But then again, Amazon.com finally parlayed a $5.8 billion market capitalization into a modest $2 million profit. It's only one cent per share, but it was real. However modest, in online retail and government alike, there is something real and proven on which to build.
If, as the old axiom suggests, the first rule of real estate is location, location, location, then the first rule in the next round of digital government is applications, applications, applications.
In contrast to the finite number of state portals -- Eggers notes that 21 of 50 are provided through a single company -- consider the tens of thousands of government forms and processes that could be revolutionized if they and the related work flow were moved to the Internet.
The new opportunities are not at the portal -- or advertising on the portal -- although portals will doubtlessly mature and spawn new features over time. The significant opportunities moving forward are in developing the applications that stand behind the portal or ride on the channel -- and that transform tired processes into online services.
Facing the most serious revenue shortfalls in decades, state and other governments are in the market for ways to meet growing demand for public services while driving costs out of the underlying process. Internet applications -- or Web services in the vernacular of some -- hold the promise to do just that.
Realizing that promise may require facing up to an unpopular old ghost. A fair reading of the Eggers piece is as a cautionary tale that echoes a major theme in the work of Harvard Business School professor Clayton Christensen -- cannibalization. In popularized capsule form, it advises "cannibalizing yourself before somebody else does." The lesson of recent history is that cannibalization by somebody else tends to be done with a blunt instrument where you might have used surgical precision had you done it yourself.
Applying this cannibalization theory to the apparent indirect channel juggernaut puts the players back into the context of their respective core competencies. As media properties, the channel providers have unrivalled reach. They draw eyeballs from places that census takers never thought to look. For their part, governments are the authoritative source of identity and licensure -- and provide an elaborate suite of services to everybody, including those well outside the private sector's target demographics.
Secure gateways notwithstanding, portals are non-exclusive access points to the applications that are behind them. The strategic importance of driving up page views at the portal pales in comparison to the value of driving large volumes of routine traffic to Internet applications, where the cost per unit of service is a fraction of conventional service delivery. The greater the traffic, the better it is for government, channel providers and citizens alike.
It could well be that there is no need to reconcile friends in the portal versus channel debate. Channel providers and government each have something the other one wants, which should allow them to come to the table as relative equals.
In a surgical form of cannibalization, all that would be lost are page views at the portal. Besides, it is uncertain that advertising revenues would add up to much in the current climate.
But beware the blunt instrument. Licensing arrangements with any third party need not cede control over application development or the underlying architecture. But that won't stop new entrants from trying to control these areas just as their (largely) vanquished predecessors did an Internet generation ago. Importantly, it is in the space between applications and architecture where government can develop a preferred technological approach to the policy issues related to data ownership and sharing, authentication and access control, privacy and security. The essential platform agnosticism of Internet protocols tips the scale in government's favor, making it unnecessary to become captive to proprietary technologies or approaches.
As for state portals, they may have been counted out a little too early. Government does not choose its customers -- it serves citizens, regardless of income, affinity group or connection speed. And, for the record, user feedback increasingly indicates they actually liked their online experience with government.
State portals also protect media companies from a chink in their own armor. The @Home failure led to an alarming bit of candor by some cable operators -- they denied responsibility for the secondary impacts of prolonged service outages because @Home was only an entertainment product. In contrast, government officials are acutely aware that they are bringing mission-critical work to the Internet -- and that they are accountable end-to-end. Until their trust is won by would-be channel partners, they'll have their own portals for doing the public's business.
Paul W. Taylor
