Andersen Consulting Inc. this week announced that it's teaming up with San Francisco-based Epylon Corp. to implement online procurement systems in the largely untapped, multibillion-dollar public-sector market.
Here's the twist: Chicago-based Andersen will install the hardware and software for making purchases online at no up-front cost to government and educational agencies. Instead, it will recoup its investment over time from suppliers that pay transaction fees each time they sell to the agencies online.
The suppliers' fees will range from 1% to 5% of the value of purchases, said Marty Cole, managing partner of Andersen's government practice in Virginia. Current estimates peg the value of public-sector purchases in the neighborhood of $US1 trillion annually. Cole said a typical government agency can cut buying costs by a minimum of 10% by purchasing online.
Epylon, Andersen's software partner in the public-sector procurement venture, has enhanced Ariba Inc.'s procurement software with functions specific to public-sector buying.
This month, Washington became the first state to announce an online procurement initiative, signing on with Buysense, a public-sector electronic procurement service developed by American Management Systems Inc. in Virginia.