Understanding Digital Transformation of Procurement Through E-Procurement Systems Implementation: Business Partner Relationship Perspective

Understanding Digital Transformation of Procurement Through E-Procurement Systems Implementation: Business Partner Relationship Perspective

Nergiz Ilhan (Monash University, Australia) and Md. Mahbubur Rahim (Monash University, Australia)
DOI: 10.4018/978-1-7998-2799-3.ch010

Abstract

E-procurement systems require a rigorous implementation process for attracting their acceptance within buying organisations and generating benefits. However, despite a rich body of literature on e-procurement systems, little is known on how buying organisations generally implement their e-procurement system. Even though an important role is played by the procurement function, limited studies have been reported to explain the details of the activities undertaken by buying organisations for implementing an e-procurement system, and in what ways those activities are influenced. To address these gaps, this chapter proposes an association between the type of business relationship a buying organisation intends to maintain with its suppliers when deciding to implement an e-procurement system, and the e-procurement implementation process it follows. The chapter further presents empirical evidence in support of one particular type of business relationship by analysing the e-procurement system implementation experience of an Australian organisation.
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Introduction

In recent years, the notion of digital procurement is emerging. Digital procurement represents a concept that involves automation of procurement process using e-procurement systems that incorporate smart analytical tools like big data and data mining solutions(Srai & Lorentz, 2019). Digital procurement supported by electronic procurement (E-procurement) further represents a key element of Business-to-Business (B2B) e-commerce (Gunasekaran et al., 2009). In particular, e-procurement systems reflects an application of e-commerce technologies to support a buying organisation’s purchasing activities (Garrido-Samaniego et al., 2010). In recent years, however the notion of e-procurement systems is undergoing an evolution as it is emphasising on the incorporation of “smart” IT systems (Schmidt et al., 2015). According to Glas & Kleemann (2016), smart systems automatically recognise demand for a certain material and from that, independently generate a purchase order that is transmitted to the respective supplier without any necessary human interference. Hence, digital e-procurement extends the traditional e-procurement systems. These systems can provide operational as well as strategic benefits to buying organisations and their suppliers (Rahim & Kurnia, 2014; Tai et al., 2010). However, mere implementation of e-procurement systems does not guarantee those benefits (Pearcy & Giunipero, 2008). This is because realisation of benefits is largely influenced by the way e-procurement systems implementation process is undertaken by buying organisations (Ilhan & Rahim, 2017). Hence, the importance of e-procurement implementation process cannot be underestimated. Although, there currently exists a rich body of literature on e-procurements systems, a large portion of the literature is concerned with several issues like identifying those factors that affect a buying organisation’s decision to implement these systems (Hardy & Williams, 2008), e-procurement implementation challenges (Hardy & Williams, 2008), e-procurement use (Muriuki et al., 2019; Soliman et al., 2005), and the benefits arising from e-procurement systems implementation (Oliech & Mwangangi, 2019; Rahim & Bantwal, 2012). In contrast, understanding the activities involved in implementing an e-procurement system in organisations has received inadequate attention from the eBusiness scholars. A comprehensive literature review on e-procurement systems conducted by Schoenherr & Tummala (2007) further supports this view. It is thus not clearly known: a) what activities buying organisations generally undertake when implementing an e-procurement system to link with suppliers, and b) how those activities are influenced (Rahim & Bantwal, 2012).

Against this backdrop, this book chapter reports a research project that seeks to address the following research question:

  • RQ: What influences an organisation to choose the key activities involved in digitally enabled e-procurement systems implementation process?

This research question is answered by examining the e-procurement systems implementation experience of an Australian organisation, analyse its experience in terms of seven activities involved in e-procurement systems implementation process undertaken by that organisation, and explain selection of these activities using business relationship as a theoretical lens.

Key Terms in this Chapter

Methodology: A research approach (qualitative, quantitative, hybrid) that is adopted to empirically evaluate a research model to find answers.

City council: A public sector organisation that operates at the local government level.

System: A collection of various parts or components (including ICTs) to help a business to carry out certain activities by automating a business process.

Business Partner Relationship: The nature of association between business entities.

Implementation: Represents a stage of an IT system in which several activities are carried out for its introduction for use within an organisational context.

Business: An organisation that seeks to meet its established vision using resources and dealing with various stakeholders.

E-procurement: Represents a class of software systems that can automate the key tasks involved in procurement process.

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