EYE ON THE STATES

Winning E-Gov Formula: Blend of Old, New Economy Companies

Thomas R. Davies

Electronic government companies are discovering what successful software companies of an earlier generation also found: The road to success for new companies in state and local government often comes through partnering with others.

Many e-gov companies have been slow coming to this realization. GovWorks and PermitsNow cashed in their chips, in part, because they never quite got the importance of partnerships. Others are gaining significant traction by using their partnerships to make the leap to the mainstream of the state and local market.

EzGov Inc. of Atlanta is becoming the poster child for the benefits of partnerships. Having repositioned itself as a software company, EzGov has entered into strategic alliances with Electronic Data Systems Corp., IBM Corp. and, most recently, PricewaterhouseCoopers. By doing so, EzGov is winning new business ? in North America as well as in Europe ? that would be well beyond its reach if it had to rely solely on its own resources.

Gaining deep market penetration is a fundamental challenge for e-gov companies. To do so, they need to provide immediate, tangible business value to state and local customers.

Today there are only two value propositions that will support their aspirations: moving citizen transactions online and helping government transform the way it operates. Delivering on these propositions will require e-gov companies to come to terms with a not-so-pleasant reality: namely, going it alone is a luxury they can no longer afford.

Far too often, e-gov companies lack the intimate understanding of the complex business processes underlying state and local government that is needed to produce meaningful and immediate results. Yes, they often develop innovative products and services. But without a deeper understanding of the way government works, they risk being perceived as yet another cool technology company, all sizzle and no steak.

To gain an understanding of government business processes, e-gov companies would be well-served to form partnerships and alliances with companies whose core capability is business process management. These are the companies government and education buyers turn to when they need assistance running the day-to-day operations of the public sector.

For example, Lockheed Martin IMS is globally recognized for its understanding of how to administer parking programs. EDS, Computer Sciences Corp., Unisys Corp. and Affiliated Computer Services Inc. are recognized for their knowledge of the complicated business of determining eligibility and processing medical claims. Maximus Inc. and DynCorp are similarly recognized for their program management expertise in child support enforcement.

Improving the cost-effective delivery of government services has been the hallmark of these companies. They excel at the challenge of operating the mission-critical business processes of government using best practices. However, they often fall short when it comes to bringing new Internet solutions to market in a timely way. This is what makes the marriage of e-gov companies and traditional business process management leaders so appealing.

The Old Economy companies bring tangible benefits to the partnership: global sales reach, existing client relationships, brand recognition, strong reputations, cultures of operational excellence and deep pockets. They also bring tremendous insight into the government business processes required to create value from the products and services that e-gov companies excel at creating.

One New Economy company that has successfully used strategic partnerships in the education market to gain widespread acceptance is Campus Pipeline Inc. of Salt Lake City. The company is a rapidly emerging provider of integrated Internet infrastructure solutions for higher education.

Their scalable software platform enables institutions of higher education to integrate campus communications; academic resources, such as instructional systems; administrative services, such as student records; campus news; distance learning and other Web applications in an online environment.

As early as 1998, Campus Pipeline entered into an exclusive partnership with Systems & Computer
Technology Corp., a market leader for higher education. SCT provides software and services to
support business processes, such as finance, accounting, human resources, financial aid and student records, for more than 1,200 colleges and universities globally. Under outsourcing arrangements, SCT manages the administrative and technology operations of colleges and universities.

Over the past few years, Campus Pipeline extended its alliance program to include dozens of partnerships with companies such as Dell Computer Corp., Oracle Corp. and Educational Testing Services. Like EzGov in the government market, Campus Pipeline discovered that buyers need one-stop, integrated solutions that include consulting, data conversion, Web hosting, application software, hardware and process improvement.

The future is bright for the combination of New and Old Economy companies in the state and local market.

Thomas Davies is senior vice president at Current Analysis, Sterling, Va. His e-mail address is tdavies@currentanalysis.com.

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