Introduction of KONEPS
Headquarters for e-Procurement service
Ja Hyun Koo
Contents Ⅰ
Overview
Ⅱ
Achievements
Ⅲ
Recent Innovations
Ⅳ
Future plans
â… . Overview 1. Concept and Service 2. Background of Introduction of KONEPS 3. Steps to KONEPS
4. Security Policy
1. Concept and Service
1.1 KONEPS (Korea ON-line E-procurement system) : Cyber market for the public procurement Processes all procurement procedures on-line from purchase request, bid notice, bidding, contract to payment. ※ In case of GSA of U.S., each process is managed on separate sites
Serves as a portal for the public procurement. - purchasing agencies and businesses are using together
- provides integrated bidding information including detailed specification and criteria for the evaluations, etc. - one-time registration enables participation in all bidding
Provides one stop service thru system connection - linkage of 77 external systems such as Ministry of Government and Home Affairs, financial institutions, and others
- information sharing and internet banking service
1.2 Internal & external system architecture e-Procurement system e-Procurement ASP PPS Operation
Portal
Supplier supporting service
CertificationRelated agencies
Unit contract system
Use Purchasing Agencies (Buyers)
Goods classification system
Linkage User registration
E-Guarantee
Supplier’s Performance
E-Payment
Integrated notice
Contracted products catalogue
Documents distribution and outside linkage
Linkage
Private Businesses (Suppliers) Surety insurance
Ministry of Finance Construction CALS And Economy
Ministry of Government Administration and Home Affairs Constructionrelated Associations Korea Financial Telecommunications & Clearings Institute
2. Background of Introduction of KONEPS Problems in traditional procurement - Required intensive paperwork and manual processes
- Needed frequent visits to and repeat registration with each purchasing office by suppliers - Troubled with irregularities and low level of public trust
Innovation thru digitalization - EFFICIENCY thru on-line process of entire procedures - COST SAVING thru getting rid of suppliers’ visit and info integration
- TRANSPARENCY thru non face-to-face transaction and real time disclosure of information
3. Steps to KONEPS 1997~2001 : Started with EDI - PPS adopted EDI to initiate e-procurement • In 1997, EDI (electronic document interchange) system was developed to interchange documents like purchase request * In 1997, we started with 20 purchasing agencies as users - PPS expanded e-procurement application step by step • e-procurement applied to procurement of goods and to the online shopping mall in 1997, expanded to construction and services in 2000, and upgraded from EDI to XML based on the Internet in 2000
- In 2001, digitalization extended to all work including bidding, contract and payment
2001~2002 : Government-wide expansion and launch of KONEPS - Mar 2001 : Decision to build a government-wide e-procurement system as one of the 11 e-government projects • Government-wide efforts made by creating a task force comprising relevant institutions and businesses
- Jul ~ Dec 2001 : Performed BPR/ISP for KONEPS * BPR: Business Process Reengineering ISP: Information Strategy Planning • Provided for good model of e-procurement system - Mar ~ Oct 2002 : System building and launch of KONEPS • Built the system for 7 months • Started the service of on-line e-procurement system
4. Security policy 4.1 Hacking prevention strategy ď Ź Complete set of physical security system - separate network of external and internal system - double firewall
- intrusion detection system - server and network security
ď Ź Regular security check up - information security test done by a private sector professional firm once a year - once in every quarter security check-up within the agency
4.2 Prevention of illegal operation inside the agency Operational procedure according to the information technology infrastructure
- Guaranteed security through standardization and complicated approval system - Received the ISO 20000 certification
Structure of mutual check and control through allotted tasks - Systemic operation between the external security firm and PPS - Specialist in charge of the security operation ㆍ log analysis, password management, analyzing hacking techniques
Guarantee security thru the log tracing and exclusive approval systme - Only the officer in charge can view the original e-document
â…Ą. Achievements 1. Achievements 2. Factors for success
1. Achievements 1.1 Utilization volume ď Ź Used by 35,000 Purchasing agencies and 150,000 Suppliers - Jointly used by buyers from the central and local governments to state-owned enterprises including entities belonging to themselves
ď Ź Records a daily average of 100,000 website hits ď Ź Exchange 100,000 documents daily online which, in the past, were delivered via mail or in person
1.2 Transaction volume In 2005, transacted US$ 43 billion - 18 millions businesses participated in 141,000 biddings amounting to US$ 24 billion - Other transactions of US$ 19 billion including private contracts were made electronically
91% of all biddings were conducted online 510,000 orders for items were delivered by one-click purchasing in the shopping mall
1.3 Enhanced procurement administration Raised productivity - Saved annual transaction costs of US$ 4.5 billion • US$ 4.1 billion of business expenses was saved in terms of time and transportation (US$ 0.4 billion for public organizations) - Per-capita productivity of PPS rose by 102%(from 208 to 421 cases annually)
Improved transparency - Achieved a fair administration by providing information in real time and expanding the provision of information
• Promoted fair competition by expanding bidding opportunities - Reduced face-to-face contacts between suppliers and officials
1.4 Leading the development of e-Commerce ď Ź Expanded the experience of e-Commerce - Purchasing agencies and businesses accumulated the e-procurement experience and utilized it for online transactions in private sector - Created an environment for PCs and the Internet, and fostered the mindset for e-Commerce
ď Ź Improved the security of e-Commerce - Facilitated the establishment of infrastructure for digital signature and security including PKI encryption * PKI : Public Key Infrastructure
- Accelerated the application of digital signatures to ensure security for private sector transactions
1.5 World best e-government operator Received the UN Public Service Award (Jun. 2003)
Evaluated as the best e-government service provider by OECD (May 2004) - A strong pull-through effect on ICT use in the private sector and no further actions are required
Reflected the standardized process in the UN global standard (UN/CEFACT, Mar. 2005) - Registration → Public Invitation → Tender/Opening Tender → Publication of Award
Recognized as Best Practice Model for e-procurement from around the world by UN (Nov. 2004) - Accentuated the integrated portal approach
Acquired ISO 20000 Certificate (Nov. 2005) - Certificate for providing IT Service according to the global standard processes (ITIL : Information Technology Infrastructure Library)
* ISO : International Standard Organization
Received Global IT Excellence Award from WITSA (May. 2006) *
WITSA : World Information Technology and Services Alliance
2. Factors for success 2.1 Overcoming Internal resistance
PPS employees’ concern and resistance - Concern over PPS’ continuance “if procurement is processed on-line, won’t it cause PPS to
disappear?”
- Resistance to losing discretion
“if I can’t meet suppliers and all info is disclosed in real time, which discretion will be left with me?”
Overcoming thru setting clear vision and sharing crisis - Setting Vision of KONEPS as the world best e-procurement model - Emphasis on the new opportunity as the e-procurement service provider
- Sharing the feeling of crisis : “Even a government organization cannot survive without innovation”
2.2 Established government-wide promotion system Need for inter-ministerial cooperation - Several local govts wanted to build e-procurement system per govt - KONEPS was a project needing inter-ministerial cooperation * legal framework, linkage to external systems, user participation Strenghtening inter-ministerial cooperation - Operated an e-government special committee as a top taskforce
* The Committee assumed full management of e-government projec -Joint efforts by officials and private sector specialists in the Committee • Public: Vice-ministers for related ministries • Private: Specialists applying new ICT * ICT : Information Technology and Communication Technology
2.3 Convincing purchasing agencies and suppliers Users reluctance and cautiousness - Purchasing agencies : ingrained to manual work and reluctant to change - Suppliers : too cautious to transact on-line “ Multi-million dollar bid will be executed on-line just by one click? What if there’s any error ?”
Convincing benefit and security of KONEPS - Made purchasing agencies understand the resulting benefit thru education and promotion * Established KONEPS education center at each regional office - Eliminated suppliers concern by emphasizing the system security * KONEPS is the safest system with digital signature and encryption
â…˘. Recent Innovations 1. CRM service 2. Ubiquitous-based e-procurement service 3. Ontology based e-catalogue service 4. e-Shopping mall
1. CRM (customers relationship management) service (2004) Differentiated services are provided for each customer by introducing CRM - Provides custom-tailored info to KONEPS users • •
interested product information among the contracted items product referrals according to customer’s purchase pattern
- Provides contract process notice service to end-user agencies that requested PPS to purchase - Provides procurement notice to interested businesses and delivers award notice in real time in text message to a successful bidder
Establishing Web Call-Center - Provides interactive consultation service by sharing customer’s computer screen
* First of the kind among government call-centers
2. Ubiquitous e- procurement service (2005) Provides mobile e-bidding service for businessmen on the move
- Enable suppliers to submit bid thru PDA or notebook while traveling Provides mobile e-inspection/tally service for construction items - Enable purchasing agencies to inspect/tally on the site of delivery from Nov.2006 * Materials delivered on the site of construction is hard to use KONEPS system for location Provides mobile info service
- Mobile channels shift away from the PPS homepage to wireless channels such as PDA
Government property management through Radio Frequency Identification (RFID) - applied to PPS properties on a pilot basis in 2005 and plan to expand to central government agencies
3. Ontology based e-catalogue service(2006) Products registered initially for property management since 1997 - mostly used for the government’s property management by providing unique classification and identification code As KONEPS launched, PPS chose the UNSPSC code to facilitate e-commerce * UNSPSC: United Nations Standard Products and Services Code * of Nov.2006, approximately 780,000 products registered in e- catalogue -As
Initiated Ontology-based e-Catalogue service to enhance searching capability and support interoperation with private sectors in 2006 * can search product info with just a part of the product name or similar word - Providing the integrated reference to many kinds of different standards and opportunities for the private businesses to enter the KONEPS e-catalogue
Plan to apply ontology service to e-shopping mall and Support the private sector & e-marketplaces to establish own e-catalogue in 2007
4. e-Shopping Mall Objective of e-shopping mall - Provides purchasing agencies with greater choice and one-click purchase of various goods and services “1 Commodity, 1 Supplier → 1 Commodity, multiple Suppliers” The largest shopping mall for public procurement - approximately 40,000 contracted items at opening in Jul. 2006 and expanded to 100,000 items by the end of 2006
Improved customer service quality and support technology and businesses - improved customer service quality by convenient purchase of goods for unit contract with PPS - Support of development for new technology and small and medium-sized companies sales routes
ď Ź Quick-register system - Used to be once a year registration but changed to at all times
ď Ź Operation plan - Professional management of planning and analyzing goods and contract by professional merchandisers - Minimize the goods registering period from 60 days to 20 days - Expanding the number of listed goods to 150,000 (2007)
â…Ł. Future plans 1. International cooperation
2. Action plan 3. Supporting continuous development of KONEPS
1. International cooperation Objective - Introduced KONEPS at international conferences and workshops from UN, WB and OECD - Supporting countries interested in establishing e-procurement system thru feasibility studies and capacity building programs - Concluded MOU with Korea Export-Import Bank on cooperation
Policy share - Assisting aid for system building
- Joint seminar for countries planning to adopt e-procurement - Active participation to international conferences
Extend to feasibility study and study tour - Supporting countries interested in establishing KONEPS modeled e-procurement system thru feasibility studies * completed F/S on Pakistan and Vietnam - Expanding Study Tour programs for countries interested in developing well structured procurement system
2. Action plan
Operating programs to share e-procurement system - co-hosting E-Procurement fora with the World Bank • Central Asia (Kazakhstan, Azrbaijan, Armenia, Georgia) • Southeast Asia (Thailand, Philippines, India, etc.) • Latin America (Peru, Columbia, Panama, etc.) Cooperating with related agency - operating e-procurement training program in cooperation with KOICA * KOICA: Korea International Cooperation Agency - Cooperating on inviting VIPs and visit from the Administrator of PPS - Increasing cooperation thru international organizations APEC, UN/CEPT, etc.
3. Supporting continuous development of KONEPS ď Ź Contents expansion to strengthen KONEPS competitiveness - business evaluation system - B2B MRO purchase support system * MRO : Maintenance, Repair, Operation
ď Ź KONEPS development for user convenience - various services based on MAS (multiple award system) - Information thru PMO (Project Management Office) expansion