Open Innovation in E-Procurement Implementation at PT AL

Open Innovation in E-Procurement Implementation at PT AL Gumay Khotibul Umam1, Retno Kusumastuti2 1,2 Universitas Indonesia , Abstract Keywords PT AL is a leading company in Indonesia in the field of Datacom, Telecommunications, and ICT for more than 30 years. Companies in this field prefer external parties compared to internal parties in developing e-procurement systems. This study reveals how open innovation is implemented in an e-procurement system and how open innovation in e-procurement implementation must be adjusted by the organization's internal regulations. The purpose of this study is to provide an in-depth analysis of how private companies use e-procurement implementation and how open innovation is carried out on the e-procurement system. This research was conducted with a qualitative approach and the type of research was ethnography, the authors made observations, field notes, and in-depth interviews with company structures and partners who helped develop the system. The results of this study indicate that open innovation can affect the company's operational performance. Furthermore, open innovation is an internal consideration for developing the system because it becomes more practical and there is an exchange of knowledge between the two parties. This research can provide benefits to the academic and practical world, especially the theme of open innovation of eprocurement systems in private companies. open innovation; e-procurement; technology implementation; ethnography I. Introduction Internet era (Interconnection Networking) is the first sign of the era of information disclosure for various parties, ranging from individuals, companies, and government parties. At present, many small to large-scale companies are increasingly creative in utilizing their business lines through the internet and encouraging the export sector to various foreign countries and helping to increase company revenues, and boosting state revenues through taxes. The procurement of goods and services sector is currently developing towards electronic, where the government and the private sector have their systems. United Nation Development Program e-government is the implementation of information and communication technology (Information and Communication Technology) (United Nations Development Programme, 1997). Using information technology in the tboostingocurement process is an efficient step in terms of transaction costs and risks associated with procurement. Electronic procurement or e-procurement is one of the most widely used e-businesses among organizations. E-procurement systems allow organizations to automate transactions with multiple vendors when searching for goods and services which leads to reduced transaction times and increased productivity for both parties (Gunasekaran and Ngai, 2008). The function of e-government procurement lies in its ability to minimize corruption related to government procurement. In developing countries, corruption and misuse of public resources are often high. The Corruption Eradication Commission commented on e______________________________________________________________ DOI: https://doi.org/10.33258/birci.v4i4.3220 11566 Budapest International Research and Critics Institute-Journal (BIRCI-Journal) Volume 4, No 4, November 2021, Page: 11566-11576 e-ISSN: 2615-3076 (Online), p-ISSN: 2615-1715 (Print) www.bircu-journal.com/index.php/birci email: procurement, although the procurement was carried out through the auction method via the e-procurement system, it did not guarantee that it was free from corruption. E-procurement is an electronic communication system that is integrated into all stages of the process of purchasing goods and services (Croom and Brandon-Jones, 2005). In addition, eprocurement is the procurement of goods and services based on information technology which includes searching, negotiating, sourcing, ordering, receiving, and evaluating (Croom and Brandon-Jones, 2004). All procurement processes have been carried out digitally and are no longer in traditional forms such as on-site procurement, collecting bids in paper form, and so on. E-procurement will also provide a sense of security and comfort in access (Udoyono, 2012). A sense of security for the electronic procurement process so that it is regulated by encouraging transparency and accountability aspects, the winner is the provider of goods and services that it has to compete fairly and openly. In electronic transactions, with the procurement procedure until the end and being accountable to participating vendors, the system can prevent or minimize unwanted practices by the government (Rahman and Almoawi, 2011). Communication is the process of delivering messages by someone to other people to tell, change attitudes, opinions or behavior either directly orally or indirectly through the media. (Hasbullah, et al: 2018). E-procurement refers to the use of Internet-based (integrated) information and communication technology (ICT) to carry out procurement. In the process of the information system, there is the implementation of the technology applied. As one of the core proponents of the e-Business supply chain, e-Procurement in this article is conceptualized as part of e-Commerce. While the e-Commerce side is simply a transaction carried out electronically, e-Procurement is the automation of many procurement processes through electronic systems, especially the Internet. System implementation is best described as a process of organizational change that extends over a fairly long period (Chan and Swatman, 1999). A more recent definition of the term comes from the diffusion-based innovation adoption model to e-Commerce/e-Business (Srinivasan and Rangaswamy, 2002). Today, innovation is not just a process in doing business. However, it can be a new set of components with the contents of regulatory requirements, production processes, industry, and market changes, and cognitive. Innovation is one of the tools used by most companies in gaining competitive advantage in addition to low cost, differentiation, and focus strategies. Innovation separates into two types; open innovation as the ability of companies to commercialize their ideas and projects or accept other innovations for the benefit of their organizations, and closed innovation as the classic concept of vertical integration or internal research and development of the company. Furthermore, Chesbrough refines the understanding of open innovation as the use of inflows and flows of knowledge aimed at accelerating internal innovation and expanding the market for the use of external innovations. Several corporate behaviors describe indicators of the open innovation paradigm, namely networking, cooperation, corporate entrepreneurship, intellectual property management, and research and design (R&D) activities. The need to consider internal actors within the company involved in open innovation with the ability to manage supp (...truncated)