Transforming Government: People, Process and Policy

Emerald Article: E-procurement implementation: a case of Malaysia government Aini Aman, Hasmiah Kasimin

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To cite this document: Aini Aman, Hasmiah Kasimin, (2011),"E-procurement implementation: a case of Malaysia government", Transforming Government: People, Process and Policy, Vol. 5 Iss: 4 pp. 330 - 344 Permanent link to this document: http://dx.doi.org/10.1108/17506161111173586 Downloaded on: 22-01-2013 References: This document contains references to 33 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 1535 times since 2011. *

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E-procurement implementation: a case of Malaysia government

Aini Aman and Hasmiah Kasimin
School of Accounting, Universiti Kebangsaaan Malaysia, Bangi, Malaysia
Abstract
Purpose Many countries worldwide have identied e-procurement as a priority of e-government agenda and have implemented, or are in the process of implementing, e-procurement systems. The purpose of this paper is to understand the challenges of e-procurement implementation in the government sector and efforts taken to overcome the challenges, using a Malaysia government case. Design/methodology/approach This study adopts a qualitative case study approach of an e-procurement project, which is one of Malaysias e-government initiatives. Data were collected using a triangulation approach that involved semi-structured interviews, document reviews and observation. Findings The theoretical framework draws on Croom and Brandon-Jones and was further developed during data analysis. Findings show that challenges of e-procurement implementation in government sector are not only related to software integration, data management and roll-out strategy, but also to legal and administration procedures, information technology (IT) infrastructure, outsourcing contract and IT skills. Findings show the importance of creating an IT facilities centre in rural areas and working closely with a third-party vendor for users training and skills development. Research limitations/implications The ndings extend key issues of e-procurement implementation using a case study in the Malaysia government. The paper highlights the need to understand challenges and limitations faced by a developing countries such as Malaysia in implementing e-government projects. The paper provides a basis for further thought and analysis on important issues such as lack of IT infrastructure and skills, as well as high dependency on third-party developers that needs to be overcome in order to gain the impact of an e-procurement system. Practical implications This paper has explored implementation issues of e-procurement in government sectors, particularly in developing countries, and hence provides guidelines for future implementation strategy for system developers, government ofcials and ministry. Originality/value Only limited studies examine the implementation issues of e-procurement in the government sector, especially in developing countries. While current studies focus more on the readiness of implementing e-procurement, this study posits to understand the challenges faced by a developing country in e-procurement implementation. Keywords Malaysia, Government policy, Developing countries, E-procurement, System implementation Paper type Research paper

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Received 25 August 2010 Revised 21 December 2010, 07 January 2011 Accepted 10 January 2011

Transforming Government: People, Process and Policy Vol. 5 No. 4, 2011 pp. 330-344 q Emerald Group Publishing Limited 1750-6166 DOI 10.1108/17506161111173586

1. Introduction E-procurement refers to the use of electronic methods in every stage of the purchasing process from identication of requirements through payment and potentially to contract management (Davila et al., 2003). There are six forms of e-procurement: e-ordering/e-maintenance repair operate, web-based enterprise resource planning, e-sourcing, e-tendering, e-reverse auctioning/e-auctioning and e-informing (as classied by de Boer et al., 2002). Some of the benets of adopting e-procurement include savings in purchasing transaction cost resulted from less paperwork, less mistakes and more efcient purchasing process (Croom and Brandon-Jones, 2007).
This study was supported by Research Grant University (UKM-GUP-TMK-08-01-303) and Fundamental Research Grant Scheme (UKM-EP-05-FRGS0054-2009).

Much of the e-procurement literatures to date have focused on private sector. Angeles and Nath (2007) explore the challenges to e-procurement in private sector and identify system integration, standardisation and immaturity of e-procurement market services as key challenges in e-procurement implementation. Additionally, Smart (2010) presents three cases of e-procurement implementation in private sector and found that the failures of implementing e-procurement were due to the difculties in dealing with process improvement, adoption or integration and change management issues. In addition to that, most studies provide broad analysis of benets of e-procurement (Tatsis et al., 2006; Puschman and Alt, 2005). Other studies focus on barriers in e-procurement implementation such as technology immaturity, problem in implementing change, potential conicts with suppliers, inability of small and medium sized enterprises to materialise savings and cost of implementation (Angeles and Nath, 2007; Tanner et al., 2008; Shakir et al., 2007). Only few studies focus on e-procurement project in government sector and examine the implementation benets (Croom, 2000), risks (Losh and Lambert, 2007) and failures (Chang et al., 2008) of e-procurement for early adopters. None have discussed in-depth the implementation challenges and how government overcome challenges of e-procurement implementation. Previous studies have also indicate difculties of the process of e-procurement implementation in government sector but limited to the absence of generally accepted practices (Newcombe, 2001), and the various sizes and functional responsibilities in government ministries and agencies (McKay, 2001). Therefore, this paper aims to provide understanding on the implementation of e-procurement in government sector using a case of Malaysia government. This paper addresses specic questions on what are the challenges of e-procurement implementation in government sector and how the government overcome those issues. This study is essential particularly in Malaysia context as most of the recent studies of e-procurement project in Malaysia government are limited to the readiness stage rather than implementation stage (Kaliannan and Awang, 2008; Hashim, 2007; Kassim and Hussin, 2010). This paper proceeds as follows. Next section presents the research context and theoretical framework of this study. Later, this paper provides methodology and background of e-procurement in Malaysia government. This follows with the analysis and discussion of the ndings. Finally, this paper ends with implication and conclusion. 2. Research context and theoretical framework Some studies used technology acceptance model or theory of planned behaviour in order to understand the adoption of new technology in public sector setting (Aboelmaged, 2010; Wahid, 2010; Davis, 1989). Although those models suggest perceived usefulness and perceived ease of use as critical antecedents to users technology adoption process, those models are not specic on the implementation of a new technology such as e-procurement system. Our theoretical framework draws on Croom and Brandon-Jones (2007), which is found useful to understand key challenges of e-procurement implementation in government sector. Their work presents evaluation of e-procurement implementation and operation from an 18-month study of e-procurement deployment across nine UK public sector organizations. The article explores ve key themes in e-procurement, namely system specication, implementation management, changes to organizational characteristics, changes in total acquisition costs, and changes to governance structures. They explore the dynamic of e-procurement process in an organization and the transformational effect of e-procurement deployment.

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Figure 1 shows e-procurement effects model from Croom and Brandon-Jones (2007). The e-procurement effects model outlines the main causal variables in implementation which are system specication and implementation management. They posit that those variables have impacts on e-procurement system by providing empirical evidence of reduced search costs, increased supply availability and increased level of communication between customers and suppliers. Their ndings suggest the important of both system specication and implementation management in order to gain impact on e-procurement system especially in changes to governance structure, changes to total cost of acquisition and changes to organizational characteristics. Their ndings have also highlighted the issues of software integration and data management in system specication, and the important of roll-out strategy in implementation management. Despite that, they have not yet discuss the specic challenges in system specication and implementation management that need to be overcome before such impact could be achieved. Understanding the challenges and limitations of e-procurement implementation particularly in government sector is important due to the complexities of government policies and bureaucracy. Without such understanding, government may not be able to achieve those impacts on e-procurement system. Therefore, we need a framework that could assist us in understanding the complexities and challenges of e-procurement implementation in government sector that could assist in future new system planning and implementation. In order to understand those challenges, we modify the idea of Croom and Brandon-Jones (2007) with related literatures in system specication and implementation management. 2.1 System specication Croom and Brandon-Jones (2007) indicate that the challenges in system specications are related to software integration and data management. According to him,
System Specification Data Management

Software Integration

Roll Out Strategy Implementation Management

Changes to Governance Structures

Changes to Total Cost of Acquisition

Changes to Organizational Characteristics

Figure 1. E-procurement effect model

Impact on E-Procurement System

Source: Croom and Brandon-Jones (2007)

software integration refers to the customers information infrastructure and its links to suppliers, while data management refers to data entry and the coding schema employed. Issues in system specication include hardware resources, network resources and web server, while issues in data management include are limited levels of management information about expenditure, product and service specications the main issues in system specication. Similarly, Lin and Hsieh (2000) found that data management is often troubled by multiple entry points and inconsistent product coding. Despite that, Subramaniam and Shaw (2002) indicate legal and administration procedures as key challenges in system specication due to multiple legacy system, different data formats and complex processes. In addition, Scholl and Klischewski (2007) highlight that legal, policy, economic foundations and long-term funding are the main barriers in e-government project. Both studies are supported by recent study in Malaysia e-government that shows how tight legal and administration procedures contribute to system incompatibility with the existing online procurement legal requirements (Kassim and Hussin, 2010). In addition, another study in Malaysia e-government (Kaliannan and Awang, 2008) found that most of small size suppliers face problems with weak bandwidth support, poor computing and information systems architecture. Thus, this study posit that in addition to software integration and data management, legal and administration procedures as well as information technology (IT) infrastructure may contribute to challenges in system specication. 2.2 Implementation management Implementation management means the process of e-procurement system delivery to the users (Croom and Brandon-Jones, 2007). Croom and Brandon-Jones (2007) explain that the roll-out strategy of e-procurement system can be either an informal evolutionary protocol or a formal project board protocol. However, because of insufcient data, their discussions are limited to benets accrued from both evolutionary and project board protocols. There is no empirical evidence on the challenges of roll-out strategy in e-procurement implementation management. Nevertheless, they suggest formal project board protocol as a preferred roll-out strategy. Additional challenge in implementation management particularly for developing countries is outsourcing contract (Auriol, 2009). According to Auriol (2009), although government can improve welfare to its citizen and transfer the cost of system development and implementation through outsourcing, government has to agree to outsourcing vendors terms and conditions. For example, government must agree to the service fees charged on users/citizens as well as the output level set by vendor in order to allow vendors to recover their investment on the new system. The service fees could become a burden to users and indirectly hinder the successful of e-procurement implementation (de Boer et al., 2002). For example, Kaliannan and Awang (2008) show that majority of small size suppliers were reluctant to use e-procurement system due to service fees charged for each e-procurement transaction. In addition to that, they have to pay extra if more than ten different product lines are listed in the e-procurement system (Kaliannan and Awang, 2008). Another important challenge in implementation management is IT skills (Heeks, 2006, 2003). Kassim and Hussin (2010) and Liao et al. (2003) show difculties faced by suppliers due to tedious procedures and lack of IT skills to perform e-procurement transactions. Therefore, this study propose the need to understand challenges of roll-out strategy, IT outsourcing and IT skills in implementation management of e-procurement implementation.

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Figure 2 shows suggested theoretical framework of this study. The theoretical framework indicates that government has to understand the challenges in system specication (software integration, data management, legal and administration policy and IT infrastructure) and implementation management (roll-out strategy, outsourcing contract and IT skills). Based on these challenges, government can plan for appropriate strategies to gain the impacts of e-procurement system particularly the changes to total acquisition costs, changes to organisational characteristics and changes to governance structure. 3. Methodology This study adopts a qualitative case study approach (Walsham, 1995) of e-procurement project in Malaysia e-government. The Government of Malaysia launched electronic government as one of the MSC Flagship Applications with the aspiration to employ multimedia technologies to re-invent the way the government operates. One of the applications is e-procurement project known as e-Perolehan (eP). The eP streamlines government procurement activities and improves the quality of service it provides and converts traditional manual procurement processes in the government machinery to electronic procurement on the internet (Rashid, 2007). eP allows suppliers to present their products on the world wide web, receive, manage and process purchase orders and receive payment from government agencies via the internet. The suppliers product catalogue is converted into the form of an electronic catalogue or eCatalogue, which can be viewed from any desktop with a web browser. The supplier is able to submit quotations,

Software Integration

Legal & Admin Procedure

Data Management

System Specification

IT Infrastructure

Roll Out Strategy

Implementation Management

Outsourcing Contract

IT skills

Impact on E-Procurement System

Figure 2. Theoretical framework: challenges of e-procurement implementation

Changes to Total Cost of Acquisition

Changes to Organizational Characteristics

Changes to Governance Structures

obtain tender document and submit tender bid through e-procurement. E-procurement allows suppliers to register or renew their registration with the Ministry of Finance (MOF) through the internet. Suppliers are able to submit application, check application status and pay registration fees through e-procurement (ePerolehan Unit, 2009). The government has appointed CommerceDotCom Sdn. Bhd. (CDC) in year 1999 to develop, operate and execute the e-procurement project based on Build-OperateTransfer (BOT) basis. The eight years outsourcing contract has been extended for an extra ve years until April 2012. CDC developed e-procurement systems modules named central contract, direct purchase, and quotation, tender and electronic reverse auction or eBidding. All suppliers are required to be registered with the Ministry of Finance Malaysia and eP enabled (fully equipped with IT infrastructure and training on product usage) before transacting with the Federal Government of Malaysia. The full enablement requirements cover full set of computer with internet line connection, e-procurement access medium, and training to use eP system. From the year 2000 to 2007, 53 per cent which is 1,419 out of 2,679 of government agencies have been identied (having a complete data) as eP enabled and all government agencies were e-procurement (ePerolehan Unit, 2009). The case study involved the implementation of e-procurement in eight of government ministries as all of the eight government ministries have implemented at least one module of e-procurement such as direct purchase. Data were collected using a triangulation approach that involved semi-structured interviews, document reviews and observation. As suggested by Heeks and Bailur (2007), the use of a broader range of research methods such as interviews and observations, content analysis and critical incident technique could develop a richer range of data on e-government. Table I shows details of interviews. Interviews involved 17 individuals with 26 hours interviews from the eight government ministries and the developer or vendor of e-procurement. The interviewees from ministries are engaged, to varying degrees, with the deployment of e-procurement system including Head of Technical Division, Head of Policy and Implementation, Chief Secretary, Assistant Secretary Finance Division, Account, Director, Secretary Member of Finance Division (E-procurement Unit), Head Secretary of Finance and Account, Assistant Secretary of E-procurement Unit, Assistant of IT Ofcer, Senior Assistant Admin Ofcer, Assistant Secretary of E-procurement Division, Assistant Secretary of E-procurement and Management Division and Assistant Secretary. The interviewees were questioned on their understanding of the e-procurement system, organisation structure and responsibilities, implementation process, system procedures and control as well as key successes and barriers to e-procurement implementation. All interviews were taped and transcribed. Researchers undertook coding of transcripts independently and then cross-checked for nal coding. Data analysis involves identication of issues and development of themes from the transcripts, notes and documents. Documents that were collected include government blue-print, feedback report, tender forms and selection process. In addition, observations in government ministries cover situation in ministries on how they handle the system and observation in CDC on how they handle customer complains. Any issues or complaints and resolution practices from interviews were coded and grouped into similar themes. Researchers later review literatures to identify appropriate theoretical framework to explain the themes. Hence, the theoretical framework is not a priori.

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Ministry 4 2 2 2 3 2 3 2 3 3 26

Ministry of Finance

Ministry of Works

Prime Ministers Department Ministry of Domestic Trade and Consumer Affairs

Ministry Ministry Ministry Ministry

CommerceDotCom

Table I. List of interviews Position of interviewee Hours Head of Technical Division 1 Head of Technical Division 2 Head of Policy and Implementation Chief Secretary Assistant Secretary Finance Division Secretary Member of Finance Division (E-procurement Unit) Accountant Head Secretary of Finance and Account Assistant Secretary of E-procurement Unit Assistant of IT Ofcer Senior Assistant Admin Ofcer Accountant Assistant Secretary of E-Procurement Division Assistant Secretary of E-Procurement and Management Division Assistant Secretary 2 Assistant Secretary 3 Director Total hours

of of of of

Health Human Resource Agriculture and Agro-based Industry Education

The researcher makes sense of the data using the theoretical framework and explains the ndings accordingly. 4. Analysis and discussions This section presents ndings according to the themes in theoretical framework. This includes analysis and discussions on the challenges in e-procurement implementation and actions taken by government to minimize or overcome those challenges. 4.1 System specication The main challenge in system specication is related to lack of integration between current e-procurement with nancial systems that were implemented earlier in the government. The systems were called Government Financial System (GFMas) and Electronic Budget Planning and Control System (eSPKB). The director of CDC elaborates:
The e-procurement is linked to the GFMas and eSPKB, which means the performance of e-procurement, is affected by the performance of the two nancial systems. For example, any purchase requisition from e-procurement has to get budget approval from eSPKB and any payment has to go through GFMas. The maintenance of each system is handled by three different parties, which means when any of the GFMas or eSPKB system down, e-procurement transaction cannot be completed. For example, if one of the eSPKB servers is down at one location such as that in Putrajaya, the whole operation of e-procurement will be delayed. Some users do not understand the challenge and put the blame on e-procurement.

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According to the Director of CDC, in order to minimize such software integration issues the government must agree to integrate the budget approval and payment system into e-procurement, which is difcult to achieve due to specic governance policy in the ministry. Previous studies (Kassim and Hussin, 2010; Scholl and Klischewski, 2007; McKay, 2001) found that the degree of software integration in e-government often involved legal and administration policy, we enhance the ndings with further explanation by the Director of CDC:
We have asked the government to allow e-procurement perform budget check and payment. It is a simple decision but it took quite some time for them to make that decision. We understand that they have to follow policy and procedures but we want to make sure that the e-procurement is working efciently.

The director explains that they are equally interested in e-procurement performance in order to ensure their return on investment especially when they have spent more than RM 250 millions in the e-procurement system. However, they could not easily negotiate and change the government process and procedures because of legal and administration procedures in government which is complex and difcult to understand. This is in contrast to Auriol (2009) who claims that the outsourcing vendors are free to set output level. Nevertheless, after two years negotiating and convincing the government, they manage to get permission to allow e-procurement system to perform the budget check, which resulted in a more efcient process for e-procurement transaction. Findings also show that there is a challenge related to lack of IT infrastructure in rural areas. Suppliers and government agencies located in rural areas do not have access to internet, hence could not perform e-procurement. According to an interviewee in Ministry of Education:

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E-procurement for services cannot be extended to government agencies and schools located in rural areas because of the unavailability of internet access. There is no dedicated leased line or broadband access. This problem is serious especially when the e-procurement application is web-based application.

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In order to overcome such problem, MOF and CDC lunched facilities centres in rural areas called eP@DESA. They aimed at providing training and assistance to local businessmen who are in the rural parts of Malaysia and who would nd it difcult to access ePerolehan. This includes making available loans through the small medium enterprise fund and new entrepreneurs fund (ePerolehan Unit, 2009). Challenges in data management are not only related to multiple entry points and inconsistent product coding (Lin and Hsieh, 2000), lack of data interchange standards (Angeles and Nath, 2007) but also related to limited data entry eld. The e-procurement is found not customized to specic requirements of each ministry. For example, in the Ministry of Education, the types of items in procurement are usually in a big quantity but the space or eld provided for data entry is limited. The interviewee in Ministry of Education explains:
E-procurement module such as e-bidding only allow a tender for one category of product but Ministry of Education requires multiple products in each e-procurement transaction.

The space for data entry is limited and there is problem when the data is wordy. One of interviewees in Ministry of Health says:
E-procurement allows one box for one alphabet and the boxes are not sufcient to allow long data entry. Users have to use non-standardised short forms, which may create misunderstandings.

The eP unit in MOF is responsible for successful implementation of e-procurement in government agencies. For example, the unit provide efcient and effective advisory service by checking, approving and accepting deliverables from CDC and make sure that CDC respond on any complaint related to e-procurement. 4.2 Implementation management Findings show the use of formal project board protocol (Croom and Brandon-Jones, 2007) to ensure successful of e-procurement implementation. The participation of e-procurement is mandatory to all government agencies and suppliers. Nevertheless, an interviewee in Ministry of Natural Gas and Environment indicates that no one could stay 24/7 in front of his/her personal computer to monitor e-procurement, hence create communication breakdown between suppliers and government. According to the interviewee:
Sometimes, the suppliers are not available online that delay the transaction process. The e-procurement system did not provide reminder to users on any changes or updates in the system. Users might miss important information. It is important to have system reminder to their emails or mobile.

Although the e-procurement system only requires suppliers to have internet access and card reader to be able to perform e-procurement, small suppliers are reluctant to use e-procurement because of their small-scale business with government. An interviewee from Prime Minister Department explains:

Small suppliers are more comfortable with manual system, as their amount of transaction is small. Some procurement is depending highly on small suppliers such as food and beverages supplies for meeting.

E-procurement implementation

However, that is not the main reason for suppliers resistance. Finding from this study shows the resistance is resulted from service fees being charged on the suppliers (Kaliannan and Awang, 2008). Despite the saving on operational costs, the nature of outsourcing contract (Auriol, 2009) allow CDC to charge service fees on each e-procurement transactions performed by suppliers, hence incurred costs to suppliers. Suppliers have to pay service fees of 0.08 per cent of the amount billed to government. One of the interviewees in the MOF explains:
Although the CDC expresses that the 0.08% charges are reasonable compared to the benet that the supplier gain such as saving travelling and marketing cost, supplier still complain about the additional cost of 0.08% that they have to bear.

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Since the BOT system required CDC to cover the cost of eP project, CDC is allowed to collect 0.8 per cent per transactions with maximum ceiling of RM 9,600 per eP transaction. For example, if the transactions value is RM 5 million, they should get at least RM 40,000 (0.8 per cent RM 5 million), but they will not get RM 40,000. They will only get RM 9,600 because of the maximum ceiling. Such outsourcing contract management can ensure that the suppliers will not be overburden by the service charge and at the same time encourage the developers to continuously enhancing the e-procurement performance. The CDC director added:
This system is built based on Built Operate Transfer (BOT) concept and I am the interested party. I love my customer and make sure that they can use my system. I have to make sure that the system works well at all time. If not, Ill upgrade the system to make it work or else I wont be able to get that 0.08% commission.

Findings also show challenges related to lack of IT skills, which is profound in developing countries (Heeks, 2003, 2006). According to an interviewee in MOF, e-procurement requires government staffs to perform role of System Administrator, Requisitioner, Approver, Goods Received Ofcer and Payment Match Ofcer. However, the number of staffs that can hold such roles is insufcient. As a result, one person has to hold two or three roles at one time. One of the interviewees in Ministry of Agriculture:
Currently, the organisation structure and the number of IT ofcers in Ministry of Agriculture could not support the e-procurement implementation in the ministry. Because of not enough IT staffs, the IT personnel are currently doing multitasking work and could not complete job on time. They have to maintain other systems in the ministry such as GeoPortal, Agribazaar, Networking Security and others.

In order to overcome the above challenges, one of the interviewees in Ministry of Education explains that the government is actively hiring contract workers and providing training to government users. Each government agency is estimated to have a minimum of ve users and a maximum of nine users that are well trained with respect to the roles. Both eP unit and CDC carry out mandatory handholding and extended handholding sessions for government users through live transaction at the respective government agencies site ofce. CDC assigned one technical person to provide comprehensive support for each user. The Director of CDC explains the use of mandatory handholding in managing change:

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When developing a system, we also need to manage people. I have to manage the people as much as possible. I have to send my staffs to the users sites to ensure that the implementation of e-procurement is successful. The staffs will explain, persuade and train the users as well as solve problems. This Mandatory Handholding is used extensively to ensure that the users are able to use e-procurement. CDC allocates 60 technical staffs at each of ministry and responsibility centre for assistance. The technical staff will be there until they are sure that the e-procurement has been fully implemented. CDC spent about RM 120,000 per month for the technical staffs to claim on transport and travelling cost. The same method is being applied to suppliers.

From the year 2006 until end of June 2007, 75 mandatory handholding and extended handholding session have been carried out for 497 government agencies and 7,981 government users have been trained. The development of skilled workers is important to ensure effective internal service management, hence provide impact on the changes to organisational characteristics (de Boer et al., 2002; Croom and Brandon-Jones, 2007). Figure 3 shows the analysis and discussions. 5. Implications The positive impacts of e-procurement systems in government sector particularly the changes to total acquisition costs, changes to organisational characteristics and changes to governance structure (Croom and Brandon-Jones, 2007), must be set alongside signicant challenges. This study posits to understand the challenges of e-procurement implementation in government sector using a case study of Malaysia government. For researchers, this paper enriches literatures of e-procurement implementation in government sector (Croom, 2000; Losh and Lambert, 2007; Chang, et al., 2008).
CHALLENGES System Integration Data Management Negotiation System Specification Legal & Admin Procedures IT Infrastructure Roll Out Strategy Implementation Management Training & Skills Development IT skills Outsourcing Contract Contract Management IT facilities centre in rural areas RESOLUTIONS E-procurement unit

Figure 3. E-procurement challenges and resolution practices

Impact on E-Procurement System

Specically, this study conrm to the earlier studies (Heeks, 2003, 2006) that the challenges of e-procurement implementation faced by government in developing countries are often related to lack of IT infrastructure and IT skills. Another important challenge is resulted from government decision to outsource e-procurement project to outsourcing vendor (Auriol, 2009). This study shows that the benets of IT outsourcing such as cost savings and quality improvement, may be transferred to citizens but government has to improve its outsourcing contract management. Given the constraints imposed by its political environment, government has to ensure that service fees imposed on suppliers is at the minimum and at the same time, the outsourcing vendor could achieve its ROI and make sure that the system is performing effectively and efciently. For practitioners, this paper provides guidelines for future e-procurement implementation strategy in government sector. There is a need for risks analysis and future strategies when trying to implement future e-government project. This is particularly important for developing country. Government has to overcome the challenges related to lack of IT infrastructure in rural area in order to avoid digital divide between citizens in rural and urban area. Government must continuously produce graduates with IT skills for future needs. Furthermore, government in developing country has limited nancial capability and may be dependent upon third-party nancing through BOT approach. With good contract management, the use of BOT approach may ensure the successful of e-procurement implementation although it comes with minor resistance from suppliers due to extra cost being incurred. 6. Conclusion To conclude, this study focuses on understanding the challenges and resolutions of e-procurement implementation in government sector (Figure 3). The challenges of e-procurement implementation in government sector can be categorised into system specication and implementation management. Challenges in system specication are not only related to software integration and data management, but also legal and administration procedures as well as IT infrastructure, while challenges in implementation management are related to outsourcing contract and IT skills. Findings also show the important of creating e-procurement unit in government sector, IT facilities centre in rural areas and training and skills development. Challenges such as legal and administration procedures and outsourcing contract can be overcome through good negotiation skills and contract management. This paper provides a basis for further thought and analysis on important issues faced by developing countries in e-procurement implementation. Although there are challenges of rigid legal and administrative policy and procedures, insufcient IT infrastructure and skills or limited funding, IT outsourcing or BOT approach may gear up the transformational government in developing countries (Osborne, 2009, 2010). Therefore, future research in any e-government project should investigate how outsourcing of IT projects could assist developing countries in improving public services. The understanding of outsourcing in government sector could contribute to improvement of public services, efciency in the delivering other public services as well as the incentives to do it.

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Losch, A. and Lambert, J.S. (2007), E-reverse auctions revisited: an analysis of context, buyer-supplier relations and information behavior, Journal of Supply Chain Management, Vol. 43 No. 4, pp. 47-63. McKay, J. (2001), Getting through the maze, Government Technology, January, pp. 46-8. Newcombe, T. (2001), Can ERP save e-procurement?, Government Technology, September 24, available at: www.govtech.net Osborne, D. (2009), Delivering public services: are we asking the right questions?, Public Money & Management, Vol. 29 No. 1, pp. 5-7. Osborne, D. (2010), Delivering public services: time for a new theory?, Public Management Review, Vol. 12 No. 1, pp. 1-10, available at: www.dx.doi.org/10.1080/ 14719030903495232 Puschman, T. and Alt, R. (2005), Successful use of e-procurement in supply chains, Supply Chain Management: An International Journal, Vol. 10 No. 2, pp. 122-33. Rashid, Z.A. (2007), ePerolehan a breakthrough for e-commerce in the Malaysian government, Public Sector ICT Management Review, Vol. 1 No. 1, pp. 20-4. Scholl, H.J. and Klischewski, R. (2007), E-government integration and interoperability: framing the research agenda, International Journal of Public Administration, Vol. 30, pp. 1-32. Shakir, M., Smith, G. and Gulee, E. (2007), E-procurement: reaching out to small and medium businesses, MIS Quarterly Executive, Vol. 6 No. 4, pp. 225-38. Smart, A. (2010), Exploring the business case for e-procurement, International Journal of Physical Distribution & Logistics Management, Vol. 40 No. 3, pp. 181-201. Subramaniam, C. and Shaw, M.J. (2002), A study on the value and impact of B2B e-commerce: the case of web-based procurement, Procurement International Journal of Electronic Commerce, Vol. 6 No. 4, pp. 19-40. Tanner, C., Woele, R., Schubert, P. and Quade, M. (2008), Current trends and challenges in electronic procurement: an empirical study, Electronic Markets, Vol. 18 No. 1, pp. 6-18. Tatsis, V., Mena, C., Van Wassenhove, L. and Whicker, L. (2006), E-procurement in the Greek food and drink industry: drivers and impediments, Journal of Purchasing & Supply Management, Vol. 12, pp. 63-74. Wahid, F. (2010), Examining adoption of e-procurement in public sector using the perceived characteristics of innovating: Indonesian perspective, in Sideridis, A.B. and Patrikakis, Ch.Z. (Eds), E-Democracy, LNICST 26, Springer, Berlin, pp. 64-75. Walsham, G. (1995), Interpretive case studies in IS research: nature and method, European Journal of Information Systems, Vol. 4 No. 2, pp. 74-81. About the authors Aini Aman (PhD) is an Associate Professor at the School of Accounting, University Kebangsaan Malaysia. She received her rst BSc in Accounting from Purdue University, USA in 1991. She joined Moore and Stephen Audit Firm as an Audit Assistant and later joined Apex Securities as Credit Margin Ofcer before joining UKM in 1993. She completed her MBA at Manchester Business School, UK in 1995 and her PhD at University of Manchester, UK in 2005. She later continued with her post-doctoral research at the same university in 2006. Her current areas of research interest include accounting information systems, e-government, knowledge management, offshore accounting outsourcing and offshore software development. Currently, she is an Associate Member of Malaysian Institute of Accountants (MIA) and a Member of the International Association of Computer Science and Information Technology (IACSIT).

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Aini has been involved in several local and international consulting works, namely IBM, British Petroleum, Ford, Permodalan Nasional Berhad and Kraftangan Malaysia. She has also presented numerous papers at various national and international conferences and published articles in various academic national and international journals including the Journal of Global Information Management, books and chapters in books by world-known academic publishers such as ICAEW, Prentice-Hall, Springer, Kluwer and Cambridge Scholar Publishing. Aini Aman is the corresponding author and can be contacted at: aini@ukm.my Hasmiah Kasimin (PhD) is an Associate Professor at the Faculty of Economic and Business, Universiti Kebangsaan Malaysia. She obtained her MSc (1978) and PhD (1988) in Management Information Systems from the London School of Economics and Political Science. Her current research interests are in the areas of e-government evaluation, information technology transfer and the biotechnology industry.

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