Effect of e-procurement implementation on the effectiveness of rwandan hospitals from 2019-2020

LIST OF FIGURES

Figure 1: Theoretical Framework 3

LIST OF ABBREVIATIONS

BI : behavioral intention

CRMS : Customer Relationship Management systems

EPS : Electronic Procurement System

ERP : Enterprise resources planning

G2B : Government to business Services.

IT : Information Technology

KPIs : Key Performance Indicators

OECD : Organization for Economic Co-operation and Development

PKI :Public key infrastructure

PLCs : Product Life Cycles

RBT : Resource-Based Theory

RPPA : Rwanda Public Procurement Authority

SPSS : statistical package for social science

TAM : Technology Acceptance Model

TRA : Theory of Reasoned Action

WB : World BankCHAPTER I: GENERAL INTRODUCTION

Introduction

This chapter deals with background of the study, statement of the problem, objectives and research questions of the study, significance of the study, scope of the study and interest of the study.

1.1. Background

A state has different needs for its development and one of the strategies for satisfying the needs is using public procurement. Public procurement is the process by which government departments or agencies purchase goods and services from the private sector. It takes place at both a national and regional level, and the process will usually be subject to specific rules and policies covering how the relevant decisions are made. The reason behind using public procurement is competition, transparency and value for money. Judith Gebauer& Arie Segav 2001, defined procurement as «All of the activities involved in obtaining material and services and managing their inflow into an organization toward the end user. The procurement process follows steps that are arranged in a determined order.These steps can be explained here under as procurement cycle comprises three main phases namely:pre-tendering including needs assessment, planning and budgeting, definition of requirements, determining priorities and choice of procedures;tendering including the invitation to tender, evaluation and award; and post-tendering including contract management, order and payment(Judith Gebauer& Arie Segav 2001). The key steps for planning and implementing a successful e-procurement strategy at any organization consists of assessing and documenting the current procurement process; assessing and documenting the desired future procurement strategy; identifying the gaps between where you are now and where you want to be; identifying the process and system solutions that will be required to bridge the gaps; documenting the important benefits that will come from implementing an e-procurement system (hard, soft and intangible benefits);developing key performance indicators (KPIs) to measure success against your identified procurement goals. It also consists of creating a business case that addresses the most critical pain points of your buying organization; securing executive sponsorship and an internal champion for the initiative, developing a plan and committing resources to the project(Judith Gebauer& Arie Segav 2001).

The key steps for planning and implementing a successful e-procurement strategy extends to reviewing and selecting the optimal e-procurement solution provider for your needs;creating an implementation plan that reduces deployment/maintenance times and resource demands on your IT department;delivering and measuring the benefits(Judith Gebauer& Arie Segav 2001). An organization's e-procurement strategy should be conceived holistically as an integrated part of the overall procurement strategy to ensure the business objectives are met(Judith Gebauer& Arie Segav 2001). It is important to understand the impact of your e-procurement plan on the structure of your entire organization; therefore, clear communication is required at all stages of the project. In the end, you will come away with a much stronger, streamlined, collaborative and financially-viable organization that is ready to take your procurement operations to the next level of success(Judith Gebauer& Arie Segav 2001).

Organizations buy or sell products or services as a part of their nature. The advent of Internet and Communication Technology (ICT) has changed the way they procure and introduced a new term called e-procurement. At the beginning of 1990s the web-based procurement systems were in use for the first time. Large corporations such as Cisco, Dell or IBM were the first pioneers and users of e-procurement systems (Trauth, 2001). Although e-procurement was adopted by private sector first, it has drawn great attention within the public sector.Drivers for implementing e-procurement systems in public sector vary from one government to another. The main driver for many local and central governments in developed countries has been to reduce administration and transaction costs and to improve competition (especially promoting Small and Medium) Enterprises (SMEs)). In contrast, in countries with high levels of corruption e-procurement is perceived as a weapon to combat corruption in public procurement ((Trauth, 2001).Public procurement accounts for about 20% of worldwide government expenditure. However, within some African countries this can amount to more than 70%, achieving a reduction in public spending by as little as 1% would make a significant difference and save a large amount of taxpayer's money (ADB/OECD, 2008; Knight et al., 2007; Basheka&Bisangabasaija, 2010). As a result, a number of governments have launched or are in the planning stage of launching e-procurement systems as one of their main e-government initiatives. Although progress has been made, the integration of e-procurement technology into the public sector remains far from ideal(ADB/OECD, 2008; Knight et al., 2007; Basheka&Bisangabasaija, 2010).

For the majority of public organizations, the process of implementing and adopting e-procurement systems is like any other IT system that presents challenges as a result of internal reasons such as organizational issues as well as external reasons such as lack of IT-infrastructure, skilled personnel and standardization in addition to the related legal issues (Lindskog, 2008; Choudhari et al., 2011; Manoharan and Carrizales, 2011; Padhi and Mohapatra, 2011).

E-procurement solutions implemented within the public sector vary from the simplest form of electronic journal, web pages or portals that provide information on tender notices to more complex solutions such as e-tendering, e-catalogue (buyer-side), e-marketplace and e-auction (Schoenherr &Tummala, 2007; Bubeck& Fuchs, 2003). The e-catalogue, e-marketplace and e-auction solutions are established mechanisms within the private sector and are also finding a place within the public sector. Of these, the e-catalogue is one of the most commonly implemented e-procurement solutions. (Schoenherr &Tummala, 2007; Bubeck& Fuchs, 2003).

In contrast, e-auction and e-marketplaces are less commonly implemented within the public sector. E-journal and e-tendering solutions are specifically designed to cater for the needs of the public sector. Public sector organizations use e-journals to provide information on tender notices instead of running advertisements in newspapers or gazettes. This strategy complies with the disclosure requirements for the awarding of major contracts as well as the advantage of saving costs typically spent on running newspaper advertisements((Schoenherr &Tummala, 2007; Bubeck& Fuchs, 2003).).

E-journal functions are severely limited and typically include providing the opportunity to view tender opportunities, ordering tender documents in paper format or the mechanism to download them directly from the web page in electronic format (Bubeck& Fuchs, 2003). The e-journal is the most commonly implemented e-procurement solution within the public sector because it is easy to use and requires relatively few financial and technical resources (Bubeck& Fuchs, 2003). On the other hand, e-tendering solutions are more complex and usually consist of various modules such as the designing of official internal processes (determining the awarding procedure and preparation of tender documents, etc.), an e-journal module for tender notices (including registration of bidders and shipping of the documents), a bidding module (preparing and bidding with an electronic signature) and finally an application that enables the storage, opening and evaluation of bids (Bubeck& Fuchs, 2003).

Other e-procurement solutions are used to facilitate the acquisition of low-value and high-volume standard goods and services (Bubeck& Fuchs, 2003).

However, e-tendering is a solution that is specifically designed to electronically manage the process of public tendering for the acquisition of specialized goods, works and consulting services that are of high value and low volume (World Bank, 2003). It is the second most implemented e-procurement solution within the public sector. However, some of the e-procurement systems that are currently implemented are described as e-tendering systems and this is not entirely accurate as they fulfil similar functions to an e-journal that only allow one-way transactions. For instance, suppliers can only download tendering documents and are unable to submit documents and/or bid for tenders using this system. Therefore, such systems can be classified as e-journal systems (World Bank, 2003).

E-procurement solutions such as e-catalogues and e-marketplaces are designed with the primary purpose of serving the needs of businesses and were established within the private sector far earlier than the public sector. Therefore, these solutions would not necessarily cater for the particular needs of the public sector. This is because public and private sectors have different procurement objectives even though they share the same basic procurement goal in finding potential supplies to attain the lowest price at an acceptable quality level (Panayiotou et al., 2004). Public sector organizations are not concerned about competitive advantage or profitability but are expected to serve the taxpayer's interests by spending money in an efficient manner, managing budgets according to legislative and administrative orders and maintaining a system of checks and balances consistent with a policy of full disclosure and public review (Ulstrup, 2001). In contrast to private sector procurement, the public sector procurement processes are highly complex and bureaucratic due to the nature of the institutions and are usually bound by rules and regulations made by local, regional, national and international public organisations (Maniatopoulos, 2004). For implementing the e-procurement system, thegovernments adopted a pilot approach and planned to implement the e-procurement system in an incremental manner with the intention of minimising project risks and to facilitate the transformational process from traditional procurement to e-procurement. A pilot approach would have additional benefits of enabling the government to verify estimated costs and potential rewards of the implementation. Operational issues identified during the pilot stage could prove useful to the government in mapping the way forward and extending the pilot initiative to other government departments (Legislative Council, 2007).

Electronic procurement (e-procurement) systems have helped governments across the world to reduce costs and increase transparency in the procurement process. From the beginning of 2014, the Rwanda government started the process of becoming the first country in Africa to realize those benefits, by partnering with a South Korean firm to develop its own e-procurement system. The government launched a pilot system in mid-2016 and rolled out e-procurement nationwide in mid-2017(World Bank Grobal report, July 2017).

Governments around the world are constantly buying goods and services from the private sector, from small everyday expenses to large infrastructure projects. Keeping the procurement process simple and cost efficient is a major challenge that every government faces. Despite best efforts, the public procurement process is often lengthy, complex, and costly(World Bank Grobal report, July 2017). To address the problem, many governments around the world have implemented digitized processes to make procurement easier, faster, and more transparent, and to reduce opportunities for corruption(World Bank Grobal report, July 2017). Rwanda began reforming its procurement processes by passing a new procurement law in 2007 and establishing the Rwanda Public Procurement Authority (RPPA), a regulatory body, in 2008(World Bank Grobal report, July 2017). At that time, the country began looking at how to modernize its procurement systems. Rwandan officials traveled to the Republic of Korea, to learn how that country's e-procurement system, one of the most advanced in the world, operated. (World Bank Grobal report, July 2017)

Rwanda uses public procurement for satisfying its needs. The main principles enshrined in law n°05/2013 of 13/02/2013 on public procurement as modified and complemented by the law n°62/2018 of 25/08/2018 are transparency, competition, economy, efficiency, effectiveness and accountability. Even if the law is there, the challenges and problems are still available to the public procurement agencies. Referring to the audit reports of RPPA (Rwanda Public Procurement Authority) and Auditor General of Rwanda, the tenders are illegally awarded and the contracts are not well performed.

One of the strategies for promoting those principles is introduction of e-procurement (Umucyo system). Article 2 of Ministerial Order establishing regulations on public procurement N° 002/20/10/TC of 19/05/2020 describes in details the use of e-procurement.

Most articles did not have a formal discernable definition of electronic procurement. Instead, e-procurement was described in rather general terms, mentioning facets of it as illustrations. There is no single definition of e-procurement. That is why for Rwanda, the meaning of e-procurement as it is described is different from e-procurement in Europe (Richard,2019).

The e-Procurement System aims at streamlining government procurement process, enhancing service delivery, increasing transparency (Code name: Umucyo), providing one single window for government procurement and reducing corruption loopholes and fraud (Richard,2019).

The following was the timeline of the project (Umucyo system):May 2015 - June 2016 - System development in Rwanda (13 months),July 2016-June 2017 - Pilot phase with 8 entities,July 2017-2018 - Roll out 131 other Entities, July 2018 - Roll out 8 Extra Budgetary Entities, WB funded projects - ongoing now, July 2019 - District Hospitals (Richard,2019).Umucyo system (e-procurement) implementation is followed by the benefits like reduced time & cost, 99% reduced bidders' movement, Improved security with PKI usage, improved transparency, reduced opportunity for corruption, reduced forgery with linkages, improved compliance to the Rwanda public procurement law(Richard,2019). The e-Procurement System automates the public procurement process and enables the interactions of Government to business services (G2B).