Study: States' E-Gov Movement Will Need Push from Private Sector

By William Welsh, Staff Writer

Nearly all the states are expected to roll out electronic government initiatives in the next two years, but to do so state IT officials will have to rely more than ever on the private sector for help, according to a new study.

Alternative sourcing, such as using application service providers, will play a key role in e-government initiatives, according to the study "E-Government: Creating Digital Democracy" released Aug. 8 by Federal Sources Inc. of McLean, Va., and META Group Inc. of Stamford, Conn. The study is based upon interviews with 110 chief information officers, deputy CIOs and other government officials representing 37 states and 60 federal agencies.

New ways of fielding IT projects and e-government services will help federal, state and local governments make up for a lack of funding and a shortage of information technology workers, the study states.

These alternatives will be seen as a "great opportunity" rather than a "necessary evil," according to the study.

Agencies that want to implement e-government quickly will have to pursue "the leading-edge, high-technology providers," said Ray Bjorklund, vice president of consulting services at Federal Sources.

Despite the general optimism voiced in the study, it may actually take longer than officials expect for state and local governments to fully implement e-government, said Amy MacMillan, a market analyst for electronic government strategies at META Group.

At the state level, the push for e-government is due in large part to the pressure CIOs are getting from governors and elected officials who hope to meet the digital expectations of their citizens.

"The states are saying that they are going to have e-government implemented within the next two [to four] years, but when you really look at e-government, this is something that will be evolving for the next 15 years," said MacMillan.

Although the government traditionally moves slower than the private sector, there is enormous pressure on states to go online with a complete range of government services through a single state or local portal.

Kevin Childress, chief information officer for the National Information Consortium Inc. of Overland, Kan., said this pressure is one reason why the transition "will happen with some dispatch," even within three to five years.

CIOs are pressured not only by constituents and elected officials, but also indirectly by dot.coms and professional services companies and even other states that offer efficient and cost-effective e-government solutions, according to the study.

For example, the study notes that a successful pilot program for the sale of hunting and fishing licenses in Montana convinced the state legislature to appropriate funds for more e-government initiatives, while Arizona's award-winning online vehicle registration system prompted California's governor to issue a directive to the state's department of motor vehicles to put together a plan for online vehicle registration.

"When one state does something good, that creates natural pressure on others," Childress said.

Spending for e-government at the local level is estimated at $500 million for 2000 and expected to increase to $1.6 billion by 2003, according to Federal Sources. Because e-government spending for state and local governments is roughly equivalent, combined spending for e-government by state and local governments is expected to reach $4 billion by 2003, with states spending slightly more than local governments.

Since e-government at the state level "is driven by political mandates," there will be slightly more spending at the state level than the local level, where the political focus on e-government is not as intense, said Bjorklund.

Even with this much money, there are other hurdles that states must overcome to achieve their e-government goals, according to the study. The study identifies seven major barriers to e-government implementation: security and privacy, cultural resistance to change, trust, interoperability of systems, ability to make payments, insufficient funding and limited resources.

While states can overcome some of the obstacles, such as security and privacy, on their own, other obstacles, such as money and IT human resources, will lead right to outsourcing, said MacMillan.

Among the states that have successfully outsourced Web portals to different vendors are Georgia (NIC Inc.), North Carolina (Andersen Consulting of Chicago) and Texas (KPMG Consulting Inc. of New York), said MacMillan. Other innovative state e-government outsourcing includes reverse auctioning in Pennsylvania by Pittsburgh-based FreeMarkets Inc. and land auctioning in Oregon by eBay of San Jose, Calif., MacMillan said.

"States are looking to see what services they can bring online quickly either through partnering with portal design companies or by finding out which dot.coms are out there providing services they can use," said MacMillan.

META Group estimates that over the next two to three years, more than half of all government agencies with dominant Web portals will use hosting services rather than maintain internal Net infrastructure.

Branding is emerging as an important part of portal strategies at the state and local level, according to the study. Worth noting, North Carolina and Virginia were the first states with personalized portals: the "NC@your service" and "My Virginia" home pages. These names are intended to show that "the portal exists to serve the citizen," said MacMillan.

Unlike the private sector, however, branding in the context of e-government does not refer to equity or market share. Instead, it is about the trust between government and citizen and the value of Internet transactions to citizens, said Rich Phillips, NIC's director of corporate communications.

A successful branding strategy that draws citizens to state or local Web portals not only strengthens the bond between government and citizen but also saves taxpayer money that would otherwise be spent on labor-intensive tasks.

The study highlights Georgia and San Diego County as case studies of successful outsourcing of e-government at the state and local level.

GeorgiaNet, the state's award-winning Web portal developed as part of a partnership with NIC, provides a comprehensive list of services to both businesses and citizens, according to the study. Because of information and services available through GeorgiaNet, state agencies are receiving fewer calls for information, and businesses and professionals are able to obtain licenses and renewals faster online.

In 1999, San Diego County signed a seven-year, $644 million contract with a four-company team led by Computer Sciences Corp. of El Segundo, Calif. The contract is the largest state and local outsourcing contract to date, according to META Group and Federal Sources.

Designed to overhaul the county's IT infrastructure and bring county services online, the project has scored a number of successes in the first six months, including the installation of government kiosks, the creation of a portal for county asset disposition, and smart card and biometric information security projects.

The study recommends that, like San Diego, state and local governments should resist pressure from constituents and elected officials for short-term solutions and instead focus on long-term strategy. And to develop that strategy, they will need to perform a gap analysis to determine the weak links in existing architecture.

Once the analysis is complete, the gaps can be filled by upgrading links to accommodate an anticipated increase in transactions.

The study also predicts that the term CIO will one day come to mean not chief information officer but chief infrastructure officer. The report states that CIOs "will morph into the role of caretakers of the adaptive infrastructure" and will begin to serve on cross-functional teams overseeing various policy areas.

"We see the role of the CIO developing into planning and coordination of projects," said MacMillan. "We also see the chief technology officer cropping up [as the person] that would be responsible for implementing the technology projects."