44 India's Best IT Implementations of the year 2005

Continued from page: 2

Friday, June 03, 2005

Maximum Social Impact e-procurement exchange under public private partnership model Govt of Andhra Pradesh

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Project Head: Ajay Sawhney, Secretary to Government, IT&C Department, Secretariat, Govt of Andhra Pradesh 
Location: State of Andhra Pradesh

While setting up a procurements portal isn't such a unique task, it's the scale of this project and the social impact it creates, which made the jury decide to give it this award. The project affects all the government departments, PSUs, local bodies and even autonomous institutions like universities in AP. As of now, there are 2000 users from 40 departments/SBUs, registered with the portal and are already using its procurement services. In terms of social impact, it reduces cartel formations amongst contractors and suppliers since all the bidding is done online through the portal. It has actually increased the participation from the supplier community since anybody can bid for a tender. This helps empower even the small and medium-sized suppliers.

Approximately 5000 suppliers are already registered with it, and the service has been extended right down to the panchayat level. Another social benefit is that due to the transparency, the citizens of state feel satisfied that the taxes they pay are being spent wisely. 

The e-procurement exchange was set up by the Goverment of Andhra Pradesh to streamline its procurement process across various departments and SBUs. It was done to introduce and enforce best procurement practices. Annually the government used to spend about Rs 8,000 crores on procurement, and the process was plagued with problems. For instance, it took four to six months to process tenders, which is fairly long. A lot of paperwork was involved and not to mention multi-level scrutiny during procurement, which took up even more time. Like most manual tendering and procurement processes, this one was also affected by cartel formations as we just said.

The e-procurement portal helped resolve many of these problems. For one, it has done demand aggregation. So instead of each department floating its own tenders, everything is centralized, resulting in better buying power from suppliers. This helps the departments get goods at the best possible price, and even helps control inventory. It even helps pre-qualified vendors to access other government departments as well, giving them more business opportunities. It uses various types of e-auctions for getting better deals. Lastly, it increases transparency in the system, allowing for better monitoring and control over the procurement system. 

The architecture
The project has been built on an n-tier architecture. There's a presentation tier that's supported by two load-balanced Web servers. These provide the front end for the e-procurement portal. There's a business logic tier, which handles several tasks including authentication, authorization and workflow management. Then there's an XML data layer tier, which handles communication with the Web services. Lastly there is a database tier, which also runs on two hardware servers, configured in a two-node active/passive cluster to ensure high-availability. 

The business logic has been kept separate from the presentation logic by design. This makes the system more scalable allowing new departments to be incorporated into the system. All workflow and navigation code has been abstracted from the user interface for achieving this. Being an online system where users are logging in, getting authenticated and filing tenders the system needs to have proper security. For this, two-factor authentication, digital signatures and 128-bit SSL encryption have been incorporated. This architecture can even be extended to other devices beyond the desktop, such as the mobile devices. 

Skill sets and key players
A project of this scale requires several skill sets, to be fruitful. Since the project cuts across the entire geography of AP, foremost it needed somebody capable of bringing together diverse views and opinions to a single platform. That's the reason the secretary of the state, AP, Mr Ajay Sawhney, headed it. Secondly, it needed a steering committee, consisting of people who were empowered to recommend and make decisions regarding changes in the legal and government framework. The project manager for the steering committee was Mr K Bikshapathi. Thirdly, it needed an external agency that could do the implementation and look at the technicalities. AP government chose C1 India as the external agency. The project manager for C1 India was Mr N. Kalyan Chakradhar Reddy. Fourth requirement was of the representatives elected from all the participating departments. These representatives were given extensive training on implementing e-governance initiatives, so that they could become effective CIOs of their respective departments. Together the team dealt with government policies as well as external stakeholders like vendors and consultants to carry forward the project. The project has made the complete procurement process paperless, which basically eliminates a lot of activities that add no value to the system. Some of these include manual sale of tender documents, manual opening and reading of bids, preparations of comparative statements, time spent in movement of files between people, manual creation of purchase orders and delivery schedules. This sort of a system ensures that at any point of time, authorized personnel can check the status of a particular transaction. There were three stages in the project-pilot, roll out and operations and ongoing maintenance. The project has been implemented using the public-private-partnership model (PPP). In this model, the government doesn't invest in the hardware, software and customization of the project. It's all borne by the service provider right up front. The service provider recovers the investment through service charges for all transactions carried out on the portal. These are charged to the individual government departments carrying out all the transactions. The benefit to the government in this case is that it doesn't have to worry about maintaining the IT infrastructure, upgrading the hardware or software or the technology changes. As all these are borne by the service provider. The service provider needs revenues to the tune of Rs 4.55 crores per annum to operate and maintain the e-procurement portal. 

At the end of the day, the project has resulted in the reduction of tender processing time by 70%. In a procurement worth Rs 16,000 crores, AP government saved 16%, which is tremendous. 

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