The Invisible State

Within five years, many government services may be delivered to citizens through indirect channels.

by / April 16, 2002
"Eventually, the vast majority of public services delivered electronically won't be accessed on government Web pages, they'll be provided through indirect channels," predicts Mauro Regio, Microsoft's global industry manager for the public sector, with the air of confidence that can only come from working for a company sitting on $30 billion in cash. "Governments just don't know it yet."

Regio, an Italian national with a heavy accent, an even heavier IQ and a Ph.D. in computer science, is Microsoft's strategic thinker charged with figuring out where the government IT market will be in five to 10 years and positioning planet Earth's largest software octopus accordingly. Like all the other senior executives at this egalitarian company, Regio's office on Microsoft's sprawling corporate campus in Redmond, Wash., is tiny (12 feet by 10 feet) and nondescript -- his principal decoration being a large whiteboard that he jumps up from his desk to write on at least every 15 minutes throughout the course of our three interviews.

I began my conversation with Regio by asking why, despite the hundreds of millions of dollars governments have spent Web-enabling their services, only a small percentage of citizens actually conduct their business with the public sector online. "Citizens are on the Net, but not necessarily on government portals," explained Regio. "They're somewhere else; they're on portals like MSN, AOL and Yahoo and commercial and entertainment sites. That's where they spend 95 percent of their time online."

The most obvious way to rectify the failure of the public sector's "If-we-build-it, they-will-come" online strategy is advertising. State, local and federal agencies theoretically could spend millions, or billions, advertising on TV, radio, newspapers and the Internet in order to drive more traffic, and thus transactions, to their Web sites. But marketing budgets anywhere near the reach of the major commercial portals simply aren't going to happen at a time when tax revenues are in a scary free fall that threatens to leave crucial education and public safety initiatives under funded.

What To Do?
Instead of trying to figure out how to get customers of commercial sites onto government sites, asks Regio, why not try the opposite? "Governments should be bringing their services to where their customers are, instead of waiting for [customers] to come to them," Regio said, and they can accomplish this by extending to the Net the service networks they've already established with banks, retailers, sporting goods stores, car dealers and other private partners in the bricks-and-mortar world. "You can buy a fishing license in a sporting goods store," he said. "A car dealership will handle your motor vehicle registration for you when you buy a car. Why not apply the same concept to e-government services?"

Banks and brokerage firms could offer online tax filing. REI.com could make your state park camping reservations and procure your fishing license even as you're buying your camping and fishing gear on their site. Healtheon/WebMD could provide online Medicare and Medicaid benefits registration. Travel Web sites could offer real-time passport renewal. Trade associations could provide online business-license renewal, while business portals specializing in trade, insurance and construction could offer a host of online government services to their members.

With e-government service networks, private service providers would bundle existing public-sector transactions into their services and transactions, leaving government portals as just one channel -- instead of the channel -- for doing these transactions. "Plenty of media companies that have tried to attract people to their portals have failed miserably," said Forrester Research analyst Jeremy Sharrard. "It's a bit of a stretch to think that government can drive enough traffic to their sites to get high take-up rates. But there are already lots of successful commercial portals driving lots of traffic. There's no reason why governments can't link in with them."

The Gartner Group goes even further in a provocatively titled report, "Why Today's Government Portals are Irrelevant," predicting that public-sector portals "may soon become obsolete." According to Gartner, by 2006 fewer than 20 percent of G2C Web transactions will take place through government-managed portals. The rest will be accessed "through different channels, and managed by external service providers or partners in private or nonprofit sectors..." the report said.

First Adopters
Microsoft has plenty of company in pushing the idea of e-government service networks. "Governments are in a portal frenzy right now," said James Vaughn, who runs AOL's Government Guide, which, at 20 million hits a month, is the most popular site on the Web for government information. "But they need to understand that a portal should be a means to an end, not an end in and of itself. Should it be government's primary job to generate as many page views as possible, or simply to make sure citizens can access government services online?"

Vaughn argues the latter. AOL wants to offer its 30-million-plus members the ability to conduct government transactions on AOL's Government Guide. The company has inked a deal with NIC, the Overland, Kan.-based company that operates 21 state and local portals, which will let residents in these states pay their property taxes and renew their vehicle registrations on AOL. "We see ourselves as the intermediary between government and the outside business world," explained Harry Herington, executive vice president of Portal Operations at NIC. Herington said NIC has relied heavily on professional associations to increase the reach of their e-government services since they first built an electronic gateway for Kansas in 1991. The company built custom applications for the Kansas Bankers Association, letting bankers get secured liens on the banker's site and for the Kansas Bar Association so lawyers could do corporation searches and file court cases on the Bar Association site. "Many lawyers were already going to the Bar Association site every day; it was a trusted entity," said Herington. "Since they were already going through that front door, by locating government applications there, the Bar association could better serve its members, and the state of Kansas could move more traffic for those services online."

The NIC/AOL deal demonstrates one of the biggest advantages of offering multiple channels for government services: higher take-up rates for online services. The AOL deal, says Herington, will let NIC reach far more customers than they ever could on their own. This in turn translates into direct cost savings for NIC's government partners, since each customer that accesses services online is one less person crowding into a government office or phoning a government call center.

Government Within a Store
From the consumer standpoint, integrating public-sector transactions into broader life events should prove a great convenience boon. Sportsmen will obtain licenses in the course of buying camping gear; realtors will have their real estate licenses automatically renewed when they renew their membership in their local realtor's association; small businesses will handle government licensing and tax-filing requirements on small business portals.

A fair analogy in the physical world is the current process of registering a new car with the state. "Today, I can't buy a car without paying a registration fee and registering it with the state," said Microsoft's Regio. "But I'm not even aware of the registration process. It's all designed into the act of buying a new car; the car dealer handles it all for me."

Massachusetts-based Imagitas, which produces the Movers Guide packets for the U.S. Postal Service and operates its MoversGuide.com site, is trying to replicate this new-car registration model for a host of online public services, starting with USPS' "change-of-address" form. Like AOL and Microsoft, Imagitas believes current e-government services often fail to achieve a "fulfilling customer experience" because they're separated from private-sector offerings. "Right now when governments move online they're just succeeding in speeding up citizen frustration," said Imagitas Vice President Nick Carter. "You get the electronic version of an exasperating experience."

With a glint in his eyes and a full white beard, the 54-year old Carter could win an Earnest Hemingway look-a-like contest. Sporting jeans, a polo shirt and Teva sandals, Carter is considerably more dressed up than other Imagitas employees today, most of whom are in shorts and Birkenstocks. Imagitas, if you haven't guessed it already, marches to its own drummer. The company's 60,000 square foot building exudes dot-com cool -- but with a public-sector twist. The building's floor plan is a street map of Washington, D.C. The legal, finance and "human potential" departments are in "Georgetown," creative services and research are in "The Mall," sales and tech support are at "Central Intelligence," the exercise room is in the "West Wing," and so on. "The imagery symbolizes the public part of our lives matched with private enterprise, and how the two can thrive together," explained Carter. "We wanted to position ourselves at the intersection of the two and be totally trusted by government."

Imagitas developed, built and operates the Movers Guide.com site, the official USPS site for change of address -- and it doesn't cost USPS a dime; Imagitas is making its investment back through payments from private firms and utility companies hocking everything from new furniture and moving vans to Internet service on the site. In truth, MoversGuide.com isn't really a government site at all; it's more like a post office within a virtual department store that caters to people who are moving. Only a couple of the over two-dozen transactions available on MoversGuide.com have even the faintest thing to do with the Postal Service, or for that matter, anything to do with government at all. "We take a look at the valuable offerings from quality advertisers that are relevant to the specific life event of the consumer: what they want at that specific time," Carter said.

In exchange for getting the site -- and the change-of-address application for free -- USPS gave Imagitas exclusive rights to host the official USPS online change of address application. AOL, MSN, Homestore.com and other commercial sites would eventually also like the chance to offer the change-of-address transaction, which they see as an ideal e-government application to package with their services. As e-government service networks gain in popularity, exclusive relationships like that between Imagitas and the Postal Service will probably need to be re-examined, as these annoying, costly public-sector tasks come to seem more and more attractive to a new generation of online powerhouses and entrepreneurs.

The Brits Are Coming
In the United States, companies like AOL, Microsoft and NIC are currently the major, almost sole, driver of e-government service networks; frankly, at this point it's hard even to get a decent read on how seriously public-sector IT leaders take the idea. Interviews with a dozen current and former state and local CIO's produced across-the-board reactions. Some see it as the best way to increase take-up rates for online services. "Our driver here is helping citizens conduct business quicker, faster and easier," said Arun Baheti, director of e-government for California. "Making the transaction less of a burden means I have a customer who isn't upset with me."

"Government Web Services are a good thing," said Mark Forman, an associate administrator at the Office of Management and Budget and President Bush's point man on e-government. "In the future, I think we'll see government services hosted by channel partners like AOL and Yahoo and also by knowledge management and work group portals put together by communities of practice."

But others in government circles voice strong objections to the concept, objections revolving mostly around technical issues -- data ownership, privacy, payment mechanisms, authentication and security -- that will have to be resolved before we experience a world in which e-government applications are routinely offered on commercial and association sites.

On a more philosophical level, some public authorities believe that soon most citizens' awareness of government will come not from their experiences in public buildings or at public hearings but from what they experience online. Start from this view, they say, and the potential online traffic reductions that Web services could produce aren't an efficiency and convenience boon, but a major problem because it could become much harder for public agencies to get important and accurate information out to the public and engage citizens in public policy without the prod of having to go to a government site to complete a government transaction.

Although the argument has a certain amount of merit, it ultimately falls short. For one thing, some people will always choose to come to government Web sites to complete government transactions believing them to be more secure. Also, governments can offer other compelling reasons for citizens to come to their Web sites, such as e-democracy tools that allow for greater citizen engagement. Lastly, the Internet has always been about distributed data, and e-government is likely to prove no exception to that general rule, meaning the ubiquity of certain government e-services could result in even greater popularity for certain government sites.

Baheti, for his part, isn't overly concerned about whether citizens access his services from someone else's front door. "Nothing would make me happier than giving people another hundred ways to do their business with government," he said.

Baheti's view is shared by Andrew Pinder, the United Kingdom's charismatic "e-Envoy" who heads up e-government and e-commerce policy, reporting directly to Prime Minister Tony Blair. Under Pinder's leadership, the UK is perhaps the only major government to formulate an explicit and aggressive strategy for syndicating its e-government services to the private sector. "We're keen on using the private sector to bundle our services with their services," said Pinder, who believes this is the only way they'll ever be able to reach all their customers on the Web. Online tax filing, for example, is currently available in the UK, but not well used. To speed adoption, Pinder wants banks and other financial institutions to package online tax filing into their services. "We'll make the business rules available to them," said Pinder. "The online form they develop doesn't even have to look like ours."

Pinder believes the private sector is better able to reach many of government's disparate customer groups in a way befitting their unique characteristics and interests. "Take a customer group like students," he explains. "We ought to be dealing with them using a different sort of language than the stiff and bureaucratic way we tend to talk to citizens. Government is not very good about that, so in this, and other areas, it makes sense to use intermediaries."

Hard Work Ahead
As the viability of Web services spreads, governments will need to shift their attention from endlessly reconfiguring their portals to more fundamental IT architectural issues. Of the technical hurdles that lie before Web services, the most difficult involve privacy and security, as government and third party groups work to simultaneously ensure that their citizen customers retain their privacy - so that nobody gets inappropriate knowledge of what any given person is doing on a government-related site - and that their identities are verifiable, to forestall benefits fraud and other forms of crime.

To solve this issue, Britain, working with Microsoft, has built the UK Government Gateway, an XML-based security and authentication middle layer that provides a common electronic infrastructure for agencies and a single user credential for all UK e-government services. Pinder sees a scenario in which a bank offering online tax filing would also provide a digital certificate from an authorized provider to its client. The digital certificate would be sent from the bank to the government agency as a component of the online tax filing transaction, providing the necessary proof of identity.

Another tricky hurdle involves customer relationship management (CRM). Suppose I recently got my passport renewed through a travel site. Now, it's Friday, my flight is Tuesday and the new passport hasn't arrived yet. Who do I contact? The U.S. Passport Office? The travel site? The answer, says Regio, is fairly simple: "You go to the entity which last sent you an electronic confirmation that the transaction was received or completed." In most cases this will be the relevant government agency, which should be sending two e-mails to the customer for each transaction: one when the transaction request is received, the other when the transaction is completed.

Ironing out all these tricky CRM issues -- not to mention those revolving around standards, protocols, service level agreements, data ownership and security -- won't happen overnight. As the UK is already finding out, at times it will be messy and frustrating. But it will happen, not because governments necessarily care passionately about letting commercial sites host public-sector applications, but because the work that goes into building the architecture of e-government service networks will also enable seamless, intergovernmental electronic service delivery to become a reality.

The same technology that lets private partners bundle e-government applications into their other electronic services will let a county government integrate a state business licensing application with its online county permitting system. Entrepreneurial organizations will be able to access e-government services through a Web directory and, using XML, pull these into their service offerings. Instead of having to form countless intergovernmental task forces, secure funding, fight turf battles and all the rest of the things that previously have made seamless government so utterly unsuccessful, integrating services across multiple levels of government will be accomplished through open technology standards and straightforward business agreements. "As long as I have a pipeline to government agency applications I can integrate services from different levels of government, put a user-friendly front face on them and package them with other e-services for our customers," said AOL's Vaughn.

When that happens, a lot of lines are going to start getting pretty blurry. From a citizen, a customer and a business perspective, e-government service networks will mostly be a good thing; a very good thing. Citizens and businesses will have more time to do what they want to do as interactions with government become less frustrating and less time consuming. "Government will be much less visible in the future," said the UK's Pinder. "At the moment, people regard government as a nuisance. People don't want to have government, they want services, so let's take government out of their face."
William D. Eggers Contributing Writer