Now that the World Customs Organization (WCO) Information Technology Conference has ended again for another year, I was reflecting on the way home from Dakar (and 10 straight years of attending and sponsoring this event) that there is one obvious discussion that seems to evade the agenda year to year. To me this is an important question and topic that has yet to be covered:
“Is it within the role and mandate of an Intergovernmental Organization (e.g. WCO, WTO, World Bank, InterAmerican Development Bank, Asian Development Bank, UNCTAD, etc.) to develop and deliver technology?”
Now I’m going to step out on thin ice here and suggest to the community of members and IT vendors, that it is not.
While I’ve been a strong supporter of the WCO over the years, and consider many of those who work at this IGO to be good friends, I think international discussion needs to be fostered here because I sense there is something fundamentally wrong. Let’s look at 2 examples.
Firstly, let’s look at the role of the WCO. The WCO describes itself as an independent intergovernmental body whose mission is to enhance the effectiveness and efficiency of Customs administrations. It is the competent global intergovernmental organization in Customs matters. To fulfil this mission, the WCO:
establishes, maintains, supports and promotes international instruments for the harmonisation and uniform application of simplified and effective Customs systems and procedures governing the movement of commodities, people and conveyances across Customs frontiers.
reinforces Members' efforts to secure compliance with their legislation, by endeavouring to maximize the level of effectiveness of Members' co operation with each other and with international organizations in order to combat Customs and other transnational offences
assists Members in their efforts to meet the challenges of the modern business environment and adapt to changing circumstances, by promoting communication and co-operation among Members and with other international organizations, and by fostering integrity, human resource development, transparency, improvements in the management and working methods of Customs administrations and the sharing of best practices.
The WCO has introduced some very useful and effective products over the years including the WCO Data Model, WCO SAFE Framework of Standards, Standardized Risk Assessments, and the WCO Risk Management Compendium. With 179 members covering 98% of the world’s trade, The WCO also maintains the international Harmonized System goods nomenclature (Module 2), and administers the technical aspects of the WTO Agreements on Customs Valuation (Module 3) and Rules of Origin (Module 4). It’s an organization that is indeed the international “Customs Co-operation Council”. The WCO offers technical expertise to it’s country members, performs effective diagnostic testing, and provides value in it’s capacity building efforts. The WCO is effective, offer tremendous value, and in general performs a fantastic job with high integrity.
Now let’s consider another IGO like the United Nations - Conference on Trade and Development (UNCTAD). UNCTAD, which is governed by 194 member States, is the United Nations body responsible for dealing with development issues, particularly international trade – the main driver of development. From the website I can learn that UNCTAD aims to promote macroeconomic policies best suited to ending global economic inequalities and to generating people-centred sustainable development.
UNCTAD describes themselves as a forum where representatives of all countries can freely engage in dialogue and discuss ways to establish a better balance in the global economy. Like the WCO, UNCTAD offers direct technical assistance to developing countries and countries with economies in transition, helping them to build the capacities they need to become equitably integrated into the global economy and improve the well-being of their populations.
Therefore, where in the UNCTAD or WCO mandate does it say they build and deliver technology for its member community?
As part of the vendor IT community it makes sense to ask the WCO and UNCTAD for an open dialogue on the issue. Does anyone other than me see the irony of hosting and promoting an IT conference for the technology providers and member states, when the IGO (representing the member states) directly competes with the same IT vendor community by building and deploying technology for the members? Is that not a strange conflict of interest from the start?
Do these organizations, build planes and automobiles to transport their staff to member countries? Do they build hotels for accommodation of their technical staff? Do they construct office space for their teams and management? Do they develop desktop applications like Microsoft Word and Excel for usage by their employees? Do they manage and deliver their own international conferences?
No. They outsource all of this, simply because an IGO is not set up to build, manage, maintain, upgrade, add-on, and support any of these items. If they did, would the members expect to receive the very best, leading edge product, service, or solution? Likely not. I hope these IGOs understand the opinion and position. It would be unfair to all of the IT vendor community if they did not. From a positive outlook, these organizations are the best at setting international policies, conventions, guidelines, and standards, to promote commonality and cooperation between the country members and the trading community. They are the best at creating and delivering policy style products and services (the very best). I just wonder why they choose to not focus on what they do best? (and allow the IT vendor community to do the same).
So why do they choose to focus on building technology? It’s a conundrum for many. I personally don’t see how an IGO can set itself up as an effective IT development shop. Building and maintaining technology is extremely difficult. Do they have the very best architects, developers, and technologists? Capitalism would suggest that this talent likely sits with the IT firm willing to pay for it. I’m just not sure an IGO is best positioned to be an effective builder and delivery mechanism for customs systems. I can’t see how the technology can be leading edge, perform, or allow for add-on modules when a country matures to require the next generation of functions. It’s a strange situation because it often compels an IGO to over market itself with functions that may be ineffective, broken, or not exist. If not marketed, they might admit the desired function does not exist. In these situations, they could profess that the missing module is being developed, while the current system is promoted as the best stepping stone to position the member country for the future. But again, how long will that take? Is the IGO suited to manage that type of rapid and agile development? Are they funded to employ the best technologists to accomplish that outcome? Does their history prove they can accomplish these feats? And those are just a few of many development issues. Are they staffed to provide maintenance when a system breaks? How long is it currently taking the IGO to deploy fixes in the field? These are all necessary questions to ask. At the same time, these actions are a barrier to market entry for the rest of the community.
Now, if the IGO can indeed promote and market itself (convincing others) to having built an effective system, there are new costs to deploy and deliver that system in the field to a requesting country member. Organizations like the U.S. State department have funded some efforts in part for the WCO, and the World Bank, InterAmerican Development Bank, Asian Development Bank, U.S. AID and others, have all funded the delivery efforts (all or in part) for technology built by an IGO. Many of us in the IT community would ask why these groups would fund a product that is in all likelihood a rudimentary solution when compared to the vast array of leading edge IT solutions available in the market place today.
One reason is branding. When the United Nations signs high level cooperation agreements with a multi-lateral donor agency like the World Bank (WB), how can the WB deny a request to fund a system built by a faction of that IGO? That’s certainly a difficult request to deny. A country state is also typically a member of the IGO. The IGO can enjoy the privileges it has over the member state to influence decisions, simply because of “who they are”. That in itself is a conflict, because it’s difficult for these members to deny a product offered by the IGO of which they are a member. That’s a lot of influence that the IT vendor community cannot, or will ever obtain, and is the first barrier to market entry.
A second reason is this: An IGO has an ability to provide their technology as a “zero-cost license”. Systems like the WCO Cargo Targeting System, and UNCTAD’s Automated System for Customs Data (ASYCUDA) provide their software for free if a donor agency or other IGO funds the delivery. In one recent example, the InterAmerican Development Bank recently funded 4 million USD to deploy ASYCUDA World to a Caribbean country. As one IT vendor, I can tell you that a lot can be accomplished with 4M USD. IT Vendors invest in building technology which often means they need to recoup their costs in software licensing. The industry is changing, and as such we all will have to match this model or perish. Some of us already have. Have these IGOs noticed? This is the second barrier to market entry, but can be addressed for those willing to match the zero cost license.
A third reason is this: An IGO does not formally have to compete in a tender situation like the rest of the IT community. Member states can enter into a direct “sole source” agreement with an IGO to obtain their system without competition. In fact, the rest of the IT community is often unaware of when these agreements occur because they are not publicized in any manner. It’s generally learned only after the fact or through word of mouth. This seems to deviate from the principles of openness, transparency, and good governance.
As one example IGO, UNCTAD also has a strict rule for member states. Their own internal regulations forbid themselves from competing their product on the open market or in a tender situation. Have you ever wondered why? How well would ASYCUDA fair against other declaration processing systems or customs clearance systems? We will never know unless this lack of transparency is removed. Without open competition, the member states only “know what they know”. They will never become aware of other leading edge technology options. I would argue this defeats overall capacity building and an optimized modernization effort. If an IGO builds and promotes their own technology, it also means they are not incentivized to promote other options through open competition. It’s a conflict of interest as their teams are only incentivized to promote the IGO offering. It’s not surprising because it is a natural organic outcome. This is the 3rd barrier to market entry. It can be fixed if the IGOs endorse a best practice for procurement like the World Bank’s Procurement guidelines.
The World Bank is in effect negating its own procurement guidelines by funding IGO systems who sole source to member states…..aren’t they?
There is a spectrum of procurement frameworks that starts with sole sourcing at one end, and includes a fully open competitive tender at the other end. The latter promotes transparency, fairness, and ensures the customer receives best return on investment. Sole sourcing is secretive, lacks integrity, presents opportunities for corruption, and negates the principles of what these IGOs stand for. Sole sourcing presents only one option. In most/all cases it’s not the best return on investment.
In top GDP developed nations, sole sourcing is frowned upon for the reasons mentioned. However, when it is permitted the provider normally has to prove to the state that the product is not available from any other provider. The state then performs its due diligence to prove this is indeed the case. In situations where the product is unique, the state will award a sole source contract agreement. If that’s indeed the case, we all have to ask ourselves if we believe products like the WCO CTS and UNCTAD’s ASYCUDA are indeed truly unique, and the only systems of their kind available in the global market.
Here’s my market analysis: The WCO CTS is a cargo targeting system with features available from the following companies:
Intrasoft, Bull, IBM, Fair Isaac, Infoglyde, Tradebytes, Secure Borders, GreenLine Systems, A-T Solutions, PAE, Arctic Group, Larus, Cupia, Crimson Logic, Concepto, SGS, Cotecna, Crown Agents, TechnoBrain, and others.
ASYCUDA is a customs clearance system with declaration processing, accounting and payment, and manifesting capabilities. The following companies have equivalent products:
IBM, Bull, Cupia, Crimson Logic, Concepto, ICS, Microclear, Gaindee 2000, SGS, and others. These lists are not all inclusive. Simply refer to the WCO Technology Network.
I would present that these systems are not unique enough to warrant a sole source justification. As such, this sole sourcing framework utilized by the IGOs is the 3rd barrier to market entry. This can only be fixed if the IGO’s agree they are in a conflict, adopt modern procurement guidelines, and agree to openly compete with the IT community to ensure the member state receives the best ROI.
In summary, the compounding of all 3 of these reasons mentioned create a market barrier for the IT community to enter the space with better products, better service, and possibly better pricing.
So where does this leave us? In my view their needs to be greater transparency and cooperation between the IGOs, the multi-lateral donor agencies, and the IT vendor community. We can still all work together under a new model that does not have to be competitive. We can collaborate, and create a framework for cooperation. For those countries that have adopted systems like the CTS or ASYCUDA, the IT community of vendors should be able to build peripheral applications that compliment these current platforms. As examples; It doesn’t make sense to me for the WCO to attempt to advance their CTS with risk indicator rules and risk scoring, when many companies can do it better at lower cost, as well as add cognitive machine learning and artificial intelligence capabilities.
It doesn’t make sense to me that UNCTAD would attempt to build (what they perceive to be) an Electronic Single Window Capability on ASYCUDA World, when companies like Crimson Logic, Cupia, Bull, PAE, A-T Solutions, and Concepto have all done it better. It doesn’t make sense to me for UNCTAD to attempt to build advanced tariff management components in ASYCUDA, when a company like 3CE has mastered it with Natural Language Processing (NLP). Not only is 3CE the most leading edge solution that I have seen available in regards to the Harmonized System, but it’s extremely cost effective. There is no way an IGO or member state could build an equivalent solution at a lower cost.
As an ex-Customs practitioner and IT community member, I would ask all member states of these IGOs to please do your homework. Please conduct a minimal cost benefit analysis and weigh your options. Make the most of your valuable IT dollar. Send me an email. I’d be happy to discuss further and connect you with experts who can offer tremendous insight. Let’s keep the discussion going. It’s important.
I will be posting this blog on the TTEK website, LinkedIn, Facebook, and Twitter. If there is interest in continuing this discussion, I’d like to do it all in one place. Since the WCO and others have group discussions on LinkedIn, I’d suggest we place all comments on the Linkedin site. That way it’s all in one place.
Finally, I’d like to thank the IGO’s referenced in this blog for understanding this important discussion and taking a moment of reflection to consider whether the positions mentioned are valuable or not for their own decision making. I hope this prompts change in a positive way. Let’s cooperate and collaborate.