You may already be familiar with traditional, time-consuming
government procurement processes. E-procurement, however, which is
also known by the buzz-acronym B2G, involves governments using the
Internet for notification, bidding and buying processes for goods
and services. Jupiter Media Metrix forecasts public agencies will
spend a whopping $286.1 billion by 2005, with 17 percent of total
purchasing done online. E-government is looking to become a boom
town.
Two distinct angles exist for entrepreneurs. One is providing
the technology services to make e-procurement possible. The other
is taking advantage of governments' new online offerings to
expand the way you do business. Small suppliers are gaining
unprecendented access to all types of government bidding and
contract processes nationwide, and it will open up even more over
the next few years.
$286.1
billion:
The estimated amount of public agency spending by 2005; 17 percent
of that will be done online
Source: Jupiter Media Metrix
|
The city of Evanston, Illinois, just outside Chicago, has an
annual budget of $180 million-$70 million to $90 million is spent
each year on goods and services. That includes everything from
medical services for inmates to vehicles and pencils. Chad Walton,
the purchasing manager for Evanston, recently supervised the
transition of the city's procurement process online using
service from MunicipalNet Inc., a growing e-procurement business in
Boston.
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Walton echoes the sentiments of many municipalities when he
discusses reasons for heading into e-government. "It lessens
the cost of responding to solicitations from the city for
businesses, which in turn should translate to lower costs for us as
well," he explains. Both sides save time by cutting out much
of the red tape from the process.
In addition to expanding potential markets for American
entrepreneurs, e-procurement is a wide-open door for tech-minded
start-ups. David Nute, 32, founder and CEO of MunicipalNet Inc.,
isn't planning on getting filthy rich, but he does expect his
company to thrive while focusing on services to small states, local
governments and the businesses that supply them. His company's
revenue model is based on selling advanced options and extra
services to suppliers. Basic access is free for businesses, an
approach that sets them apart from most competitors.
The get-rich-quick glow of early e-government plays like
GovWorks.com has faded, leaving entrepreneurs to forge ahead with
sensible business models and back-to-basics marketing.
"It's very grass-roots," says Nute. "There is no
substitute for calling up a procurement director, going in, sitting
down, looking at [him] face to face, earning [his] trust. It may be
old-fashioned, but it works."
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