The Ministry of Defence (MoD) is introducing an ecommerce system to trade online with its thousands of suppliers.
The project is one of the earliest and largest web-based purchasing projects in the UK, and will handle annual spending of £4.5bn. The scheme is a major step toward the government's stated aim to see as much as 90 per cent of routine purchasing taking place electronically by 2001.
A spokesman for the Ministry, which employs 350,000 people, said the organisation is negotiating with services giants EDS and Cap Gemini to build the system. It will announce which vendor has won the contract next month.
Web pages will link MoD purchasing staff with the catalogues of approved suppliers, and back-end systems will be integrated with software to warn when stocks need replenishing. The software will replace a paper-based system.
'Eprocurement' concerns the automated purchasing of maintenance, repair and operating products needed to run a business - goods such as PCs, stationery and machine parts, but not products that businesses buy either for use in manufacturing or for resale.
Analyst GartnerGroup estimates that eprocurement systems can slash costs by between 50 and 60 per cent through automation of manual processes and discounts from large-scale centralised buying. The MoD said it is too early to predict its cost savings.
Gartner research director Alexander Drobik said that he only knows of 25 eprocurement projects currently running in the UK. "I'd be surprised if there were more than 50 in progress in total," he said. "Even the ones that are live are not fully deployed."
The Stationery Office, BT and UK software supplier ISC are also deploying eprocurement systems. The MoD said an initial service would be introduced this summer.