Arizona Takes Top E-Commerce Prize

By Steve LeSueur, Staff WriterYou arrive at the beach for a week's vacation and suddenly remember you forgot to renew your license plate stickers, which expire in two days.If you live in Arizona, no problem. You simply get on the Internet and make this transaction through ServiceArizona, the state's online system for registering motor vehicles. Or you could phone in the information using ServiceArizona's interactive voice response system. Although your new stickers still must be mailed to you, the Motor Vehicle Department's computer records are updated immediately so that police officers can verify that your license plates are current.ServiceArizona was one of 11 information technology projects honored last month by the National Association of State Information Resource Executives, the Lexington, Ky.-based association representing state chief information officers. NASIRE annually selects programs and systems for its Recognition Awards in the field of information technology.The Arizona system, which is expected to save the Motor Vehicle Department $1.25 million annually, garnered the association's top prize for an electronic commerce application by a state government."The NASIRE awards program is the premier event for recognizing technology innovations by states and their private sector partners," said Mike Benzen, president of the association and Missouri's chief information officer.Washington received three awards, the most of any state, and Arizona and Texas each won two. (See box below for a list of all state awards.)ServiceArizona, which is operated for the state by IBM Corp. of Armonk, N.Y., allows citizens to register vehicles any time of the day through the phone or Internet, making it the first multichannel electronic service delivery system for motor vehicles in the nation.IBM and Arizona officials developed the system jointly. But IBM paid for the development costs and for the ongoing costs of operations and enhancement of ServiceArizona under an arrangement in which the company receives a transaction fee for each use. Initially, IBM received $6.95 for each transaction, but now the company retains $1 for each transaction, 2 percent of the vehicle taxes collected through ServiceArizona, and a portion of the fees charged by banks for credit card processing.The biggest challenge in implementing ServiceArizona was taking on a task that no other state had done, said state officials. "Business rewards risk, but in government, the environment to support risk often is not there," said Russell Pearce, director of Arizona's Motor Vehicle Department. "If you fail, the world may unravel around you.""The auditors and lawyers were sure we wouldn't succeed," said Penny Martucci, an assistant division director in the Motor Vehicle Department who managed the project.To minimize the state's risk, officials wanted a benefits-funded contract in which the vendor paid the development costs and recouped its investment through the transactions generated by the new system. Consequently, Arizona has invested only $206,000 of its own money to bring its "back office" into line with the system, said Martucci.But even this approach aroused some suspicions. "People questioned why someone like IBM would take the risks and actually pay to take over this part of the business," said Pearce.The system's first transactions began in November 1997, and the volume soon exceeded expectations. Today, ServiceArizona handles about 12 percent of the 4 million vehicle registrations that are renewed each year in the state.State officials estimate that a manual transaction costs the state about $6.60, while a ServiceArizona transaction is $1.60, a savings that helped allay concerns about the new system. But even more important is the convenience to the public, said officials.It takes about seven and a half minutes to process a registration renewal at a motor vehicle division office, and that comes on top of the customer's drive to and from the office and a possible wait of 25 minutes or longer, they said. By contrast, ServiceArizona takes just a few minutes from a home, office or vacation spot.Arizona and IBM continue to add new features to the system, such as online registering of fleet vehicles and buying specialty plates. The state also wants to develop the capability to issue duplicate driver's licenses over the Internet."With Internet applications, our philosophy is to start simple and grow fast," said Bob Samson, IBM's vice president of sales for the public sector in the Americas. Samson declined to say how much revenue ServiceArizona is generating for IBM, but the company clearly regards it as a solid moneymaker. Arkansas went live with a similar IBM system in January, and Louisiana last month began transactions with an Internet-only system.Martucci said at least 18 states have inquired about the system, and Arizona officials have given numerous presentations to state representatives at meetings and conferences.As the second fastest growing state in the nation, Arizona has large numbers of people moving into the state. Consequently, the volume of new customer transactions at the Motor Vehicle Department is growing by 13 percent annually, said Pearce. One of his long-term goals is to enhance ServiceArizona so that new state residents can register their vehicles and obtain Arizona driver's licenses online."This would eliminate a huge amount of the workload," said Pearce.The 11 state projects honored by NASIRE were chosen from a field of 52 submissions from 18 states and one federal agency. A committee comprised of state and corporate NASIRE members made the selections. Jim Hall, chief information officer for New Mexico, chaired the committee.Washington's three award-winning projects were a data warehouse system that allows easy access to human resource information for state agencies; its K-20 Network giving schools access to digital learning tools such as the Internet, intranets and group videoconferencing; and Access Washington, a Web site that indexes government information on the Internet.The Texas Medicaid Fraud and Abuse Detection System won for its innovative use of technology. The system employs neural networks and advanced computational technology to uncover fraud and abuse by Medicaid providers and recipients. Texas also won an award for its Health and Human Services Consolidated Network.A new category this year was IT Personnel Recruitment and Retention. Kansas won this award with a comprehensive program that included bonuses, advanced training, employee contracting and home telecomputing.Other award winners were:?Indiana's GIS Childhood Lead Poisoning Prevention Program;?Utah's Mobile Data Collection System/Cellular Digital Packet Data program;?The Kentucky Information Highway;?Arizona's Information Technology Project Investment Justification.XXXSPLITXXX-Administrative ApplicationsWashington: Data WarehouseDeveloped system to allow state agencies easy access to human resource data and information for decision-making and planning purposes.Electronic CommerceArizona: ServiceArizonaThe first multichannel electronic service delivery system for motor vehicle transactions in the nation.Innovative Use of Technology (tie)Indiana: GIS Childhood Lead Poisoning Prevention ProgramGeographic information system designed to support the state department of health in the analysis of lead program data and its correlation with community infrastructure and demographic characteristics.Texas: Medicaid Fraud and Abuse Detection SystemEmploys neural networks and advanced computational tech-nology to streamline and improve the detection and identification of suspected fraud and abuse by Medicaid providers and recipients.Intergovernmental ApplicationsUtah: Mobile Data Collection System/Cellular Digital Packet Data, Laptop Computers in State and Local Law Enforcement VehiclesIn-vehicle laptop system connected to intergovernmental and private-sector network used to support local police, highway patrol troopers and other law enforcement personnel.IT Personnel Recruitment and RetentionKansas: Kansas IT Recruitment and Retention ProgramComprehensive recruitment and retention program, including bonuses, advanced training, employee contracting, functional user IT aptitude assessments and home telecomputing.Networking (tie)Texas: Health and Human Services Consolidated NetworkHigh-quality, centrally managed wide area network that eliminated redundancies, maximized service quality, offered additional services and provided minimal expense through a cost recovery system.Washington: K-20 NetworkNetwork giving all schools in the state access to the learning tools of the digital age: Internet, intranet, group videoconferencing and interactive video services for distance learning.Public and Private PartnershipsKentucky: Kentucky Information HighwayIntegrated communications backbone built through strategic partnerships with a consortium of communications companies.Service ApplicationsWashington: Access WashingtonWeb site that indexes government information on the Internet and adds a new level of transaction-based services for citizens and government agencies alike.Statewide Initiatives, Policy/Planning/ManagementArizona: Information Technology Project Investment JustificationProcess used to promote effective communication and consistent justification for making quality decisions in the selection and deployment of information technology.Source: National Association of State Information Resource Executives