ANALYSTS EXAMINE THE OUTLOOK FOR E-GOVERNMENT.

While many enterprises have reinvented themselves to take advantage of the e-business marketplace, the government is preparing to transform itself into an e-government. Gartner Group Inc. (NYSE: IT and ITB) analysts project spending for e-government (including federal, state and local) will grow from $1.5 billion in 2000 to more than $6.2 billion by 2005. Gartner analysts provided their detailed analysis on e-government during Gartner's Spring Symposium/ITxpo 2000 conference at the San Diego Convention Center. This expenditure is for e-business-related hardware, software, and internal and external service. Gartner analysts said the government must be prepared for some difficulties in making this sort of a transformation.

"E-government promises of operational costs savings, improved service delivery and positive transformations of the government workplaces are real. However, a high rate of e-government project failures in the next several years may be unavoidable," says French Caldwell, research director for Gartner. "E-government transformation is manageable, and governments can take advantage of failures and cut innovation cycle times."

Gartner segments the e-government market into three categories. The G2G segment represents government-to-government purchases, and the G2B segment covers government-to-supplier and government-to-business transactions. The G2C segment represents government-to-citizen transactions.

The G2G and G2B segments are projected to account for nearly 70 percent of e-government spending in 2000, with revenue reaching $1 billion. In 2005, the G2G and G2B segments will top $4 billion. The G2C segment is forecast to reach $455 million in 2000, and it will grow to $2.2 billion in 2005.

US E-Government Transformation Providing Opportunities For New Vendors

As the government implements its e-government strategies, new vendors will have the opportunity to succeed in this marketplace, according to Gartner Group Inc. Government agencies are having difficulty finding quality IT workers to implement their e-government strategies, and these agencies are looking for vendors that are extremely nimble.

"The value propositions and innovative business models brought to the table by niche e-government providers are throwing down a gauntlet to the Tier 1 professional services and systems integration houses that have dominated the government market for years," says French Caldwell, research director for Gartner. "However, these traditional government vendors have a tremendous advantage in their expertise at navigating the government procurement and accounting processes."

As noted spending for US e-government hardware, software, and internal and external services will grow from $1.5 billion in 2000 to $6.2 billion in 2005. To get leading-edge value for their money, Gartner analysts said these government agencies will need to look beyond the traditional large professional services companies and systems integrators to companies such as ezgov.com, FreeBalance and GovWorks.com, just to name a few.

The innovations the newer niche providers have introduced into the government IT market represent radical departures from the stolid, conservative marketing approaches traditionally employed when targeting government accounts. These companies capitalize on the potential leverage of "business pull" as opposed to "technology push" on government demand and the ways in which decision makers conceptualize service delivery.