We’ve reached into the Partnet archive to bring you today’s post. Originally posted in March 2013, B2B VS B2G: How eCommerce Can Save the Government Money, is brought to us by blogger Debra Fryar.
Business to Business (B2B) markets have positively influenced the business community for a number of years now. Their impact on the economy is evident in several ways:
Transaction costs. Three cost areas are significantly reduced through the conduct of B2B eCommerce.
- First is the reduction of search costs, as buyers need not go through multiple intermediaries to search for information about suppliers, products and prices as in a traditional supply chain. Internet is more efficient at gathering information, in terms of effort, time, and money spent. In B2B markets, buyers and sellers are gathered together into a single online trading community, reducing search costs even further.
- Second is the reduction in the costs of processing transactions (e.g. invoices, purchase orders and payment schemes), as B2B allows for the automation of transaction processes and therefore, the quick implementation of the same compared to other channels (such as the telephone and fax).
- Third, online processing improves inventory management and logistics.
Removing Intermediaries. Through B2B e-markets, suppliers are able to interact and transact directly with buyers, thereby eliminating intermediaries and distributors.
Transparency in pricing. Among the more evident benefits of e-markets is the increase in price transparency.
- The gathering of a large number of buyers and sellers in a single e-market reveals market price information and transaction processing to participants.
- Increased price transparency has the effect of pulling down price differentials in the market.
- Buyers are provided much more time to compare prices and make better buying decisions.
- B2B e-markets also allow multiple buyers and sellers to participate in two-way or reverse auctions. In such environments, prices can be set through automatic matching of bids and offers.
Economies of scale and network effects. The rapid growth of B2B e-markets creates traditional supply-side, cost-based economies of scale. Furthermore, the bringing together of a significant number of buyers and sellers provides the demand-side economies of scale or network effects. Each additional incremental participant in the e-market creates value for all participants in the demand side. More participants form a critical mass, which is key in attracting more users to an e-market.
Business-to-government eCommerce, or B2G, is defined as commerce between companies and the public sector. The United States Government is the largest buyer in the world. The federal government spends over $300 billion dollars annually on various goods and services. The federal government is also under extreme pressure to save money wherever it can.
Although the federal government has taken advantage of some of the lessons learned by B2B markets, moving many of it processes and transactions to the Internet, it has not taken full advantage of web-based procurement or eMarketplaces. There are a few systems in place, GSA Advantage and DOD EMALL being the largest. But government e-procurement systems remain undeveloped and underutilized. Web-based purchasing policies increase the transparency of the procurement process and reduce the risk of irregularities. The federal government would be wise to use online marketplaces to take advantage of their enormous buying power and reduce prices across the board. The American taxpayer would be most appreciative.
What do you think? If you are an American taxpayer or involved in B2G, do you agree? Sound off in the comments section below.
Last month my colleague Gabrielle Zimmerman wrote a two-part blog series on Communicating with the Government. I put it out for discussion on LinkedIn asking for people’s experience with communicating with government and learned a lot.
Here is a summary of the advice that I got.
- You need to target developing relationships with both the acquisition community and the potential users. The potential users may be harder to identify and get in to see. Both of these groups are extremely busy and your interactions should be short and to the point.
- Attend Agency Industry Days or Commanders Conferences to make initial contact. These are times when the government acquisition community is looking for discussion with industry. Be friendly, concise, and prepared. Follow-up contact should be by phone and not email.
- Select different messages for different players.
- Acquisition folks need contracting details: a one-page capabilities statement works well. Be sure to include your NAICs, DUN S, CAGE, Business size/type and any contracting vehicles you have.
- If you get in to see the users, make sure you have done your homework and that you already know what they do. Try to get them to explain their needs from their point of view so you can continue the discussion with how you can help them specifically. Be prepared to concisely explain what you have done in the past that has been similar to their needs, how you solved a problem, improved a process, or saved the customer money.
- If you are selling an established product, military customers want to know details (i.e., What is the product range? Is it rugged? How long to the batteries last?) Be prepared to provide an information sheet with detailed information on the product.
Many thanks to the members of the LinkedIn Business Development, Proposal Management & Writing, Marketing & Sales from CapturePlanning.com and GSA & VA Schedule Contracting Group for a rousing discussion on this subject. So what do you think? Any important points that I’ve missed?
The General Services Administration (GSA) has embarked on a quest to use a commercial best practice called Strategic Sourcing. According to the GSA website these are the benefits:
FSSI solutions provide easy access to its procurement vehicles, which offer business intelligence, best practice solutions, and greater discounts with volume increases. Additional benefits include that they:
• Fulfill OMB’s requirement for cross-government FSSI participation
• Assist with socioeconomic goals
• Collect and analyzes data
• Identify trends
• Re-engineer business processes
• Replicate cost-saving business processes
• Share lessons learned and best practices
• Realize cost efficiencies
• Streamline the procurement process
• Drive additional discounts
Let’s examine these benefits. (Concepts with a high degree of overlap are combined.)
- “Easy access to procurement vehicles.” This is not unique to FSSI. DOD EMALL, GSA Advantage!, amazon.com and many others provide easy access. Both DOD EMALL and GSA Advantage! have focused on highlighting small business offerings, environmentally friendly offerings, items on sale and a model that walks the novice through the procurement process without them even knowing it.
- “Business intelligence,” “collect and analyzes data,” and “identify trends.” FSSI does not offer this in and of itself. Consolidating data into a single collection point and application of BI tools is how good BI will happen. FPDS-NG, PCOLS and (again) DOD EMALL and GSA Advantage! provide data consolidation opportunities already, but BI does not happen without analysis. There is no guarantee that the Federal Government will do so here given other missed opportunities.
- “Best practice solutions” and “assist with socio-economic goals.” Strategic Sourcing has become a best practice in the private sector for good reason. A corporation has a duty unto itself to increase its profit margin. A corporation has no duty to support socio-economic programs, avoid favoritism, justify even minor decisions in writing, or follow rules outside of those dictated by commercial contract law. This is not true for the public sector. The financial impact of strategic sourcing on these other requirements has not been assessed. This country has worked so hard to create jobs. Doesn’t this seem antithetical?It may be true that if all you have to pick from are companies fitting the desired socio-economic targets your organization’s statistics will benefit. But the other half of this equation (and the real basis for such goals) is to create business opportunities for small and disadvantaged businesses who could be elbowed out by their larger, deep pocketed competitors. FSSI is blocking small and disadvantaged businesses from participation in the Federal market space, except for a few chosen vendors out of hundreds.
- “Fulfill OMB’s requirement for FSSI participation.” This is not a benefit, it’s a policy. Perhaps it is a benefit for GSA in the “atta-boy” department.
- “Re-engineer business processes,” “replicate cost-saving business practices,” “share lessons learned and best practices,” and “realize cost efficiencies” are all nuanced phrases meaning essentially the same thing. Continual Process Improvement is the responsibility of every Government organization and if FSSI will do these things then it has a place in the tool kit. But because you paid a lower price for a pencil or a bucket you have not necessarily saved the collective Government (and us taxpayers) any money if the Department of Labor is spending more on unemployment benefits.
- “Streamline the procurement process.” Now we’re getting somewhere. FSSI will do this because it downselects from hundreds of potential suppliers to just a few. Fewer contracts to manage should mean that contract actions happen faster and more accurately. It will cost the Government less to manage fewer contracts. Even the GSA Schedule program will benefit from this as schedule holders in the FSSI targeted areas will let the schedules lapse (or be forced out) due to poor sales performance, resulting in fewer contracts to manage. But if most of the suppliers leave the Schedule program what happens when it’s time to recompete FSSI? FSSI requires a vendor to be a schedule holder to participate. Will those forced out or choosing to leave be interested in spending their corporate time and funds to get a new schedule on the off chance they may win a scarce seat at the next FSSI banquet table?
- “Drive additional discounts.” This should be true. If the FSSI vendors are few in a vast market then volume should drive the prices down. Smaller and smaller margins should be possible when there are many, many sales. How low will they be able to go? In 2012 the average net profit margin in office supplies was 11.8%. Can the 15 successful vendors live with 9%? Or 5%? Time will tell. And then there’s the impact on jobs to consider.
So what is the alternative? Invest in improvements to DOD EMALL and GSA Advantage! that steer orders to small businesses and ensure the customer gets the exact item they need. Make the use of these two eCommerce platforms mandatory for procuring commercial items. Don’t manage these commercial items as National Stock Numbers (NSNs) since they are continually and immediately available from commercial inventories. Let everyone play in these two market spaces. Let market forces shape the competition. Set benchmarks for vendors so that when they achieve certain sales levels they will automatically drop their prices. Give every company that has a stake in office supplies, janitorial supplies and equipment and maintenance, repair and operations supplies and equipment an even playing field.
What are your thoughts? Do you agree with the idea of investing in these improvements to drive customer satisfaction? Share your ideas below.
In my last post, Let’s Get the B2G Conversation Started — Part 1, I talked about the need for contractors and Federal Government employees to focus on communications media to ensure we meet in the right places. And that even though communication implies multiple iterations of two parties exchanging the roles of Sender and Receiver and verification on each party’s part, that it can be often a one-way street.
An RFI, for instance, should be a platform for conversation, not an end in itself. The worst is when the Government fails to reply to RFI responses, effectively excising the opportunity to ensure both parties have a shared understanding of what’s been said. The same is true during contract performance when written requirements are furnished without opportunity to converse about them before delivery of product or results. The Government works really hard on the information and questions included in an RFI. The contractors work twice as hard on putting together their responses because they want the Government to seriously consider them for the work contemplated. When the contractor’s message is sent using only one channel which, after transmission, is shut down from the receiving end, never to be reopened until the RFP comes out, there is high probability that the Government is going to fail to learn something that would improve its desired outcome. The Government should at least publish a summary of the RFI results and, at best, enter into conversations about the contemplated work with any submitters who appear promising. When FAR talks about Market Research it is the policy writers’ hope that the Government will take the opportunity to learn more about how the industry delivers similar products or services in other arenas and what sort of terms and conditions in a contract will create a partnership that produces positive results. The point of an RFI is NOT to check a box.
It’s hard to imagine that there would be any reluctance to explore the possibilities for a project or product with others who have direct knowledge and expertise and yet, getting that conversation started seems to be the hardest part of doing business with the Government. We’ve had quite a bit of conversation on LinkedIn already on this topic, but if you have more to add or just haven’t done so already, please tell us your story.
Fall is in the air—that time of year where it’s nearly impossible to keep turkey and football far from the mind. This week it is even more apparent as most of America will be enjoying a holiday stuffed with family and friends, good food, and—of course—college football. But did you ever stop to think about how college-level referees get paid? Probably not. I happen to know that there is a really cool software package called GamePaySM that keeps referees in the black.
GamePaySM tracks everything required to pay officials and other independent contractors who work sporting events. Understandably, a lot of game officials work part time and are burdened with a large travel requirement. GamePaySM keeps tabs on when and where officials work, all in a secure, online environment. The software keeps accurate records and allows Conferences to calculate payments as well as pay taxes. Users can review payment history through a reporting function and can view the status of events and payments from anywhere.
Over 34 universities and athletic conferences use GamePaySM to manage their gaming officials including:
|American Athletic Conference
|Atlantic Coast Conference
|Big 12 Conference
|Big South Conference
|Big Ten Conference
||Sun Belt Conference
||U.S. Military Academy
||University of Pennsylvania
|Florida State University
||University of North Texas
||University of Richmond
Partnet is proud to have developed and supported the GamePaySM application since its inception in 2003.
GamePaySM: Celebrating 10 years of official payments in gaming.
I enjoyed reading Debra Fryar’s blog post, B2G Communication Mismatch. She is right to say that communication is not only about your message; it’s also about how you convey it. Communication 101: in order for communication to occur a sender, a message, a medium and a receiver must be present. Leave out even one link in the chain and the process fails. Contractors and federal government employees both must focus on communications media to ensure we meet in the right places.
So where are the right places? Debra mentions that, “68% of contractors said they would try to do more face to face visits and only 19% of government said they planned to.” Austere economic times, uncertain futures, shut downs and sequestration are creating a somewhat prickly environment, but I am wondering if this statistic has a very high variation from the norm. In my experience, government employees can have some odd notions about talking to contractors. I do not think there is anything new with the notion of government employees planning on fewer face-to-face communications.
But the nagging question remains: from where does this reluctance stem? Certainly during source selection sensitive periods the integrity of the acquisition process must be protected. Source selection officials must be very careful to avoid even the appearance of favoritism or technical leveling. Even being seen in public with a company representative that is competing for government business that is currently up for grabs can compromise the government employee.
But there are other times when talking to contractors is not only recommended, it’s smart. For example, in the acquisition planning stage and the post award stage. Having been both a government employee and a contractor I can assure you, we’re all just people with a variety of knowledge, skills, and experiences working together. Engaging in conversations about what you are trying to buy both when framing the acquisition (see FAR 10.002(b)(2) for recommended techniques to use in Market Research) and once the contract is awarded will yield a gold mine of useful information.
And I do mean conversation. Communication can be a one way street. Using the Sender > Message > Medium > Receiver model, communication occurs successfully when intake by the Receiver happens. One factor not mentioned in this model, however, is the quality of the communication. How well was the message understood? Unless communication flows both ways, there is not a good way to gauge the quality of the conversation. “Conversation” implies multiple iterations of two parties exchanging the roles of Sender and Receiver and verification on each party’s part that there is a meeting of the minds over what the exchanged messages mean.
It’s hard to imagine that there could be reluctance to explore the possibilities for a project or product with others who have direct knowledge and expertise and yet, getting that conversation started seems to be the hardest part of doing business with the government. I’ll dive into this topic further in Part 2, but in the mean time, tell us your B2G communication story.
Business-to-Government has experienced a few bumps in the road over the past year: the GSA conference scandal, the Sequester restriction on training and travel budgets, the government program office’s reluctance to speak with industry, and now the government shut down. Indeed so much has happened in government over the last year to increase the challenge of B2G communications that I’d be hard-pressed to list it all. The folks over at Market Connections Inc and Boscobel Marketing Communications have published a white paper which sheds some light on the communication dilemma we are facing today and discusses the apparent mismatch of how industry and the government plan to communicate with each other under the current budget constraints. Let’s discuss some of the more interesting points they’ve presented.
The Difficulties of Talking to Your Government Customer
Seventy-two percent of agencies plan to attend fewer conferences and 57% say they will be hosting fewer conferences. Contractors are in step with these results with 50% stating they will attend fewer conferences. Government participants stated they would be turning more to webinars, reading publications in their field, and reviewing websites to gain knowledge. Contractors plan to have more personal discussions with government personnel in addition to updating their websites and producing white papers and case studies. The biggest discrepancy was in the area of face-to-face visits. Of contractors, 68% said they would try to do more face-to-face visits, while only 19% of government said they planned to do the same. This might explain why it is so hard to get an appointment to meet with government personnel.
A silver lining does appear in the findings however, especially for small businesses. Increased use of social media and website reviews by government personnel will make it easier for small business to get their story out and compete directly with large businesses. By participating in LinkedIn discussions, regularly using Facebook, Twitter, and Google+, you can spread your message to government and become known as a thought leader. Video is also a great way to highlight your products and explain what you can bring to your customers.
A big concern held by both government and industry is that this communication mismatch will inhibit innovation and collaboration. Two-thirds of both contractors and government agree that it will be difficult for government to maintain best practices. Three-quarters of those surveyed, for example, believe contractors will have to become more innovative to inform and educate their government customers. As contractors we must keep trying to attract their attention in new and creative ways as well as the tried-and-true approaches like simply knocking on their door.
Last week we took a stroll down DLA memory lane and the evolution of eBusiness with A Look Back: eBusiness Retrospective. This week let’s take a look at how the DLA leveraged technology to support business processes in the post-Internet era.
Enter the Internet. The concept of AUTODIN was harnessed for much broader use both in who would use it and what would be transferred across it. Email was the first thing most people encountered that got them on the World Wide Web. Then a colleague showed me how you could look stuff up using something called AltaVista. (If you’re wondering what happened to those early search engines, read more here.) With the Internet you could send large files to other people using “ftp” (this was the first time I remember using lower case letters for an acronym). And then another miracle happened: two people could look at the same thing on the Internet at the same time.
Smart people in DOD realized that we needed a concerted effort to get the best from this new, amazing resource that we now take as a given here in the 21st Century. The Joint Electronic Commerce Program Office was established with Scottie Knott at the helm. From this think-tank-with-an-action-plan came such web-based systems that have become a familiar part of the landscape like Wide Area Workflow, used for invoices, material inspection and receiving reports; DOD EMALL, the one-stop eCommerce site for DOD; Contractor Central Registry, where all vendors doing business with the government have to be registered; Electronic Document Access, which holds a copy of all DOD contract documentation; and FedBizOpps, which advertises opportunities from the government to the vendor community. With that, eBusiness was born.
So where to go next? Everyone’s money is on mobile technology and I hope that’s where we go. Talk about bringing the power of computing right to the person doing the work! Mobile computing does one better by bringing the power of computing to the person doing the work WHERE the work is being done. I don’t know who will be reminiscing about the early days of mobile computing in 20 years from now, but I’m sure it will make computer users of the time smile.
Recently my friend and colleague Claudia “Scottie” Knott was inducted into the DLA Hall of Fame. This got me thinking about where she and I were in our careers when we met in the early 1980s. As everyone knows, the Department of Defense has always been an information technology leader and was an early participant in the development of the Internet. Leveraging the ability to make information, communications, and transactions available on a broad scale has had a positive impact on DOD business processes. I’m happy to say that Scottie and I were a part of that evolution at DLA and had big dreams for leveraging technology to support business processes—what we now call eBusiness. Today I’ll give you a look at this evolution up until the time of the Internet. Next week, we’ll continue the discussion with the significant innovations brought about in the post-Internet age.
Life before Big Data: Pre-Internet Times
Originally, data processing was accomplished on a local level. If two organizations needed to share data, they hand delivered or mailed completed forms to each other. Data had to be manually entered at each location where a computer would then process it to produce the desired effect (e.g., create paychecks, release stock from a warehouse, or bill a customer). Besides the duplicate labor, the margin for error was increased each time the data had to pass through another pair of hands to be processed. Punched cards were a great innovation. With punched cards, the margin of error was reduced because one computer could punch the card and the next computer could read the card, successfully preserving the information for data processing. This translated into measurable savings. But they had to be kept in a specific order for the computer to read the cards properly (think major disaster if a box was dropped) and they still had to be mailed (think slow, not to mention possibly damaged or lost). Even magnetic tape had to be mailed if another computer elsewhere needed the data to perform its job.
The next innovation for DOD was AUTODIN, the AUTOmatic DIgital Network. AUTODIN eliminated the mail and made worldwide data sharing a reality. Originally AUTODIN ran on second generation computers that used semiconductors instead of vacuum tubes. These computers occupied a large amount of space and required a LOT of air conditioning. (Read more about that here.) What was practically miraculous about AUTODIN was that it made point-to-point transaction processing a reality. It was Electronic Data Interchange before the term was coined. DOD was stepping up its eBusiness game as early as the 1960s, when AUTODIN first went live.
AUTODIN solved the problem of transferring massive amounts of data in less than 24 hours between two computer systems that were far apart, but the language of AUTODIN was bound by 80 card columns. The precise position of a letter, number, or blank in those 80 spaces communicated enough information to convey—in the case of a requisition for supplies, for example—what was needed, who needed it, how much of it was needed, where it was to be sent, and who would pay for it. In order to accomplish this, an intricate series of codes was developed so that one or a few characters could convey a lot of information. Think about your 140 character limit on Twitter for a moment! In order to communicate via AUTODIN you needed a big manual with formats, codes, and dictionaries, so it was not very accessible; if you didn’t need to work with it, it wasn’t worth learning.
“Dumb terminals” were the next big advancement where regular workers could send inquiries to their local mainframe to get the latest, as of last night’s cycle, information about a contract, an account, the quantity of stock on hand, or a personnel status. These terminals were shared, often among a hundred people or so. And competition for a seat at one could be fierce. While these tools brought the power of computing closer to individual workers, there was still a long way to go to get to eBusiness.
When the first personal computers (we actually said the whole thing at first, not just “PC”), showed up in the office, they went into a room that could be locked at night. There was one (1) per Division. We could create graphs and print them right on the transparencies. It was very exciting. If the boss wanted to change it, you just printed a new one! We used patterns in the bars and pie sections and symbols on the data points for line graphs because we didn’t have color printers at the time.
In the 1980s there was a lot of local creativity going on throughout DOD. People saw new technology, like PCs, and came up with some pretty creative ways to use it. Scottie Knott impressed us all with leveraging downloaded mainframe data into a PC word processor to produce action sheets for contract administrators. I don’t think that little program—what we might call an app today—was mentioned in the write up for her Hall of Fame citation. Nonetheless, PCs allowed us to move from writing elaborate requests for programming, to ordering a download we could manipulate on a PC ourselves. The power of computing moved one step closer to the people doing the work and eBusiness was beginning.
I also worked with Scottie on the DLA Pre-Award Contracting System (DPACS). The objective of this system was to eliminate mainframe paper output by delivering it electronically to the desktops of the buyers. Programs, not yet apps, assisted the buyers in tracking workload, creating and distributing documents, recording activity and results, and finalizing procurement actions. You have to understand that this was truly a novel concept. It was met with a lot of skepticism and the budgeteers were having a very hard time with the expense of putting a PC on everyone’s desk. This was a client-server application which meant a lot of downloading and uploading to get and send data to the mainframe, but we could actually see the drop in paper consumption and, as the learning curve was overcome, an increase in productivity. While the mainframe remained the backbone and was updated only every 24 hours, client server activity could happen in real time—another ground breaker for eBusiness.
Next week we will discuss all of the changes that we experienced in the post-Internet age. So what about you? Do you remember punched cards and magnetic tape? What’s your favorite technology throwback? Add your comments below.