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e-Business: 

Contents | Foreword | Introduction | The Law | Document Management | PKI & ES | DECS
e-Purchasing | Collaborative Working | e-Tendering | Reverse Auction
Government Procurement Card | The e-Business Revolution | Conditions & Guidance
Contact Details | Glossary of Terms | Acknowledgements

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What is e-Business?

The subjects discussed in this guide, and the terminology used, often prompt a good deal of confusion. In the field of e-Business, a number of terms seem to be used interchangeably or with little thought as to their meaning – e-Commerce, e-Business, e-Procurement etc.. In a fast changing environment it is not surprising that one of the fastest areas of growth is in the creation of new “buzz words”. On the whole it is not necessary to worry unduly about the different terminology. However, there is one distinction which is worth making; for the purposes of this guide, we take the phrases e-Commerce and e-Business to mean:-

• e-Commerce is the electronic conduct of buying and selling activity and is usually associated with web sites from which consumers purchase goods or services (known as b2c – business to consumer), but it is also used in relationships between businesses, often employing private networks (b2b – business to business). In the defence sector, the MOD in particular, we are largely concerned with this latter category of e-Commerce – although the former may have some relevance, for example when using the GPC.
  

• e-Business is a broad term, embracing all of the individual “e” tools and techniques. It is usually taken to mean the integration of electronic processes beyond buying and selling activities, e.g. full integration into organisations’ ERP (Enterprise Resource Planning) systems or equivalent business tools to conduct transactions by electronic communications end-to-end.
  

In the defence environment a number of tools and techniques are available which, collectively, add up to a full range of e-Business capabilities. Some examples are shown below:-

e-Mail
e-Procurement
e-Commerce
e-Process
e-Working
Full e-Business!

Benefits & Risks

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e-Business must be about delivering benefits. It is not about applying electronic techniques just to be fashionable. Many of the benefits will be articulated in subsequent chapters where individual subjects are addressed. However, there are some generic benefits to be realised which fit broadly into the SMART Acquisition philosophy of “Faster, Better, Cheaper.”

• Faster: The application of e-Business techniques enable the realisation of business process re-design, using electronic tools to speed up processes, often by means of automation;

• Better: Working electronically enables people to be liberated from routine, non value-adding tasks. It makes the computers do the drudgery, freeing up the power of human intellect and creativity. Working electronically also offers improvements in traceability and audibility;

• Cheaper: Automation and taking manual intervention out of the equation can lead to reduced costs.
  

There are also broader, governmental benefits to adopting e-Business techniques. The Prime Minister stated that he wished the UK to provide the best environment in the world for e-Trading . In that context, public sector procurement organisations can act as an exemplar, using their purchasing power to encourage the adoption of e-Business techniques, and thereby assisting the development of the UK marketplace. In order to encourage Government Departments to engage in this process, the Government has set down the aim of undertaking all service provision electronically by 2005. Ultimately, however, decisions on the application of particular techniques have to be based upon the business value that these techniques deliver.

Working in this new environment is not without its risks. In the defence sector, in particular, the UK is working on the boundary of new developments, pushing the agenda forward. For that reason, we are encountering new issues well ahead of other areas. Individual chapters of this guide will address risks as well as benefits in respect of particular subjects. Nevertheless, there are also some generic risks. Perhaps the biggest of these is that, unlike most manual business processes, e-Business is very often supported by one or more third parties, who are not part of the usual business relationship, for example providers of exchange services like the Defence Electronic Commerce Service (DECS) and EXOSTAR. The existence of these third parties has to be recognised in business relationships and there has to be clarity about which parties are responsible for particular risks and who bears liability for them.

While there are new risks to be addressed as a result of implementing e-Business, merely from the use of electronic transactions, all the normal rules, legal principles and rules of business in a non-electronic environment continue to apply.

e-Business in Defence

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The Ministry of Defence and those of its suppliers who are its major Industrial partners are committed to employing e-Business techniques in their trading and collaborative relationships. The Department has published an e-Business strategy and many of the major defence industries also have strategic visions of how they are employing or intend to employ e-Business.

Joined-up government

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The MOD works closely with other government departments and agencies to ensure that its application of e-Business takes into account wider government interests. The Department’s e-Business strategy is approved by the Government’s e-Envoy, with whom it has a close working relationship. MOD also works closely with the e-Commerce Team at the Office of Government Commerce (OGC) and are represented on a number of the OGC’s “e” committees. The OGC has the policy lead in central civil government for e-Commerce. Both the e-Envoy and the OGC are represented on a defence e-Business committee, which reports to the Commercial Policy Group.

MOD and Industry working together

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There are a number of committees, organisations and initiatives in the e-Business arena demonstrating the desire of MOD and its Industrial partners to work together for mutual benefit. For example, the UK Council for e-Business (UKCeB) sponsors a number of Working Groups that each look in detail at specific aspects of e-Business, such as Information Management and the Export Control of Intangibles. In the context of commercial issues, a working group has been formed under the auspices of the Commercial Policy Group. The e-Business working group is jointly chaired by representatives of the MOD and Defence Industry and is composed of stakeholders from Defence Industry, e-Business service providers as well as MOD itself and other central government organisations, such as the e-Envoy and the OGC. The purpose of the working group is to drive forward the development of commercial policy on the application of e-Business, ensuring that the commercial approach takes account of risks and liabilities and allocates these appropriately. It is also a forum for new ideas and an opportunity for Industry representatives to influence MOD thinking and keep up to date with new developments. Organisations represented on the working group are as follows:-

Key to the commercial implementation of e-Business is the development of a portfolio of standard contract conditions that facilitate the agreement of contracts that enable MOD and Industry to take advantage of e-Business techniques. e-Business is a challenging subject, and the more we can work from a standard tool-set of conditions, with obligations, risks and liabilities already scoped, at least at an outline level, the quicker we can get to contract. Of course, being realistic, this is an area of business where things can move very quickly, so we will never have all of the commercial issues completely worked out.

This Guide

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Within the chapters of this guide, we hope to explain the various applications and techniques that are in use or could be used in commercial relationships between the MOD and its Industrial partners. Each chapter tries, in so far as is possible, to outline these in straightforward language, to explain the commercial significance, and to provide pointers to further information and contact points. Due to the dynamic nature of the subject, and the fact that the guide references other, sometimes more detailed documents, this cannot be regarded as a fully comprehensive guide to Defence e-Business. However, we believe that it does represent the first overview of the subject from a commercial perspective.

Acknowledgements

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This guide could not have been produced without the following, who have contributed sections, ideas or commented upon the drafting: Jean Keay, Gwen Beale, Colin Sinkins, Denise Savage, Mary Shoobridge, Jack Danpure, Robert Miller, Jim Ayres, Julian Campbell, Anne MacFarlane, Ian Rooney, Jerry Fathers, Rick Evans, Alan Brown, Brian Duffy, Peter Farmer, Andy Carpenter, Paul Newman, Tim Lam, Simon Dunford, Graham Sturgess, Patrick Curry. I owe a particular debt to Grant Lovett, for providing valuable and extensive support in the editing process. Grateful thanks are also due to David Scillitoe, my co-Chair on the Commercial Policy e-Business Working Group, and to other members of the Working Group. Any errors or omissions are, of course, entirely the responsibility of the editor.

By Simon Lydiard
MOD Commercial Policy Adviser on e-Business & Guide Editor

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