Dot-Coms Pitch Public Service

As a buzzword, "e-government" has been bandied about as a solution to many of government's most pressing problems. But for all of its possibilities, the use of the Internet as a path for government-to- citizen services has not been emphasized as much as one might expect by federal agencies.

"For a number of reasons, the federal government has really been focusing its time and money first on internal processes and then business-to-government connections," said Larry Bradley, federal e-business solutions manager for IBM Corp. "Now I think they're finally starting to really look at providing more [World Wide] Web-based government-to-citizen transactions."

With that opportunity finally opening up, it's not surprising that the private sector stands ready to offer help. Several dot-com companies, all specializing in facilitating direct government-to-citizen services, have arrived on the scene.

Those firms, such as ezgov.com Inc., GovConnect Inc., govWorks Inc., NIC Commerce and Carta Inc. have developed install-and-go software programs designed specifically for public-sector transactions. They can also lift a lot of the burden on agencies by hosting applications and providing integration and re-engineering aid.

"There are a lot of liabilities and difficulties in doing transactions over the Web, and I think there really is a lot of appeal to having a middle tier to take on that responsibility," said Rich Kellett, director of the Emerging IT Policies Division of the General Services Administration's Office of Information Technology.

During the past couple of years, the dot-coms have cut their teeth on state and local projects. For example, GovConnect (formerly known as Renaissance Government Solutions) developed solutions for 34 states that allow citizens to pay state taxes and child support and apply for unemployment benefits online.

Ezgov.com offers its state and local customers packaged solutions such as ezProperty, which allows citizens to review property records and pay property taxes online using a credit card or bank draft. It also offers ezTicket, which collects penalties for parking and speeding tickets. Link2Gov applications let citizens renew driver's licenses and tag registrations or update professional banking and real estate licenses online.

To crack the federal market, companies recently started to team up with IT firms already established in the government market. Ezgov.com, for example, recently partnered with IBM; GovWorks has an agreement with American Management Systems Inc.; and Carta Inc. is working with Microsoft Corp. The reasoning?

Federal e-government applications are much more complex and require more integration and scalability than the relatively simple tag renewal and ticket payment systems used by state and local governments.

"Federal agencies oftentimes have pretty good or very good information and content presentation activities already under way online," said Kaleil Isaza Tuzman, chairman and chief executive officer of GovWorks. "Our model is to be a kind of an 'Intel inside' of electronic government, to be the application service provider on the back-end that's making the transaction more effective and buttressing the information presentation component. So really, it's less front-end Web site development and more of the engine inside that makes their existing Web site more powerful."

Indeed, the promise of more effectiveness for less money and effort is taking hold in the federal government, with several agencies exploring the option of hiring a third party to develop and host e-government applications.

The U.S. Federal Election Commission, for example, asked NIC Commerce to help it with an application that enables citizens to search for information about the source and amount of individual campaign contributions. And the U.S. Census Bureau will begin to research potential partners to help it put reams of Census 2000 data online for citizen queries and perusal.

"The truth is, we have huge requirements to get this data out to the public, and we just don't have enough time, hardware and expertise to do it," said Enrique Gomez, program manager for the Census Bureau's Data Analysis and Dissemination System. "By going to an outside source and partnering with them, we're able to deliver our data to the public in the most cost-effective way and reach more people in the same amount of time."

There are plenty of tangible benefits for federal agencies that partner with those specialized firms, not the least of which is the ability to leverage existing resources and reap enough efficiencies to make e-government financially rewarding. Agencies can redirect personnel and budgets to other important tasks. With outside help, agencies can get up and running much faster; some firms estimate that even with complex integration to back-end systems and databases, they can bring a site online in a matter of months.

Having a dedicated provider handle the technical work can provide other advantages, too. "The biggest benefit is that federal agencies get the opportunity to scale," said Christopher Baum, vice president of electronic government for Gartner Group Inc., an IT research firm. "If you've got someone who's doing the same type of service for other agencies, they can afford to build the redundant systems, they can afford to set up the secure lines, they can afford the more powerful servers. You can get four or five times the speed and power while spending a lot less money than you would trying to do it on your own."

Indeed, the pricing structure is a major benefit of using a third-party vendor because there are plenty of options. Agencies strapped for capital can spread the cost of the application development and hosting on a per-transaction basis and either absorb the cost themselves or tack on an extra fee to citizens for the convenience of an online service.

Some companies charge an initial upfront fee for development and then charge by transaction for hosting and processing the application. Carta, which has taken a stand against charging citizens, counts the transactions and charges the fees back to the government at the end of the month. And NIC Commerce actually builds portals and applications for free and then sets up a revenue-sharing agreement with their customers based on long-term transaction volumes.

Agencies also have a great deal of flexibility in choosing how much help to get from outside sources. Although many firms bill themselves as application service providers, most will perform a variety of tasks, which range from simply selling their packaged solutions to providing staff members to work onsite helping IT departments establish e-government sites or actually run the application on the government server.

Challenges Galore

But for all of the benefits to be gained by taking on an e-government partner, federal agencies are justified in their caution. Simple online citizen service forms or financial transactions can be done relatively easily. But more complex applications require significant integration with back-end systems and redesigned business processes. Before such an undertaking, agencies should prepare their infrastructures and employees. Agencies also need to contemplate the sudden increase in traffic that will flow into their networks.

"One thing that's critical is to make sure that you aren't just replacing current procedures with an electronic version of that same procedure," said Jeff Ficke, senior vice president of GovConnect. "You want to not only make the service more convenient, but you want to make it more effective as well."

As with any major IT undertaking, agencies also need to thoroughly investigate their partners and make sure that they can deliver what they promise, especially in the areas of security and privacy.

"Protecting citizen privacy is one of the federal government's biggest priorities," said Rich Phillips, director of communications for NIC Commerce.

"There is an enormous difference between e-government and e-business, and that is that e-government requires a certain level of the public trust. So if they're going to partner with the private sector, agencies absolutely have to find a partner that understands that government is different and that it requires a much higher standard of privacy and control."

One way to re-assure agency heads and ensure buy-in is to initially choose a simple application that requires no complex integration and uses only publicly accessible data.

"It's important to get a quick win for the least amount of money to demonstrate the value of a packaged and hosted application," said Jeff Smith, vice president of sales and marketing for Carta. "Then once you've gotten some confidence in your partner and the process, you can build from there."

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Benefits and challenges

Benefits of using dot-com firms:

* With third-party vendors that specialize in e-government, agencies reap the benefits of lessons learned from previous public-sector implementations.

* The time to market is extremely quick. Many dot-com firms can get an e-government application up and running within weeks.

* Resource-strapped agencies gain cost-effective access to a wealth of high-tech knowledge and personnel.

* Depending on the pricing model chosen, agencies generally will see big savings in capital and operational expenditures.

* Third-party providers can keep the site staffed with around-the-clock assistance, which, combined with the site's convenience and state-of-the-art Web technology, helps give citizens a more positive perception of government.

Challenges:

* Many e-government firms are less than three years old. In choosing a vendor, an agency must investigate the stability and financial viability of its preferred partner.

* Agencies will have to contend with a perceived loss of control among their own administrative and information technology staff.

* To prepare the legacy infrastructure for more complex applications, business process re-engineering and back-end integration are required.

* Security and privacy concerns must be addressed. Although dot-coms contend that their systems use the latest and greatest technology to guard against security or privacy breaches, the service is still too young to prove infallible.

* If things go wrong, the public will blame the agency -- not the company.

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Advice from an early adopter

Because there aren't many examples of federal online services geared toward citizens, many agencies are looking to state and local efforts for inspiration and guidance.

One good example is in North Carolina. The Davidson County Tax Office has long prided itself on customer service, even going so far as to keep its doors open to the public 11 hours a day, 5 days a week. "We're open longer than any tax office I know," said tax administrator Joe Silver.

This summer, the office began offering the county's 142,000 residents the option of paying their real estate taxes and renewing their driver's licenses via the World Wide Web. The change has already helped in at least one case.

"This guy who owns a lake house here actually lives in Hiroshima, Japan," Silver explained. "Last year, with mail delays and what not, his payment came in late, and he was charged a penalty. This year, he paid via the Web, and by doing so, he got to take advantage of our discount that we offer for early payment of taxes. Not surprisingly, he was ecstatic."

Davidson County, which is using the ezProperty and ezVehicle applications offered by ezgov.com Inc., is just one of hundreds of local and state government agencies discovering the benefits of partnering with dot-com companies that specializie in e-government services. And although their government-to-citizen applications are simpler in scope than those anticipated for the federal government, their experiences offer plenty of instruction for federal agencies contemplating hiring a third-party government-to-citizen provider.

Among the lessons learned:

* Start simple. Break out of the gate with a non-mission-critical, simple, fail-safe application to help you get your e-government bearings and the lowdown on your new partner.

* Do your homework. At last count, close to 100 companies were flooding the e-government market, and many of them, though well-funded, have little true business experience. Do plenty of research before choosing a partner. The worst-case scenario would be to have a firm take on your data and processes and then fold its tents and file for bankruptcy.

* Think access. Although the ability to access government services online is critical, don't forget about those citizens without computers. Many e-government firms also offer integrated voice response systems along with the Internet package, so if your goal is to maximize customer service, seek out this option.

* Don't forget security. Don't just take a company's word on data safety; test the system. One county in Ohio actually had its IT staff try to break into third-party provider Web sites. Many sites failed the test. Also, keep a sense of control by replicating your data beforehand -- just in case.

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The perfect dot-gov service

Not all types of citizen/government transactions are well-suited for an online environment. The best applications, say industry players, are those that are:

* Fast - If the application includes a form that takes more than a couple of minutes to fill out, you run the risk of losing dial-up connections and the attention and patience of users.

* Repetitive - Any transaction performed more than once a year, such as monthly water bills or, in the federal arena, quarterly estimated tax payments.

* Prone to causing citizen frustration - Simple financial or information transactions that require citizens to go to an office and stand in line. At the state level, license renewals fit the bill; for federal agencies, a good candidate would be filling out a passport application.

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