Client Evaluation of BidDocs Online Inc - Case Study Example

Client Evaluation: BidDocs Online Inc. Introduction BidDocs Online (BDO) is an online source for the viewing of construction bid documents. The platform maintains an updated listing of construction bids in both the public and private sector (BidDocs ONLINE, Inc.). With the improvements made in the technology industry, many organizations are striving to become paperless. Business activities are conducted online as spatial borders diminish in significance. The bidding process for contracts has not been left behind in the move to becoming technologically relevant. Organizations such as BDO make a listing of all projects available in public and private sectors and allow interested parties to bid for them online. BDO then makes an analysis of the bidding company’s profile and in depending on the needs of the project, award the contract to the best suited bidder. The organization serves as an electronic bidding agent for different companies when contending for large contracts (Darov and Famulare). Client details Industry BDO is an accounting firm responsible for the awarding of bids to supply government and other organizations with products and services. Technology has grown the industry as more and more firms are gaining ground, and are being given the responsibility to award tenders through a competitive process. A procurement method involving sealed bids ensures ‘fair and open competition’. When an organization is bidding for a project, it does not have the opportunity to influence the process or steer the selection. All companies bidding are subjected to an unseen regulator who decides which organization is best suited to satisfy the bid requirements. Today, the internet facilitates the sealed bid process and occurs within set time deadlines. During submission of the electronic bids, bids can be signed with an electronic signature (Schmidt). In awarding the bid, the bidder whose price quotation is most competitive is the one who is awarded the bid. Competition BDO competes for the same market share as the four biggest worldwide auditors PwC, KPMG, Deloitte and EY (Jones). The four dominate the sector but reforms are giving medium-sized companies such as BDO an opportunity to compete with them. The four largest accounting firms in the industry command the largest market share. Since the 2008 global financial crisis, it has become given that any public accounting firm whose revenues extend to the double-digit billions is a formidable partner for any CFO (Bacani). The trend, as indicated below, reveal a consistent increase in revenues for accounting firms: From the above the momentum of growth is picking and more companies are expected to competitively participate in the bidding process. Although BDO does not feature among the top four accounting firms in the world, it does appear in the accounting firms to watch in the near future. BDO is the fifth follower after the Big Four, albeit a distant follower (Big Four Firms Network). Customers BDO reported that the year that ended September 30th 2014, is revenues for the previous year had grown nearly nine percent. The growth in business was attributed to growth in China and 28 acquisitions it had made within the past year. Following the recorded growth, the company had acquired a presence in 151 territories (Jones). BDO International has fast grown to be a serious contender in the accounting industry because of its growing revenue base. The customers that BDO attends to are mainly bidders who are seeking contracts for products and services for large organizations. Analysis Electronic bidding has in recent time come under serious criticism with allegations that the process is not sufficiently competitive. The first complaint that was presented to the attorney general by Burns & Levinson LLP, Quinn Brothers of Essex, Inc. argued that electronic bidding does not conform to statutory requirements that bids ought to be opened publicly and read by the awarding authority (Darov and Famulare). Future prospects for BDO are looking positive as the company indicates that its pitches have increased significantly. BDO believes that it has prospects of taking up some contracts from the big four financial auditing firms. According to a recent opinion by Simon Michaels, a managing partner at the firm, there are more opportunities to tender which are yet to translate into a growth in market share (Dakers). BDO is keen on developing relationships with non-execs and seeking more advisory work. The firm aims to pursue more private and public work and capture 5 per cent of the FTSE 350 as clients within the next five years. The firm is determined to fight complacency in order to achieve more consumer and investor confidence. In the meantime, a 2013 report chastised the big four companies for “misalignment” with shareholder interests (Ebrahimi). The investigation revealed that the relationship between auditors and management has become comfortable and requires overhaul. In any firm, the first responsibility of auditors is to the shareholders; to give them an accurate picture of the company profile. In so doing the right investments can be made. Conclusion BDO saves time and money for owners, designers and contractors as the bidding process is undertaken through the internet. The process is also beneficial because of its real-time updates. The chances of a bidder to submit documents for a project that has already been assigned to another bidder are eliminated. Bidders are, therefore, exempted from rigorous labor made more difficult by uncertainty. Owners also save time in determining who to award the bid since the bid documents are all acquired online. Corruption is also eliminated since the face-to-face interaction which introduces the possibility of rigging and document concealing is eliminated. Question 5: Is BDO a disruptive business model? Good governance principles require that an organization complies with the basic principles of integrity, transparency and account rendering. These traits would ensure that a business is well regulated and that its clients are presented with equal opportunities. Recent claims of the electronic process lacking in integrity and transparency are a cause for concern. The shortcomings notwithstanding, it is imperative to first identify the inherent benefits of electronic bidding which facilitates e-procurement. The process, grants ease of access to information from both government and private entities with regards to supply opportunities. The process is cost-saving in terms of data collection, transfer and transmission. The technological integration that is increased during franchising thus improves on the benefits presented by using the online platform for bidding (Gascó 85). The strategic value in electronic bidding lies beyond its economic impacts and multisectoral benefits. Its strategic value lies in its creation of a platform that allows interoperability that the government requires for its electronic developments. Electronic bidding, however, is considered as a disruptive innovation as opposed to a sustained innovation. In defining disruptive innovations, Gascó (2012) considers it as innovation which enters the market in the form of an innovative product or service and disrupt the relationship of the organization with its clients and suppliers; and interrupt financial arrangements for its current market and technology (p. 87). The table below presents the characteristics and rationale qualifying electronic bidding as disruptive technology. Characteristic of Disruptive Technology Electronic Bidding Rationale There is not initial demand for the innovation; the client base is small and may be costly All technological innovations are costly for an organization since it requires training of personnel and acquisition of relevant equipment. From the bidder’s perspective, small and medium enterprises (SMEs) are restricted from entering the competition pool because of prohibitive cost and complexity for a new entrant. They thus do not consider the public and large institutions as potential clients. Initially, the technology is not attractive to the clients it is designed for. Apprehension initially clouded the use of technology in the bidding process due to concerns over the transparency and integrity. The technology is at a new level of competition Electronic bidding will help the SMEs to go beyond the borders of manual or fragmented systems. Breaking these barriers however, introduce new competition from international bidders who meet the bidding requirements. Initial profit margins are likely to be small Initially, using the system only requires downloading and uploading of documents using the internet. It is not until the system is fully operational that the benefits can be realized. Immediate profits are thus not obvious to an organization implementing the technology. It is possible for BDO to secure the disruptive nature of the model by making the process automated, thus limiting liability. Trades made on an electronic platform that uses automated order-matching should not result in liability. Software in essence precludes parties from buying higher or selling lower than the prevailing market prices (Kluchenek and Kahn). Franchise bidding is also an alternative to combat the disruptive nature of electronic bidding. Through having several franchising organs, the model is disseminated to a larger platform. A larger number of people are reached by the franchises which have the authority to award contracts to contenders. The franchisee is mandated to seek investments in terms of bidders and setting up relevant technology. The investment requires both investing in training personnel and acquiring relevant software. The benefit to the market is that more people will gain access to the bids thus increasing confidence of the bidders concerning the process. When bidders are able to rely on the electronic bidding process, the business model ceases to be disruptive and attains an edge as a sustainable technology. Works Cited Bacani, Cesar. DELOITTE VS. PWC VS. EY VS. KPMG: WHICH IS THE WORLD’S NO. 1 ACCOUNTING FIRM? 5 January 2015. 28 January 2015 . BidDocs ONLINE, Inc. BidDocs ONLINE, Inc. - Services. 28 January 2015 . Big Four Firms Network. The Next Four: BDO, RSM, Grant Thornton and Baker Tilly. And A Surprise. 2014. 28 January 2015 . Dakers, Marion. BDO is realistic about its chances of cracking the blue-chip audit market. 19 November 2014. 28 January 2015 . Darov, Anatoly M. and Timothy J. Famulare. Bid protests involving electronic bidding. 30 January 2013. 28 January 2015 . Ebrahimi, Helia. Big Four chastised by Competition Commission. 22 February 2013. 28 January 2015 . Gascó, Mila. Proceedings of the 12th European Conference on e-Government. Sonning Common: Academic Conferences Limited, 2012. Jones, Huw. "BDO concerned over patchy roll-out of EU accounting rules." Reuters 26 November 2014. Kluchenek, Matthew F. and Jacob L. Kahn. Deterring Disruption in the Derivatives Markets. 2013. 28 January 2015 . Schmidt, Tim. Sealed Bidding: When Does it Make Sense? 10 January 2014. 28 January 2015 . Read More