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High Payoff in Electronic Government
Average reader rating: 9.5  
by Intergovernmental Advisory Board 07 the future of Countries & Democracies

May 2003

A. Executive Summary
The Intergovernmental Advisory Board (IAB) undertook this study to identify prime examples of "high-payoff" electronic government (E-Gov) programs to share the secrets of their successes, and to determine how they measure the results achieved from investments made.

Defining High-Payoff E-Gov Programs
As a new and powerful concept, E-Gov promises many benefits to its government sponsors. It can reduce costs of government operations; open new sources of revenue; attract businesses, tourists and new residents to the area; make it easy for citizens to do business with the government; and reinforce the relationship between the citizen and democratic government. As with any government program, the value of E-Gov is in the benefits it delivers to the public and the new avenues it opens to create value. But E-Gov can be costly, and its value to the public that supports it must be shown.

We found E-Gov programs offer many types of benefits to a government. They can be distilled into five categories. Any successful E-Gov program should address at least one of these areas, but the most successful will probably deliver benefits in multiple ways.

1. Financial: Reduced costs of government operations/enhanced revenue collection
2. Economic development
3. Reduced redundancy: Consolidating and integrating government systems
4. Fostering democratic principles
5. Improved service to citizens and other constituencies.

Financial: Reduced Costs of Government Operations/Enhanced Revenue Collections. The low-hanging fruit of electronic government are the programs that automate routine government processes and eliminate paperwork, printing and mailing costs, check processing, document storage and retrieval, and the need for personnel to interact with citizens in person or on the telephone. This type of savings is available to every jurisdiction that implements an E-Gov program. E-Gov eliminates the need for staff intervention in online programs that provide government forms, and those that permit citizens to obtain and renew licenses and registrations, apply for government grants and benefits, and get information over the Internet.

E-Gov programs make it easier for the public to pay permits, licenses and registration fees, fines, and taxes owed to the government. These programs eliminate the need for check processing, time delays in handling checks, receipts and other paperwork. Many jurisdictions employ contractors to create and maintain the E-Gov programs used to process these payments-some of which incur no cost to the government. The use of these programs is increasing over time, although there are some indications that citizens will resist making payments online if the "convenience fee" assessed to pay for online processing is more than a nominal $1 or $2.

Economic Development. E-Gov programs designed to promote economic development are a boon to businesses, both small and large, thereby increasing their contribution to the local economy. One of the earliest and most popular types of E-Gov program reduces the amount of regulatory paperwork of doing business in a community by permitting online document searches and filings, tax and wage reporting, employee background checks, workers' compensation claims, and one-stop regulatory submissions. Other E-Gov programs foster economic development by promoting the beauty, benefits, historic and recreational attractions of the area to potential visitors, businesses and residents.

Reduced Redundancy: Consolidating and integrating government systems. E-Gov programs that integrate systems and databases and provide one-stop sources of government information enable government to operate more responsively and more efficiently. Governments that have already achieved the "low hanging fruit" of automation recognize the payoff that will come with the next big step toward integration and transformation of government services. National E-Gov strategies recognize the benefits of achieving economies of scale and reducing the number of duplicative systems, stressing the benefits of implementing modular applications ("build it once, use it often") and a centralized infrastructure to reduce the national investment in IT. Other benefits of consolidating and integrating E-Gov systems include the ability to provide high quality, multi-channel, user-centric services to citizens and to ensure the security of E-Gov systems.

Fostering Democratic Principles. The free flow of information permitted by the Internet facilitates transparency and accountability in government. It also increases the accessibility of government at all levels. Developing countries, especially, value E-Gov for making government more transparent and more democratic, and for encouraging citizen education and participation.

Improved Service to Citizens and Other Constituencies. Service to citizens is the primary purpose for E-Gov programs in most countries. National and state portals make government information readily available and online services accessible. Benefits delivered by these programs are defined in terms of convenience, time savings, quality and completeness of information. In past years, the focus on delivering benefits to citizens in general or specific constituencies (e.g., vacation planners, students, seniors) has been so intense that costs were often not considered.

Measuring E-Gov Programs
Regardless of the type of benefits, the best way to measure the performance of E-Gov programs is relative to the objectives of the program itself and the public agency that sponsors it. The number of ways to measure a government program is growing daily. One or more of these programs are used in most governments including national, state, county, municipal, and tribal governments. We reviewed a wide range of processes developed to evaluate E-Gov programs, including:
a) Cost-benefit analysis, net-present-value and internal rate of return
b) Return on Investment
c) Customer Satisfaction
d) Take-up Rates
e) Benchmarking.

As the need for performance measurement and accountability has increased, many jurisdictions are performing more complex and multifaceted analyses to determine the relative value of different E-Gov programs. The United States government requires the development of convincing business cases for large E-Gov programs, and for all crosscutting E-Gov initiatives. These business cases require extensive analysis of the costs of each alternative (including "do nothing") for satisfying a business need weighed against the total benefits. Costs, benefits and risks of each alternative are evaluated in the context of the current situation. Potential funding sources, sponsors, partnerships, and synergies are considered. Market demand and promotions are also considered in developing a business case.

Many jurisdictions use Portfolio Analysis to assess the risk inherent in all of their E-Gov programs viewed as a whole. This kind of analysis permits the funding of a high-cost program as long as other E-Gov programs that deliver high benefits relative to their costs offset it. It is measured by quantifying the aggregate risk relative to expected returns of an entire portfolio.

Risk Management is a part of all comprehensive analyses. A risk analysis considers the impact and probability that specific factors will impede the organization's ability to realize the benefits of an E-Gov program. These include the risks of cost overruns, of technical obsolescence, or of becoming misaligned with political priorities. They also include the risks that program managers will not leverage the technology or that the target audience will reject a program. Risks of security and privacy violations must also be assessed.

The balanced scorecard is a conceptual framework for translating an organization's strategic objectives into a set of performance indicators distributed among four perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth. First proposed in a Harvard Business Review article in 1993, it has become a popular measurement methodology in governments. A scorecard is only appropriate for organizations with a well-defined strategy with which the performance indicators can be aligned.

These assessment methodologies have been used around the world, to a greater or lesser extent in different jurisdictions. Many E-Gov pioneers agree with the assertion made by Public Sector CXO magazine that "E-Government, like politics, is 'local.'" There is no uniform "cookie cutter" approach to determining the E-Gov program that will have the highest payoff for a jurisdiction. Accordingly, there is no single measurement method that will apply as well for one government or agency as for another.

Any definition of "high payoff" represents value for taxpayers, through cost savings, economic development, synergies achieved through integration of government processes, strengthened democratic processes, and service to citizens and other constituent groups. Many tools can be used to measure the performance of these programs, with different tools for different values. In each case, the strategic decision-making process should determine the appropriate metrics.

In these times of tight budgets, measuring E-Gov benefits is a growing priority in governments, although the state of the art appears to be in a fairly primitive stage. Investments in E-Government, like other government investments, traditionally have not been driven solely, or even generally, by the prospects for financial return; rather, these programs have been created to deliver better services to citizen/business/interest group constituencies. Each case requires a tailored measurement approach that considers the quality, speed and comprehensiveness of services to citizens, economic efficiencies, alignment with government's strategic/political priorities, and the risks of changing technologies, potential cost overruns and changing needs.

To maximize the benefits from E-Gov technology and increase the use of E-Gov programs, governments must market them broadly. Not all E-Gov programs are welcomed enthusiastically, despite the benefits they promise to deliver, and gaining full acceptance for E-Gov will require marketing, information and education campaigns. Citizens must be made aware that they can interact with their government online and that it is advantageous to do so. E-Gov managers must continuously assess the citizens' level of acceptance through preference polling, customer satisfaction surveys and online trend monitoring.

The important economic value of E-Gov will be the transformational value of re-engineering crosscutting government processes, and integrating IT investments into business processes. There are formidable organizational impediments to this significant change-management objective, however, and internal factors are more important than competition as indicators of transformational readiness.

The full report can be downloaded at:
High Payoff in Electronic Government (PDF,491 KB).

Please also take a look at the:
Articles, Links, the Club of Amsterdam Forum
and the Club of Amsterdam event about 'Re-Inventing Democracies for the Future'

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