Dec 13 2023
Digital Workspace

Tech Trends: Government Digital Transformation: E-Payments and E-Procurement

As digital services accelerated during the pandemic, governments more commonly embraced digital payments and digital procurement, building blocks for transformational government.

From banking to buying and beyond, digital transactions are now the norm — except in government. At the state and local level, constituents still must write checks and even go in-person to government offices to handle what could be routine payments.

This started to change during the pandemic. A National Association of Counties (NACo) poll found 96 percent of respondents had shifted operations or citizen services to a digital platform, and 71 percent reported they were able to reopen operations or services more quickly with virtual options.

Government can continue this momentum by furthering its e-payment and e-procurement initiatives. As part of digital government, state and local entities can increase efficiency and elevate constituent satisfaction by implementing systems for collecting and issuing digital payments.

How Does Government Digital Transformation Make a Difference? 

Historically, states have relied on highly manual processes, sometimes supported by technologies running in state data centers. With digital transformation, “they are taking those processes to the cloud to offset the cost and staffing needed to support those systems and the data centers,” says Bob Sievert, e-procurement subject matter expert at the National Association of State Procurement Officials.

The overall goal of such digital transformation is “to incorporate new technology to gain efficiency, reduce costs and to improve the lives of both employees and suppliers,” Sievert says.

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E-payments and e-procurement support these ambitions. Financial and procurement processes “are foundational to all business practices in government,” Sievert says. “These processes are natural areas for transformation now because the technologies have already matured.”

As an aspect of government digital transformation, digital payment and procurement processes “make services more convenient for county residents,” says NACo CIO Rita Reynolds.

Internally, “if you can put online processes like e-payment in place, your staff can be more efficient. The data is more up to date, payments get posted faster and, of course, the accuracy is better versus manual data entry of any type,” she says.

How Do E-payments Make Things Easier for Citizens? 

When it comes to doing business with constituents, state and local agencies “want to make it as easy as possible for people to access the services that they need and rely on, allowing residents to pay for any particular service in the way they’d want to do it, as quickly as they can,” says Kunal Modi, a partner at McKinsey.

Digital payment processes support this aim by “giving choice in how people engage with government, to make it most efficient for them to receive the goods and services that they’re relying upon,” Modi says.

REVIEW: How agencies can navigate the digital transformation process.

This has the potential to impact constituents across a wide range of government functions. “E-payments encompass everything from paying your taxes and paying for a business license to paying a traffic ticket,” Sievert says.

Right now, those processes are fragmented. “Every department has its own process and procedure,” he says. “With e-payments, the state can set up a payment portal for the whole state. ‘What are you here to pay?’ You pick it, and it takes you through a single process for whatever you need to pay.”

All this helps to elevate constituent encounters. As a resident, “I’m able to take care of those payments when it’s convenient for me, and I also can get email reminders,” Reynolds says.

“Getting a bill in the mail is one thing, but getting email reminders is great,” she says. “When you are using e-payments, you also get a confirmation right away. Now you have documentation, and you don't have to wait to see if the payment was received and credited to your account.”

Rita Reynolds
If you can put online processes like e-payment in place, your staff can be more efficient. The data is more up to date, payments get posted faster and, of course, the accuracy is better versus manual data entry of any type.”

Rita Reynolds CIO, National Association of Counties

How Evolutions in E-Procurement Change Government’s Impact

E-procurement refers to the digitization of processes for requisitioning, ordering and purchasing goods and services. Here, too, there’s potential to improve a broad range of government functions.

“Government is in every line of business: health, public safety, prisons, transportation and so on. And they all have their own way of doing things,” Sievert says. “E-procurement lets you get these processes consolidated into standard, common practices. You get consistency in how you buy things, which helps ensure compliance with rules and compliance with law. It helps ensure you are doing things the best way you can.”

In terms of accountability, Sievert explains, taxpayers want to know that government is using their money to buy the best equipment for the best price.

“E-procurement systems drive people to follow the rules and regulations, to get the best competition and the best prices. With these systems, oversight and accountability are a natural byproduct of using them to do the buying. You can monitor whether people are buying the right things, are spending money how and when they should, and are not overspending,” Sievert says.

Government can leverage the power of e-procurement to standardize its practices, as well as to ensure it is getting best value for its spending. “If it’s all done through electronic means, now using artificial intelligence, the e-procurement system can do comparisons from the RFP and give you those summaries so you can make more informed human decisions about which vendor to pick,” Reynolds said.

This in turn can help to elevate trust in government, making state and local efforts more impactful. Residents “are more likely to have a favorable opinion of government when they can see that a standardized process is being followed,” Reynolds says. “And using e-procurement makes it easier to share that information back out to the public.”

LEARN MORE: Three strategies to consider when modernizing government contact centers.

Overall, digital government services such as e-procurement enhance the impact of government by making transactions go more smoothly.

“It’s critical that government create as frictionless a setup as possible for agencies to access supplier expertise or capabilities,” Modi says. “E-procurement solutions take a lot of the friction out of the procurement process, whether that is identifying the qualified pool of suppliers, helping those suppliers comply with the various rules and regulations of the state or supporting the bid process so that states can choose the right supplier for their business objectives.”

What Tech Can Agencies Use to Improve Digital Payment Methods?

Several technologies come together in support of digital payments and procurement processes.  Essentially, you need a transactional portal with a database underlying it.

“There are applications to manage your suppliers as bidders and payees; sourcing [applications] to get bids and proposals; contract lifecycle management tools to author, issue and manage contracts; and procure-to-pay tools to handle the requisitioning, approvals, ordering, receiving and payment processes,” Sievert says.

With an eye toward convenience, governments should also be looking to support mobility in financial transactions. “People should have the ability to do e-payments from a mobile app,” Reynolds says.

Historically, government has acquired these technologies from niche players with highly tailored products. Now we’re seeing emerging platforms “that cover the entire value chain — source to contract, procure to receipt, invoice to pay, vendor management — but are still built-for-purpose for the public sector market,” Modi says.

In addition, there are “mega-platforms,” typically an enterprise resource planning system configured to support procurement processes. “Increasingly, we’re seeing the emergence of the bigger, end-to-end solutions.” Modi says.

Whichever route state and local agencies use to bring e-payment and e-procurement processes to life, they’ll likely be looking at cloud-based offerings.

“There are a lot of vendors out there that offer e-payment and e-procurement solutions that are cloud-based, and that’s definitely the way to go, given the need to deliver more efficient processes for citizen services,” Reynolds said.

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