Every year American individuals and businesses complete about $600 billion worth of transactions with the local, state and the Federal governments, excluding their various tax payments. To date, less than one percent of those interactions occur on-line, according to Adrian Moore, director of privatization and government reform for the Reason Public Policy Institute, a Los Angeles-based think tank that studies government management. But, like death and taxes, you can be sure that percentage will increase.
Ordinary taxpayers routinely use the Internet in their day-to-day existences. As they have grown ever more comfortable with on-line transactions, their expectations increase about the kinds of services they can enjoy on the Net. Those expectations have been spilling over into the government realm. Taxpayers want to know why they can’t download a rare IRS form on the Net instead of having to drive halfway across town to retrieve it at an IRS office.
“People are expecting the government to act like a private business,” Moore observes. The result has been public pressure on government agencies to move the necessary but hated tasks of being a citizen — like renewing your driver’s license — to the Net.
To meet this public demand, governments are changing the way they deliver services. They are making information available in digital form, providing the capability for on-line transactions, and using e-commerce tools for government procurement and bidding. Welcome to the world of e-government.
E-Government Spreading ‘Like Wildfire’
E-government is “spreading like wildfire,” observes Moore. And outsourcing e-government projects is growing “just as fast.” He reports that state and local governments will outsource IT projects totaling $4.9 billion by 2004.
Moore says e-government outsourcing improves service quality and reduces costs. Taking services online can cut costs up to 70 percent. Moore says a good comparison is banking. It costs a teller $1 to process a transaction. Move that transaction on-line and it costs less than one cent.
Creating a portal is typically an agency’s first step into e-government. Governments are attempting to author inclusive sites with a wealth of information. The next step is to give citizens the ability to download forms or fill out electronic forms. For example, some cities are allowing construction companies to obtain building permits on-line. And then there’s the public’s perennial favorite: paying parking tickets.
Convenience is just one reason why the taxpaying public wants these services to migrate to the Web. Speed is another. “People’s turnaround expectations are increasing, too,” notes Moore. The public won’t accept pokey responses when they are used to solving a problem with a click of a mouse.
Moore says the cutting edge will be when governments can push services out to the citizens. For example, a couple applies for a marriage license. The county system will automatically contact the IRS, which will email the love birds to see if either wants a new W-4.
A New Way to Pay the Outsourcing Provider
The governments are adopting a new mechanism to pay for this Web development. They are shifting from a tax funding payment model to letting the users pay. “Initiatives financed solely or primarily by the private sector will become more common,” Moore predicts. Firms will provide Web portals or application specific solutions at no cost, generating revenues with transaction fees charged to governments or directly to users. “Companies are fighting for e-government provider contracts and only asking for a piece of the action,” he continues.
Advertising on these sites can generate another source of revenue for the outsourcing provider.
For example, Utah wanted a company to build and operate its Internet site. The state wanted the site now, but knew it would require at least 12 months to secure funding. To solve the problem, Utah advertised for a self-funded contract.
NIC won the contract. It makes its money by charging fees for on-line services to Utah’s businesses and citizens. Moore reports eight other states have hired NIC to operate their government Web sites.
The biggest red flag for e-government has been the concern about consumer privacy. Financial information required by the IRS is much more sensitive than the data required by Ebay. “Privacy issues in e-government can be much harder,” says Moore.
Finally, governments realize they have a major educational challenge ahead of them. The early adaptors can’t wait to do everything on the Net. But the majority of voters are worried about privacy and or just plain uncomfortable about turning to the Net.
Moore says the Arizona Department of Motor Vehicles has Web-enabled its drivers license renewal program. However, there has not been a desert storm of interest in on-line transactions. “The Web portal has been busy, but it hasn’t had a huge share” of the transactions, Moore reports. Arizona drivers, it seems, are worried the Web site will not work and then they will be slapped with a penalty for late renewals. “They’re more comfortable waiting in line to get the stamp” that proves they have paid, he says.
The Need to Educate
Moore believes governments will have to prove to the public that Web-based transactions are reliable and are the government’s preferred method of doing business with its citizens. A successful track record will be the best way to convert the non-believers. After all, it wasn’t that long ago when Amazon.com was trying to do the same thing.
So, how are the states doing? The 1999 Digital State Survey ranked Georgia and Alaska as the top two electronic states. The survey looked at four criteria:
- The ability to download permits and licensing forms.
- The ability to apply for permits and licenses electronically.
- The availability of help or advice through an on-line mailbox.
- The ability to contact agency staff online.
Moore concludes that e-government “will reshape bureaucracies.” However, even with the “huge explosion in interest, I don’t see governments closing down their offices any time soon.”
Lessons from the Outsourcing Primer:
- E-government is reshaping bureaucracies.
- E-government can cut costs up to 70 percent.
- Consumer pressure is forcing governments to move routine transactions to the Web.
- Outsourcing providers are willing to put up the sites for fee and be paid through advertising or fees generated at the site.
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].