Lining up for e-gov

Bypassed. Ignored. The federal market's redheaded stepchild. All are outdated

euphemisms for the state and local government information technology world.

These days, the vendor community is rushing to tap the multibillion-dollar

state and local market, which is poised to explode as agencies are freed

from Year 2000 budget clamp-downs. Governments are moving to offer the electronic

services constituents are demanding, and industry is fighting for advantageous

positions to benefit from it all.

Vendors can no longer neglect the disjointed state and local government

market in favor of larger federal government solicitations. The market's

massive purchasing power combined with its burgeoning need to provide electronic

services make it much too tempting for e-government and e-commerce vendors.

"After many, many years of almost being ignored by the private sector,

the local government market has come into its own," said Costis Toregas,

president of Public Technology Inc., a nonprofit technology organization

for cities and counties nationwide.

As evidence, traditional technology firms have recently reconfigured

themselves to meet the challenge. There's the partnership between American

Management Systems Inc. and govWorks Inc., designed to tailor govWorks'

government payment portal to interface with financial, human resources,

public safety and other systems from AMS. There's a new electronic marketplace

from Digital Commerce Corp. designed exclusively for state and local government

procurement. And Intelisys Electronic Commerce Inc. and Information Management

Specialists Inc. (Informs) are teaming up to offer small cities and towns

a procurement system and portal-based purchasing.

AMS began to home its focus on the state and local government market in

August 1999, when it added six executives to its state and local government

practice. Four of the new additions came from Massachusetts state government,

where they had worked on the E-Mall multistate Internet purchasing program.

The state and local government market is at a "critical watershed revolution"

as it transitions away from agency-oriented systems to enterprisewide customer-facing

solutions, said Donna Morea, director of e-government solutions for the

AMS State and Local Government Group.

"Citizens are demanding that they interact with government with the

same 24-by-7 access that they would get by interacting with the corporate

sector," Morea said. "Customers are demanding sort of a single front door.

Instead of constituents having to worry about whom they interact with in

government, they simply need to know what they want to do."

While governments are re-engineering legacy systems for Web applications,

government in the next two to three years will begin to invest in what Morea

describes as "e-enterprises," entire agency systems that are Web-enabled

to be "customer facing." This market is largely untapped, she said.

Some firms target the front-end market and others have their eye on

the back-end solutions, but no one has focused on the end-to-end space for

state and local governments, she said. To this end, AMS is creating middleware

to link front-end and back-end systems so agencies will not have to re-engineer

their enterprise to move applications to the Internet.

By partnering with AMS, govWorks will provide the online place where people

can pay tickets, bills or taxes, and look for government jobs, exchange

ideas with elected officials, find information, access government resources

and participate in government auctions. The company is working with 30 governments

to take them live with the payment portal.

Linda Morse, govWorks' public-sector group executive, said the company

is targeting the existing AMS client base to provide Web-enabled front-end

financial systems, human resources systems and others that need to be accessed

for Web transactions and processing. This way, govWorks can develop a front

end tailored to specific AMS systems rather than having to rework the front

end for individual customers, she said.

"This is something that governments have been trying to do for a very

long period of time, but the tools at an affordable price were not available,"

Morse said.

Linking portals to agency back-end systems may be a crucial factor for

some cities or counties considering e-government. Brian Moura, assistant

city manager in San Carlos, Calif., said he doesn't see much value in payment

portals that don't connect back to agency systems.

"A Web site or portal that takes payments without being connected to

the agency's back-end permits, park and recreation, etc., system really

isn't any better than a manual system," Moura said. "That's why the best

solution for e-government applications is to Web-enable the back-end systems

already in place at the agency."

Not all companies jumping on the state and local bandwagon are pushing

Web services. Others are specializing in purchasing systems.

As part of its deal with Intelisys, Informs will integrate the company's

supplier-managed content and Web-based software into its procurement system,

which is already installed in nine states and several counties. The combination

is designed to allow state and local governments to electronically search

and configure products from multiple vendors, get automatic approval and

create purchase orders.

Roger Allen, vice president of Informs, said surviving in the state and

local government market while it was consumed with Year 2000 investments

was difficult. His company installed just one system during the past two


Not so now.

State and local governments spent $547 billion for goods and services

last year, up from $497 billion in 1998, according to the U.S. Commerce

Department's Bureau of Labor Statistics.

But state, local and federal spending for e-government will explode from

$1.5 billion in 2000 to more than $6.2 billion by 2005, according to Gartner

Group Inc. analysts. Those figures include the costs of hardware, software,

internal labor and external service.

About a dozen states have set aside money in their 2001 budgets for

new systems, Allen said. Of those, 75 percent have budgeted for major upgrades

to their enterprises. The rest want to get into e-commerce.

In addition to the loosening of the IT purse strings after the Year

2000 problem, state and local governments are becoming more receptive to

partnering with the private sector for e-commerce initiatives, he said.

"They're finding out the vendor wasn't always in there to get all their

money," he said. "If they're open with us, we can do a lot better at that

tailoring than if they're not."

For example, Colorado plans to launch an Internet portal that could

offer nearly 700 electronic applications. State officials want a private

company to make the upfront investment. The vendor, in return, would receive

revenue from transaction and subscription fees generated by the site, said

Colorado chief information officer Paul Quade. "Basically," he said, "they

would be taking all the risk on the front end."

"These private companies are willing to go an extra mile to move into

some areas where they wouldn't have moved into before," Quade said. "It

gives us a world of opportunity. There are more choices. Most of those business

leaders generally care about government. They want to see government succeed.

At the same time, there's business for them."

Despite the increasingly close relationship between the sectors, the

public sector must start providing electronic services or else risk finding

themselves competing with the private sector, PTI's Toregas said.

"I see it as a wake-up call," he said. "I see this not as a for-profit

drive but as a social imperative to use the Internet for better government.

If governments don't step to the plate, they're going to be left behind.

The face of local government will shift away from City Hall to some screen,

some portal."

To help hammer out potential policy and technology issues related to

e-government initiatives with vendors, in February, PTI agreed to work with

National Information Consortium Inc., a government services provider. Toregas

said PTI endorsed NIC because the organization gives the public-policy reins

of an Internet portal to the government, and they bring front-end capital

to the partnership while sharing revenue.

To ensure that their presence is recognized in partnerships with the

private sector, governments must resolve these issues with vendors, Toregas

said. "If [citizens] don't go the city, they begin to forget they are members

of the community," he said. "In a networked environment, you are only a

click away from somebody else. We want to be more than just a place to pay

tickets. [Governments] have to fight for the allegiance of their citizens."

Oracle Corp. is yet another company that has jumped into the feeding

frenzy. Jose Garcia, the company's area vice president for state and local

government, said some officials are tentative about Internet applications

after making major investments in Year 2000 remediation efforts.

But as they begin to feel more comfortable with the Internet, and realize

it is not just a fad, Garcia said he thinks many governments will try some

small projects, then use those to springboard to larger applications.

For example, the Chicago Parks Department, which operates mostly in

a mainframe-oriented environment, hired Oracle Corp. to develop an application

to allow citizens to sign up for activities online.

"In less than 30 days, we developed an online scheduling system for them,"

Garcia said. "[Citizens] can actually pay for the activities online. [City

officials] start to see a trend by park, [which tells them] what kind of

resources they're going to need, how many people they're going to need to


To establish a stronghold in the market, Oracle is emphasizing end-to-end

solutions, Garcia said.

"We're not doing a hodgepodge of stuff," he said. "Why not get a total,

complete solution that's simple to implement, that provides everything you

need? Best of breed — it's over."

— Harreld is a freelance writer based in Cary, N.C.


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