Lining up for e-gov
- By Heather Harreld
- Jun 05, 2000
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 All are outdated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,"
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,
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.