Australia's National Local Government Newspaper Online

Exchange Solutions leads the way in the delivery of integrated e-commerce solutions for Councils *

Exchange Solutions Pty Ltd, a Brisbane based e-commerce solutions company has commenced rolling out its eagerly awaited integrated e-commerce solution for Local Government. As part of the first stage of its strategy, Exchange Solutions has been delivering e-procurement solutions to Councils.

This offering allows Councils to participate in either an electronic marketplace environment, or alternatively have a Council branded solution.

The first Local Government e-marketplace, a partnership between Exchange Solutions and Cooperative Purchasing Services Ltd (CPS), was launched in December last year by the Victorian Minister for Local Government, Bob Cameron. The main attraction of the CPS Member Market for the 300 member Councils and Statutory Authority owners of CPS, will be the ability to access CPS contracted suppliers.

Q-Market

The next major e-marketplace for release is Q-Market (www.q-market.com.au) aimed at Queensland Councils. Anticipated to be launched in late August, Q-Market will be available to any Queensland Council. To assist with the roll out of Q-Market, Exchange Solutions has recently engaged the services of Liz Whitton, formerly with the Local Government Association of Queensland (LGAQ).

Whether an e-marketplace or branded solution is chosen as the preferred option, the specific procurement requirements of an individual Council are catered to, by allowing Councils to access the growing number of existing Exchange Solutions suppliers, Council contracted and preferred suppliers as well as their own local supplier base.

Importantly, Councils are now starting to demand the ability to interact with their local suppliers in an e-commerce environment, however, Councils have not been able to invest the necessary time and financial resources in order to make this a reality. While local suppliers contribute only around 20-40 percent of a Council’s spend volume, they commonly number in the thousands.

The reality is that Councils want to support their local businesses wherever possible. Further, if a local business feels they are being disadvantaged by missing out on supply opportunities, they tend to be the most vocal about it – frequently making their local Councillor the first port of call! In addition to implementing an effective e-procurement strategy, most Councils are also simultaneously examining ways of fostering community e-commerce initiatives within their region, usually under the umbrella of the Council community portal.

Often however, such initiatives are undertaken in isolation to those of the e-procurement team, and as a result have generally been seen to be unsuccessful due to low participation rates from their local businesses.

In most cases such initiatives have involved an approach which either simply provides a local business registry service, delivered via a dynamic database, or Council has provided a merchant type e-commerce system aimed primarily at business to consumer transactions. Such a ‘build it and they will come’ approach has demonstrated to be ineffective.

The complete solutions offering of Exchange Solutions in being able to effectively cater to all suppliers, irrespective of their size, provides an additional benefit for Councils.

The ability to achieve significant participation rates by local businesses allows Councils, for the first time, to achieve a truly integrated e-commerce strategy. By using Council supply opportunities as the immediate commercial motivation, the local supplier base then becomes an instant ‘critical mass’ for local businesses within a community e-commerce environment.

Achieving high participation rates for local businesses

For a Council to achieve a high participation rate of local suppliers depends upon two key components: how prescriptive Council is in linking ongoing supply arrangements to the willingness of suppliers to participate, and the removal of barriers to participation for small business.

Experience has shown that the more prescriptive a Council is in this respect, the higher the participation rate. The gulf in participation rates can be quite dramatic. Where a Council makes no definitive public statement as to its move towards e-commerce, and as a result, offers no lead to local businesses, participation rates can typically average between five and ten percent of their local supplier base.

However, when a Council takes the promotional lead in their business community, and clearly communicates it has supply preferences to businesses capable of trading online, participation rates can commonly exceed 60 percent.

In a more committed way, some Councils are now considering promoting online participation as a mandatory requirement, as has some Commonwealth departments. Such an approach however, needs to remove the traditional barriers for small business. Typically this means both the cost and technological barriers.

For most small businesses, the cost barrier is one associated with both a financial and time cost. Again, experience has shown that small businesses will physiologically equate the financial cost to that of ‘yellow pages’ advertising, around $500 - $1,000. In terms of technological barriers, small businesses must be provided with a full range of support activities from education and training to content management support for their catalogues. Such a hand holding approach is proving to be essential.

Pine Rivers Shire Council first to implement an integrated e-commerce strategy

Pine Rivers Shire, one of Queensland’s largest metropolitan Councils has committed itself to become the first Council in Queensland to adopt an integrated e-commerce strategy. Under the Exchange Solutions partnership model, Council is implementing a solution that will allow it to achieve significant cost efficiencies for its own procurement purposes, while also providing significant benefits to its own local business community.

“Council is very excited about this opportunity,” said Pine Rivers CEO, John Mathews. “At a time when our local businesses are still struggling to come to grips with issues such as GST, this initiative by Council is being embraced enthusiastically by our local business community.

“It is clear that while local businesses see an opportunity to continue their existing supply relationships with Council, they can clearly grasp the wider opportunity in dealing online with each other and eventually our ratepayers.”

While it is still in its formative stages, local businesses are showing a great deal of interest in participating.

“We recently held our first local business briefing with some 160 attendees,” John Mathews said. “Within two weeks, in excess of 60 percent of those attending had signed up to undergo training.” Under the lead of Council, Exchange Solutions is now progressively working through in excess of 2,800 Brisbane based businesses. The Pine Rivers initiative involves Council taking the lead with both its supplier base and the local business community.

“In the future, it is envisaged that all business will recognise the benefits of transacting business online,” he said. “Under our project, local businesses will be able to trade with Council, each other and ultimately ratepayers.”

While this was a low cost option for Pine Rivers it has necessitated a clearly stated commitment of support towards its success.

Exchange Solutions has commenced discussions with a number of other Councils who want to adopt such an approach. As a result, these Councils are keenly watching how the Pine Rivers initiative progresses.

To obtain a copy of whitepapers on e-commerce strategy please contact us at: information@exchangesolutions.com.au or telephone (07) 3251 4141

* Copy supplied by Exchange Solutions

The following articles are also included in this edition or go BACK to the main page: