E-Mall Win Offers SAIC New Calling Card

By Nick Wakeman, Staff Writer



A Massachusetts-led project to build an online procurement system is creating an opportunity for a large systems integrator and its software developer partner to roll out similar systems in other state and local governments as well as in the federal government.

Massachusetts has hired Science Applications International Corp. of San Diego and Intelisys Electronic Commerce LLC of New York to build E-Mall, a pilot program to allow multiple states to buy a wide range of computer products and office equipment over the Internet.

Seven states, including Massachusetts, will participate in the $450,000 pilot program. The other six are: Idaho, New York, South Dakota, Texas, Utah and Washington. Three other states, Ohio, Georgia and Vermont, have signed up as "observers." They will closely watch the system but will not participate. Other states also might become observers.

Plans call for the pilot to be up and running by Nov. 25 and last about six months. Massachusetts is allowing 15 of its own agencies and 10 vendors participate in the pilot. Each of the other states are bringing at least one vendor and one agency. Massachusetts officials expect 500 transactions a week to be conducted through E-Mall, which will be used by agencies to buy office supplies, computer hardware and software, and lab and scientific equipment. Participating vendors are Dell Computer, Gateway, Micron Electronics, Software Spectrum, VWR Scientific, W.W. Grainger and Xerox.

The SAIC-Intelisys team beat out several notable competitors for the E-Mall project. Among the competition was IBM Corp. of Armonk, N.Y., KPMG of New York, PricewaterhouseCoopers of New York and Wang Global of Billerica, Mass.

"Supply-chain management just won't go forward without electronic commerce, so this win helps lend us a lot of credibility," said John Jacey, director of supply chain sales and marketing for SAIC.

Electronic commerce is one of three technologies changing the way state governments conduct business, said Lesley Kao, senior analyst at the market research firm G2R Inc., Mountain View, Calif. The others are data warehousing and enterprise resource planning software.

The key to SAIC's win was Intelisys' software, said Gary Lambert, director of procurement for Massachusetts. "Eighty percent of what we were asking for came straight out of the box," he said.

The paperless system created using Intelisys' IEC-Enterprise product saves time and money, he said. With the system, vendors do not have to create separate online catalogs for government customers and commercial customers.

Intelisys' product connects users to the contract database that contains pricing information and electronically routes purchase orders and invoices, Kramer said.

Privately held Intelisys was formed in 1996 by Chase Manhattan Bank of New York, which still owns half of the 80-person company. Intelisys Chief Financial Officer Robert Kramer declined to release revenue figures for the company, whose client list includes Ford Motor Co. and Motorola.

SAIC's role in the E-Mall project centers around building the contract database, project management and other systems integration services. Once the pilot is running, SAIC also will establish the analysis requirements and a wish list for future features.

Jacey said the project's payoff will come as more state agencies and states come online. If E-Mall rolls out to all 50 states, the value to SAIC would rise quickly to the $50 million to $60 million range, Jacey said.

The pot could get even bigger if local, municipal and county governments eventually join E-Mall, he said. And there could be even more potential business from vendors who want to build e-commerce capabilities.

SAIC's supply-chain management business, which is growing at about 20 percent annually, contributes about $400 million a year to the company's $4 billion in annual revenue, Jacey said. Most of revenue currently is from the federal government.

While SAIC will continue working closely with Intelisys, it will still work with other e-commerce applications developers, he said.

Likewise for Intelisys, the relationship with SAIC is not exclusive, Kramer said, noting the company also has worked with KPMG. The company wants multiple integrator partners implementing its product.

Lambert said he expects E-Mall to catch on quickly with other states as well as with vendors. A typical paper-based transaction can cost up to $150 to process, whereas an electronic transaction costs $30 to $40, he said.

E-Mall also has the capability for states to look over their borders and buy off of other states' contracts, Lambert said. For example, New York and Massachusetts currently have an agreement that allows them to buy supplies from the other state's contracts.

However, that agreement is rarely used because it involves a paper-based system, and buyers in one state typically do not have easy access to catalogs from the other state, Lambert said.

But with electronic catalogs, access is no longer an issue, Lambert said. If the agreements are in place, a small state will benefit from the volume discounts larger states receive, he said.