Government agencies need to come together and streamline services to make online service offerings compelling, according to Deloitte Consulting.
Only "whole-of-government initiatives" will move e-government projects forward according to a Deloitte report, e-Government's Next Generation.
Dr Mike Lisle-Williams, e-government principal, Australia and New Zealand for Deloitte Consulting, said: "The biggest challenge is moving beyond a Web site and portal and streamlining services and the alignment of departments."
"Government has done quite well in dealing with complexity and the provision of information. But it hasn't done so well with complex transactions and the tracking of cases and applications."
Williams said there is an issue at the moment that a lot of government service can not be completed online and consequently there has been a "disappointing" take up of government online services by the community.
"Government has to understand that there is more than one way to access the government. An integrated multi-channel delivery is most important."
Williams said government also needs to understand that the process will not be about saving money. "It is actually more expensive to have an online channel for government as it still has to keep the call centres and other forms of communications. There is no substitution."
The report said government's commitment to the "electronic evolution" means it must transform itself to meet the new demands of customer service in the e-government age.
"The general consensus among experts is that e-business failures were due mainly to unrealistic expectations of the Internet's commercial power and strategies that had no long-term chance of survival. Governments face similar challenges: a sizeable number of delivery channels, complex cost structures, and customer bases already showing diverse preferences for accessing services," the report said.
On looking at the various levels of government within Australia, Williams said the "picture is very uneven".
"E-government is still in the foothills and the mountain is still a way off. The real challenges are ahead and are not focused on technology, but utilising the benefits of technology."