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Analysis: Can e-government sites eliminate the wait?


(IDG) -- E-government: Until recently, this meant nothing more than static webpages that reproduced the bureaucracies resting at the heart of federal, state and local agencies. For decades, those same bureaucracies in the paper-based world have left citizens waiting in long lines or on hold for hours.

As governments move services like voter registration and driver's license renewal mere mouse clicks away from their constituents, they are finding many different business models with which to accomplish the tasks. Some are doing internal development and some are outsourcing. Vendors in the e-government market, which IDC (a sister company to CIO's publisher, CXO Media) predicts will exceed $100 billion by 2008, are offering a variety of solutions, ranging from simple front-end Web interfaces to completely integrated systems that eliminate the paper chain.

Governments on the cutting edge of offering electronic services are overhauling their processes and systems, turning them inside out from agency-centric to customer-facing systems that span agency silos. Government agencies are also facing privacy and security questions and grappling with the age-old problem of funding these new electronic offerings, which often still operate in tandem with identical paper-based services.

By an almost overwhelming majority, governments are turning to portals: umbrella websites that operate as a front door, linking users to additional resources. According to an April survey from the National Association of State Information Resource Executives, 20 states (representing almost 50 percent of the nation's population) consider their websites to be portals. Eight more states (representing 23 percent of the population) reported plans to launch a portal within a year. While most states have developed portals internally, the report says, others are increasingly looking to vendors to develop or maintain their sites.

Virtual town hall

State governments are leading the charge toward e-government, as they are unencumbered by the bulk of the federal government and operate closer to their constituents, who are demanding the ease of for tasks like renewing a driver's license. The ultimate vision is to offer the government version of My Yahoo and MyNetscape personalized links to everything from local traffic reports to making tax payments online.

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In April, North Carolina announced its North Carolina@Your Service, a portal that lets citizens and businesses perform various tasks online. The state contracted with consulting firm Arthur Andersen, which subcontracted Yahoo for content and an electronic store to accept payments. The contract also includes an option to transfer operation of the site back to the state, says Rick Webb, North Carolina's CIO.

Gov. Jim Hunt announced the grand opening of the portal in August, and officials are counting on media coverage from the announcement and a scheduled statewide public speaking tour to market the new online offerings. Officials are also exploring options for incentives to encourage citizens to use the site, Webb says. "There's a natural draw when a citizen can have 24/7 access to government at home."

During the first six months of the contract, Arthur Andersen representatives will work with state agencies to link legacy systems to the portal front end, according to Webb. Agencies will be free to work with other vendors in developing e-government applications, but will need them approved to ensure compliance with the enterprisewide e-commerce plan. "The agency applications tie back to the portal, [and] we still get to competitively bid it," he says. "We still have the agencies driving it from a business perspective. We truly wanted that enterprise, one look, one feel approach."

Washington state is also taking an enterprise-level approach to its portal, which will be the facade for the state's complete systems overhaul in preparation for offering electronic transactions. The state plans to use sophisticated security architecture to provide digital signature technology for businesses and citizens to secure online transactions.

Even before the state began to Web-enable its systems, it started offering online services through its homepage, Access Washington. The site, which logs a million hits per month, presents a clear overview of the available information and services without dragging along any bureaucracy from the paper-based world.

Users are ushered into a wide variety of options, such as ordering documents online, looking up a person's criminal history or even applying for college admission. Businesses can pay excise and unemployment taxes, and they can file wage reports. The site also offers clear directions. "Obviously these transactions don't make sense unless they transform the business processes end-to-end," says Steve Kolodney, Washington's CIO and director of the state's Department of Information Services. "It's not enough to set up an Internet lemonade stand outside your firewall and say you're offering services."

To pay for the infrastructure required to support the digital government plan, Washington's legislation appropriated $10 million for portal startup costs. Individual agencies will be responsible for funding their own applications. None of the development or maintenance associated with portal operations will be outsourced, and citizens will not be charged to use the services. "People want access to their government, and it is our responsibility to provide it," Kolodney says. "We see this as a core competency, and we don't believe in giving away core competencies."

Like other states, Washington will pull data from multiple agencies needed for certain "life experiences," such as opening a business or planning retirement. The state has also quickly established security measures to protect advanced online transactions, such as accepting taxes from businesses and citizens online. This summer, the state rolled out TransAct Washington, which provides digital signature technology for identity verification and data protection during transmission.

Businesses and citizens receive their own digital signature either online or in person from a bank, depending on the sensitivity of the transactions they will be performing. Portal users will have to present their digital signature only once on entering the portal, and the system will recognize them as they move through various pages within the portal.

Despite this movement among state governments to offer personalized links, the core process of moving administrative services to the Internet involves consolidating reams of sensitive personal data. This could engender the fear of government evolving into "Big Brother" as more databases are merged to store the personal information required for customizing desktop links, says Mark Struckman, director of electronic government programs at the Folsom, Calif.-based Center for Digital Government. This issue could be lethal if not handled correctly by government agencies, he says.

"It will create absolute uproar if the government is not proactive in explaining how privacy and security are going to be handled," Struckman says. "The government has to put on its public relations and marketing hats and explain that when one agency looks at your data, it can look at only the fields that pertain to its job."

States must also proceed with caution when outsourcing digital government to ensure that they are not shirking their stewardship responsibilities, Struckman says. Officials must carefully detail who owns the data and what entity may be allowed to mine that data once a third party is involved. Redundancies in the network are also necessary to ensure adequate backup if the network goes down.

For free or fee?

While North Carolina and Washington received legislative funding for their portals, many states have opted for a self-funded model, requiring no state expenditure. Under this model, the portal is typically financed through convenience or transaction-based fees charged to users for bypassing the long lines or other inconveniences of paper-based government business. These fees are typically split between the state, which often receives the lion's share (as much as 80 percent), and the vendor.

The National Information Consortium (NIC) operates portals for 11 states, including Georgia, Indiana, Iowa, Nebraska, Utah and Virginia. While two of the states have a fixed price contract with NIC, the others operate under the self-funded model. NIC sets up a corporation in each state's capital, buys all hardware, software and application development tools, and staffs the office with its employees. Users pay the freight via convenience and transaction fees. "We do business with the government instead of on behalf of the government," says Joseph Nemelka, executive vice president of the market development division at NIC. "We simply are a resource that they have brought in for these core competencies."

NIC leverages the revenue it generates from commercial applications to provide free services through the portal such as community calendars, child care provider licensing data, and information on legislative and social programs. These free services comprise 95 percent of all NIC offerings. In some instances, citizens can save money by using the online services. For example, many NIC states now offer free online corporation searches.

The self-funded approach mitigates state risk, Nemelka says, because the state doesn't have to invest any capital, and the interest of the state is aligned with that of the vendor. The vendor makes money only if citizens and businesses use the applications. Also, NIC is motivated to market its services, which it does via county fairs, library postings and association meetings. NIC may soon offer states a performance-based contract, where the state can either pass fees on to the citizens or work out an agreement with NIC to share some of the cost savings associated with procedural efficiencies.

The self-funded business model also lets NIC-affiliated states leverage application work done for other states for their own electronic service offerings, says Robert Chandler, general manager of Information Network of Arkansas and an NIC employee. Arkansas turned to the NIC model because government officials didn't want to invest taxpayer money for information and services that were already available from traditional government sources, he says.

"We can just acquire the code at no cost, and then we modify it," Chandler says. "Getting the application up is just the beginning. As more people use it, you have to continue to add value. As demand requires, we continue to add staff. If we don't continue to add value, we won't stay in business."

The Arkansas portal, launched in 1997 as an informational site, now offers more than 100 online transactions like professional licensing, hunting and fishing licensing, tax filing and one of the only applications in the country that lets companies file articles of incorporation online. While the state has offered citizen incentives in the past - such as a $2 discount for renewing a driver's license online - officials have had to stop that practice because some citizens complained it was unfair to those without access to a computer, Chandler says.

For states concerned about turning stewardship responsibilities over to an outside source, NIC officials note that while it provides the record format, it does not house any data. Some agencies have NIC put the data directly into their legacy systems, while others want their own employees to initiate the upload into the legacy back end. While transaction data may be on NIC's server and backup tape at the end of the day, it is transferred to the agency systems overnight.

Arkansas's approach may prove one of the most popular business models for funding and operating government portals today, but it is not a sustainable option, says Robert Atkinson, director of the technology and new economy project at the Progressive Policy Institute, a Washington, D.C.-based organization with the mission of advancing the government's agenda for the information economy. "Governments that aren't willing to pay any money into [electronic services] can get up and running and put some applications online," Atkinson says. "Most jurisdictions in this country don't have the expertise to do this [in-house]. The risk of the outsourcing model is that they're getting the revenue from the users. Ultimately, I don't think the consumer is going to be paying for this. You don't pay now when you go to look at a deed."

Uncle Sam wants you

The federal government has been slower to launch portals because doing so requires cross-agency collaboration, which is a foreign concept for many agencies that have always operated vertically within their own boundaries. However, some agencies, like the departments of Defense, Housing and Urban Development, and Education, have launched portals geared to offer electronic services.

The U.S. General Services Administration (GSA) is leading the effort to create a federal government portal designed to link the government's 20,000 websites and 100 million webpages. Called, this portal is designed to create a "Library of Congress" of government websites to ensure easy access to all federal information online, says Bill Piatt, CIO of the GSA. Because commercial search engines only link to frequently requested pages, only 15 percent to 20 percent of federal government webpages are accessible through those search engines, he says. That's a slim percentage of the average of 27 million Web users - or 10 percent of the U.S. population - accessing federal pages per month.

Eric Brewer, a University of California computer scientist and founder of the search engine developer Inktomi Corp., will build the site free of charge, saving a projected $5 million to $20 million in portal development costs. will be able to search a half-billion documents in less than a quarter of a second and handle 100 million searches each day. The portal's business model also includes a branding incentive program, which will allow other portals like Yahoo, AltaVista, universities or other private sector concerns, to access data from and market it on their sites with the brand or icon if they agree to certain terms and conditions, Piatt says. "It's silly for us to create the portal that everyone will use because people have different tastes," he says. "It will be like the Intel Inside for the search engine. Citizens, when they see that brand, will know it means certain things. Citizens accessing government through one of those brand portals should be able to access information without anyone tracking their movements and using [the information] for commercial purposes."

The branding incentive program will also require private sector portals to send any feedback received from users back to officials. The portal will route all feedback to the appropriate agencies making federal government redundancies "painfully obvious," Piatt says. Agencies can then revamp sites to align with user needs. The portal will not charge users, and agencies will be responsible for transaction support.

The Department of Education has assembled multiple agencies for its Access America for Students portal. Spawned from the Clinton administration's National Performance Review program, this site is a student's gateway to the federal government. It offers a variety of information and services online, from applying for federal student financial aid and registering for selective service to searching for a job. In the site's first year since its launch in May 1999, the number of hits grew from 1,500 to 63,000 per month.

Access America is now going through its third redesign following customer feedback and will soon add private sector companies to its list of federal agency partners. Officials from the student financial aid office are working to share data about students and their loans with the 5,000 financial institutions throughout the country that provide student loans backed by the federal government, says Charlie Coleman, Office of Student Financial Aid director of innovations. "The students will have a complete account of the types of loans they've got. They can do debt planning and know what their monthly payments will be when they get out of school so that they can make better management decisions," he says.

The burgeoning e-government market is crowded with vendors offering various solutions for front-end interfaces that allow citizens to perform administrative tasks like paying parking tickets and other fees. It's clear that the most successful models include integration to back-end systems to streamline processes. This could create a truly paperless government. Cost savings generated from those efficiencies could enable governments to provide free services while generating revenue from more sophisticated online applications. However, without the correct system integration, agencies may end up with what Washington's Kolodney describes as an "Internet lemonade stand," a juvenile attempt to offer services and support with the electronic equivalent of a curbside storefront and a shoe box with which to collect the revenue.

The market may still be evolving, but the advantages of embracing e-government are clear. The stakes are much higher than using digital government to streamline processes. Government officials should look at portals and e-government as an economic development tool for companies evaluating an area for possible relocation, says the Center for Digital Government's Struckman. "In five years' time all governments will be Internet-enabled, or they won't be governments at all," he says. "Companies aren't going to locate in your jurisdiction, [and] your businesses and your people will go away."

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