance, trade secret,
contract negotiation and other exchange of confidential information transmitted across the
Internet are subjected to unauthorized access and disclosure, and other security issues.
• Legal Liability. Legal liability is the duty of care and responsibilities one owes to another. One may
be sued or have to pay for damages if one does not perform that duty of care
Conclusion
This assignment concludes that acquiring the right platform to carry out
E-procurement can determine whether the platform succeeds or not.
This may vary from organization to organization depending on the
nature and level of complexity of that organization. Security of an
organization’s IT infrastructure will determine whether E-procurement
platforms succeed. Concerns about the online transactions regarding
hacking, data encryption and cyber theft and attacks pose real threats
to acceptance of E-procurement.
Recommendations
Given the aforementioned conclusions, the study recommends that;
• Cultural change precedes technology adoption to reduce resistance to change.
• The government legislates regulations to govern electronic contracts to foster acceptance of
enforceability of E-procurement transactions and electronic evidence as evidence in a court of law.
• The government conducts a study of its user needs and those of suppliers so as to acquire the
appropriate E-procurement platform
• The government criminalizes cyber-crime and puts in place a raft of punitive penalties to discourage
cyber-crimes.
• Ensuring data encryption; Organizations should ensure that all data transmitted between the connected
applications is encrypted.
• Engaging in due diligence; Organizations need to ensure that any cloud-based service takes basic
network security preventative actions such as using firewalls.
• The procurement team needs to identify the types of information that the ERP platform will manage,
who will access the platform and from where they will access it.
THE END
