The Long and Winding Road to E-Government.

If slow and steady really does win the race, than that's good news for the federal, local and state government, which, collectively, have been moving on the adoption of Internet and related e-strategies at just about a snail's pace--particularly when compared with the rest of the world.

But at least things are moving in the right direction. A GartnerGroup forecast--announced at the research firm's Spring Symposium/ITxpo 2000--says spending for U.S. 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 the biggest bang for their buck, government agencies will have to partner not only with traditional professional services companies and systems integrators, but with new e-government niche players, such as ezgov.com, Free-Balance, and GovWorks.com. These for-profit sites are picking up some of the slack, but continue to run up against archaic infrastructures and bureaucracy-laden agencies.

For a look ahead, CE talked to Gartner research director French Caldwell about the hurdles in the transition to an e-based organization--and what businesses can do to move things along.

What are some of the issues here besides taxes?

For those companies that do direct business with the government, e-government is going to affect the type of business they do and how they do it. Take electronic procurement. A lot of agencies have made some great strides in electronic procurement but that changes the way business compete for government contracts, so there's a very strong interest there for CEOs. There's a need for businesses to be involved in the rules and regulations and to participate in the development of e-government strategies that can support collaboration.

It looks like e-government in general isn't very far along.

Depending where you look--in Canada there have certainly been some clear, measurable objectives--by 2002, 50 percent of government services will be transitioned to e-government, and, by 2004, all services will be transitioned. The U.K. has some similar measures, and I believe Tony Blair has accelerated that to where they'll have 100 percent e-government services by 2005.

What about the U.S.?

Here we have a presidential directive directing agencies to develop e-government strategies, but they're taking a very slow approach. It's going to take the kind of top-down direction and legislative direction that we've seen in other areas. But it's possible for the government to take on a large project like this and be successful--we saw that with Y2K. There was great agency collaboration and great collaboration with the business community and you need to take advantage of those networks, and skills that were developed.

Why is this all moving so slowly?

It takes a lot of money to change. And businesses usually recognize that the change is not free and that you have to spend money to effect a large-scale change like this.

True, but businesses usually spend money on a structural change as an investment, because they believe they can lower costs or increase revenue. Is it possible some people in government aren't convinced this is going to produce results?

Well, you do need strong leadership. The real danger for government is that if it doesn't make the transformation, then a number of services will start to be provided by the private sector. Look at filing your tax returns, where you pay H&R Block $10 to file electronically and you're spending $20 or $30 on the software. That's money you're paying for the service, the convenience and we'll start seeing more services move to the private sector where people are willing to pay for the efficiency they might not be getting from government agencies.

So Y2K might have been perceived as more of a crisis.

But this is a crisis, too. Look at what's going on with the aging government workforce. In the U.S. Federal Government, the average age is 47 and a half years for federal workers and right now 25 percent of federal workers are eligible for retirement. Ten years from now, if current trends continue, half the federal workers will be eligible for retirement. No corporation would tolerate that kind of risk with their workforce. But government is having a tremendous challenge attracting and retaining young, professional talent, so they have no choice but to start looking at e-government strategies.

So government is being adversely affected by the war for talent?

Government is definitely losing the race for talent. And if you're losing all these people in government with years of experience, then at some point you're going to be hiring in a whole block of people who have no experience. You need to solve this problem now.

Should government act more like an e-savvy business then?

Well, no, I think government has its own issues and to say we're going to make government operate like a business--nobody in his right mind would think that that could really work. Tell me what company has its customers making decisions inside the company. What company has U.S senators on the board of directors? There are reasons you don't do that in business, but reasons why you do that in government. So there's a different relationship between government and constituents and businesses and their customers. It's not the same relationship at all. A lot of people have assumed that you can just mimic what you're doing in e-business and it will work for e-government. But it's not going to work. You'll get some short-term success, but in the end people will be dissatisfied.

How should U.S. business be investing in government systems?

Take a look at the recent alliance between American Management Systems and GovWorks.com. AMS is managing the back-end for IT systems for a number of government agencies, and GovWorks, is providing front-end service portals for these agencies. So you're going to see more alliances like that. You may also start to see some of the dot-coms come in with software services and start to be competitive with these old-line government contractors. They have a real disadvantage there, though, because there is a certain skill for working with government. So I see more of an alliance process.

Hurdles to E-Government Success

The success of for-profit, third-party sites offering government services-- such as online ticket payment and license and permit registration--is tied to somewhat archaic local governments. As a result, implementation of E-Government services face these hurdles:

* Local content challenge.

E-Government sites will have to produce and maintain unique content for more than 80,000 U.S. government authorities, which adds up to a content management nightmare.

* Lagging technology prevents real-time transactions.

The new sites won't be able to provide the convenience consumers have come to expect. GovWorks, for example, doesn't connect online to many of the governments it serves--so it can take up to seven days for payment to reach governments. ezgov.com does link to governments, but batches information only once a day. Full integration will take time as E-Government sites are forced to convince individual localities to be part of the integration work.

* Resistance to role changes.

E-Government will be eliminating much of the manual processing upon which many jobs depend. In addition, skilled government workers will be tempted to jump to E-Government startups and their stock options promises. More creative compensation plans will need to be developed to maintain talent.

* Revenue models will be questioned. New sites have moneymaking challenges, including: building enough traffic to warrant ads; data collection; and lack of real-time connections which will make it hard to justify fees.

Source: "E-Government Begins Its Slow Adoption," Forrester Research, 2000.