E-Business as Usual for Federal Contractors

A sputtering new economy has high-tech companies refocusing attention on the old economy's largest enterprise ? the federal government ? where they see nothing but expansion ahead.

"There is a significant push at the federal level to implement a wide range of e-business initiatives," said Bill Smithson, vice president for information technologies at Materials, Communications and Computers Corp. in Alexandria, Va. "These range from moving to e-forms to reduce paper, to building Web portals that provide a single gateway into agencies, to work-flow solutions that are streamlining government processes and providing management visibility and oversight."

The reason for optimism is that many government agencies are just starting to tap into the Web's potential to improve operations. While the Internet owes its existence to federal research and development, government has lagged behind the private sector in fully realizing the benefits of the technology, said Kevin Fitzgerald, senior vice president and general manager of federal and state and local government sales for Oracle Corp., Redwood Shores, Calif.

"To date, the federal government has not demonstrated thought leadership in thinking about itself as an e-business," he said. "Rather, most e-initiatives have been characterized as e-government, resulting in a hodgepodge of programs and ideas simply being transferred to the Internet. This has resulted in costly, overlapping, uncoordinated projects."

According to Fitzgerald, an e-business approach would have government using Internet capabilities to transform itself internally by creating significant efficiencies, and externally by enabling citizens to obtain services on their own.

But "true transformation initiatives in the federal government are few and far between," he said.

Part of the problem lies in the very nature of the federal government. As the Justice Department pointed out in the Microsoft Corp. antitrust case, a monopoly doesn't have the same drive to innovate and serve as a firm with active competition.

According to Mike Fox, vice president of corporate development at SRA International Inc. in Fairfax, Va., the same holds true with the government.

"Service to the citizen appears to be less important than service to the consumer," he said. "The federal government is a monopoly, so it tends to not care as much about services as eBay or Amazon."

While a slow-loading Web site causes a commercial enterprise to lose customers, a slow page on FirstGov won't cause Americans to click over to the Canadian government site to request citizenship, for instance.

Further complicating the implementation of e-business is 50 years of legacy systems. Many government agencies have a jumble of systems, databases and programming languages, resulting in tremendously fragmented enterprises, said Robert Miksit, e-services business developer for Hewlett-Packard Consulting in Rockville, Md., a unit of Hewlett-Packard Co.

"To establish a more cohesive and efficient organization, the most important objective for an agency should be to leverage its existing investments by supplementing them with cost-effective solutions," he said.

Finally, the size and the organizational structure of the federal government, coupled with its unique financing and decision-making procedures, require custom e-business solutions that are tailored to the government's needs. And these solutions can't be standardized for all agencies.

Take the Defense Department, the Education Department and the Environmental Protection Agency, for example. Each has unique constituents, services and needs.

"The federal government market is really a set of numerous vertical markets with broad needs and problems, not just a single, monolithic, homogeneous organization," said James White, senior vice president of i2 Technologies Inc., Dallas. "A mistake made by many technology companies, especially e-business solution providers, is to treat the federal market as a single solution."

Despite the slow start, the federal e-business market is picking up steam. Federal e-business expenditures, now running at under $2 billion per year, are expected to grow at a 35 percent annual rate over the next several years. "The benefits of e-business and e-government are already apparent and unmistakable," White said. "This train has left the station, and the biggest challenge now is how to fulfill the promise of e-business to citizens, to suppliers and to stakeholders throughout the processes."

One factor driving this change has been federal regulation. The Government Paperwork Elimination Act, for example, mandates that by October 2003, federal agencies must allow the people or entities it deals with to maintain their records and submit information electronically, where practicable.

To further spur this along, in May, Sen. Joseph Lieberman, D-Conn., introduced the E-Government Act of 2001 which, among its wide range of proposals, requires agencies to open up their regulatory and enforcement processes to electronic participation.

Pressure from business and individual citizens also is spurring change.

"A key issue for the federal government is that citizens are demanding more and better services online," Miksit said. "The trend is to migrate the citizen from standing in line to going online. The days of long lines and bureaucratic red tape are out; information portals and enterprise integration are in."

Without a doubt, government has already moved beyond the point of simply publishing lists of regulations on the Internet. In setting up its e-business practices, the government is turning toward industry-standard systems and commercial best practices that are driving down cost and complexity, Fitzgerald said.

"This kind of emphasis and adoption of modern, integrated application processes and the deployment of more cost-effective computing platforms will yield tremendous cost savings and increased levels of service to internal and external customers of government," he said. This simplifies the task both for vendors and the government, and ensures that the systems will continue to be usable in the future as the technology evolves.

To meet the needs of the federal market, Oracle has adapted its business financials programs for use by government agencies. The Department of Education, for example, chose Oracle Federal Financials for its Student Financial Assistance program, so that aid programs can be run over the Internet, thereby reducing the cost of delivering loans.

The Navy Military Sealift Command and Veterans Affairs also use the Federal Financials program, and the Transportation Department uses Oracle's iStore customer relationship management and e-commerce Web storefront, enabling users to perform tasks such as paying fines, registering for operations licenses or purchasing training materials.

i2 also takes software already proven in the private sector, and adapts it for the government. "When we approached the federal market, we looked for operations and processes within the federal government workplace that mapped to the competencies we built in the commercial market," White said. "Based upon our successes in private industry, we have the ability to approach the federal user with a commercial best practice that also fits its specific need."

Another major trend has been setting up portals to bring services to employees and constituents. HP's Miksit called 2001 "the year of the portal in federal agencies," saying many agencies issued requests for information, proposals and blanket purchase agreements or initiated proof-of-concept, pilot or implementation programs for portals.

"With such a high level of procurement activity and most implementations in their early stages, this momentum is likely to continue for the next few years," Miksit said.

To address this aspect of the e-business market, HP partnered with BroadVision in April 1999 to develop portals that provide integrated commerce, marketing and customer-relationship management across Web sites, e-mail, call centers, PCs, kiosks, mobile phones and personal digital assistants.

As a result, HP recently won a five-year, $4 million contract to develop and deploy an enterprise information portal for the Coast Guard. Through the project, called Homeport, the Coast Guard is consolidating the information published by its various offices on numerous Web sites run by more than 600 different Web masters.

The new site will serve as a portal for the Coast Guard's 80,000 employees and volunteers. Subsets of the information found on Homeport will be made available via extranet or Internet sites to other government agencies and the general public. Using XML, reusable and personalized content can be published to multiple output formats: Web browser, wireless devices such as personal digital assistants or cell phones, print and portable document format. Wireless content will be available on Coast Guard cutters at sea.

Intranet portals, such as Homeport, are not the only portals springing up. "Although most of the activity centers on intranet portal implementations, these efforts are setting the stage to service the citizen via the Internet," Miksit said. "Once the portal infrastructures are in place, they will be able to integrate to existing systems to provide the first level of service."

FirstGov, with access to more than 30 million pages of content, is the most notable of these sites, but there are also more than 50 other interagency portals online. These sites ? such as egov.gov, chemsafety.gov, fedbizopps.gov and health.gov ? are designed around a certain topic, rather than a department or agency.

Although they are generally sponsored by a single agency, they contain pertinent data from other agencies as well. The consumer.gov site, for example, is maintained by the Federal Trade Commission, but has more than 175 participating entities. The E-Government Act of 2001 provides funding for additional portals.

Such widespread projects make it easy to see why those serving the federal marketplace are largely upbeat, despite gloomy prospects in other technology sectors.

"The sky's the limit," Smithson said. "As the public, legislators and agencies themselves continue to realize the significant benefits that e-business can deliver, we will see more initiatives that leverage this kind of technology to drive the delivery of information and services."

And as these agencies come up with these initiatives, they will continue to turn to industry to provide the means for executing these projects.

"The real opportunity, for the federal government and for industry," White said, "is if they look out into the marketplace, identify the best commercial practices and proven solutions and partner with industry to implement the ones that will drive value. Partnerships among the government, solution providers and systems integrators will be key to success."