The latest projections on Internet growth are out and they continue to boggle the mind: 177 million users in the United States by 2003 spending over $700 billion online, according to International Data Corp., a research firm based in Framingham, Mass. Worldwide, e-commerce will hit $1.2 trillion by 2003, or 26 times 1998 spending figures.
But e-commerce in government today is only a drop in the bucket compared with what's about to come. That has a number of state officials worried. E-commerce has the ability to transform government for the better, but nobody has sat down and figured out what the key ingredients are in making e-commerce work on an enterprise scale in the public sector.
It's easy to spot the activity in both the gigantic business-to-business market and the smaller, but more hyped, business-to-consumer world of retail cyberspace. What are never mentioned are the government-to-business and government-to-consumer worlds of e-commerce. Despite some speculation to the contrary, e-commerce in government does exist, but it's just not that easy to find.
Every month in Arizona and Massachusetts, tens of thousands of drivers renew their vehicle registrations online. Earlier this year, an untold number of businesses filed tax forms with state revenue agencies over the Internet. Numerous state and local procurement agencies now purchase products from Internet catalogs. In a growing number of communities, library patrons can log online, renew a book, place a new title on reserve or pay a fine.
"Everybody is doing something, but it's all very tactical," said P.K. Agarwal, chief information officer for California's Franchise Tax Board and a member of both the National Electronic Commerce Coordinating Council (NECCC) and the National Association of State Information Resource Executives. "Nobody is looking at the strategic side of the issue. How do we address the policy questions about payments, security, credit-card convenience fees, authentication, infrastructure and so on?"
Agarwal and others believe expectations are rising that e-commerce will allow government to operate inexpensively, but few government officials have a clue as to which issues need to be overcome in order for e-commerce to proceed. And not only do they lack the answers on how to proceed, but time is running short.
The 800-pound gorilla known as Y2K is about to get off the backs of government. "In the private sector, Y2K was just another IT project," commented Steve Kolodney, director of the Center for Digital Government, "but in government, Y2K trumped everything." As Y2K projects conclude, governments are about to turn their eyes to e-commerce in unison. "This is a special moment in government and technology," said Kolodney. "Everybody is starting to look forward at the same time for the easiest project to do, and what they see is digital government."
To help governments develop guiding principles for e-commerce that address their special needs, members of the Center for Digital Government met with NECCC members and hashed out dozens of major discussion points to consider. They range from access and privacy to security and training. "Every state has different influences or circumstances, but some issues are common to all of them," said J.D. Williams, Idaho's state controller and a member of NECCC's executive board. Williams recalled attending a federal meeting on the same subject shortly after NECCC's symposium and hearing similar concerns. "The same issues are being discussed at the federal level. It's just a different scope."
Officials agree that e-commerce in government can be broken down into three broad areas of interest: infrastructure, applications and standards. From these, all other issues follow. The Center has identified nearly 50 issues common to government and has developed strategies, based on some best practices, on how state and local officials can begin to address them (see sidebar). These issues -- and their potential solutions -- will be presented to the entire NECCC membership this month in San Diego.
Agarwal, who has been speaking out on e-commerce since its early days, is highly optimistic that this effort will galvanize government officials into taking the proper course of action. But he remains concerned that state governments need an enterprise approach to e-commerce, but lack the central authority to do so. "Large private-sector organizations have enterprise divisions to lead such efforts," he said. "But in most states, the central organization isn't out there."
Funding could also become a major stumbling block. Digital governments, with enterprise portals that customers can open in order to transact business with just about any agency, aren't cheap. New funding models need to be discussed, according to Williams.
But despite these hurdles, the Idaho official believes e-commerce will prevail in government for the simple reason that it's about to become a political issue. Williams cited a recent C-SPAN interview with Maryland Gov. Parris Glendening and Utah Gov. Michael Leavitt, in which the sole topic was digital government.
According to Williams, it's no surprise governors are talking about e-commerce. The subject is commonplace in the private sector, removing its mystery and making its absence in government more glaring. "Our political leaders have to respond now to e-commerce," he said. "If they don't, it's going to become a campaign issue." *
Tod Newcombe can be reached via e-mail.