So often overshadowed by its large neighbor to the south, Canada has learned how to do things its own way, without a lot of fanfare.

Take electronic government. For three years in a row, Canada ranked No. 1 out of 22 countries in a global survey, which is startling news to many. Canada achieved this success not by showcasing Web portals or high-profile applications, but by building trust among its citizens.

Canada Post, the Canadian postal system, created the world's first electronic post office, and is part of a consortium of vendors and service providers who are building the Canadian government's technology infrastructure, called Secure Channel, to allow citizens to access government services securely over the Internet.

"We realized a long time ago that people might not like us, but they trust us," said Dean Pope, general manager of electronic/Internet services and products for Canada Post. "What we have been working off as a strategy is building on that trust."

Canada Post, said Pope, has developed an electronic postmarking service. Much like the postmark on a letter provides an origin, date and time stamp, "Our role is to validate the transactions that took place and put our stamp to prove it," said Pope.

Canada, a nation of about 31 million people, is divided into 10 provinces and three territories. It is the only country in an Accenture E-Government Leadership survey to have reached what Accenture calls the service transformation stage -- using a customer relationship management (CRM) approach to deliver transactional e-services citizens want, and integrating those services seamlessly across many departments and agencies.

The federal government committed approximately $660 million to the initiative. Most of the 130 e-services slated for completion by 2005 are up and running, although many are still being fine-tuned and developed into more sophisticated offerings. According to the June 2003 Government On-Line Annual Report, the available e-government services get their share of use. In 2002, more than 400,000 Canadians applied for employment insurance online and 9 million (43 percent) filed their tax returns electronically.

"What most impressed us about Canada is the amount of collaboration and discussion that has gone on, and not just at the federal level," said Graeme Gordon, a partner with Accenture. "It really is another factor that differentiates it. Canada understands this is about more than simply the Internet, it's about service transformation and really focusing on customer service."

While the impetus for providing e-services comes largely from a citizenry that has become accustomed to conducting much of its daily business online -- Canadians are highly enthusiastic about online banking, for example -- it also is driven by the goal to improve delivery of government services overall and achieve efficiencies, he said.

"E-government is a lightning rod for service transformation," said Gordon. "Government is under pressure to continue improving, yet budgets aren't increasing, so they're having to learn how to do things more effectively."

Doing things more efficiently means applying some private-sector practices -- particularly CRM -- that have helped large enterprises improve their customer service. Banks, for example, routinely use CRM to understand which customers make them the most money and which cost the most to service.

While governments such as Canada's have embraced the CRM theory -- at least the better service part -- they're reticent to wholeheartedly apply a private-sector practice to public-sector organizations. "Governments are afraid when you start talking segmentation, that it means some people will be treated differently. Some people are worried CRM will lead to treating certain citizens with kid gloves," said Gordon. "But that's not what it's about. It's about understanding what people want and providing good, consistent service."

Efficient Transitions

For Michelle d'Auray, CIO for the Canadian government, CRM is citizen, not customer, relationship management. The government uses CRM, she said, not so much as a marketing tool, but as a way to help citizens move from channel to channel with the least effort possible.

"If a citizen asks for a service over the phone and then goes to the Net, they should not have to repeat their information over and over again just because the people on the other end of the line have changed. And they should expect to get the same answer on the Web site as they do on the phone," said d'Auray. "For us, citizen relationship management is also about looking at ways to offer the benefits to which citizens are entitled to automatically, rather than requiring the citizen to figure it out. Its also means doing a better job at coordinating our efforts across levels of government, so we only send one, rather than three, government officials into a senior's home, for example, to do an assessment of the benefits they might be entitled to."

D'Auray is clear that focus on the citizen has been the key to Canada's e-government success. To find out what citizens want in terms of e-government, the government established an Internet user-based panel of 4,500 people to better understand their service preferences and expectations. The government also conducts multiple focus groups on a range of e-government issues, and participates in a number of syndicated studies, such as the Citizens First series research on client satisfaction with government services.

"We do an enormous amount of focus group testing and adjustment based on the results because it's not just about putting the right information and services up once, it's also critical that we regularly change in response to changing use patterns and changing preferences," said d'Auray.

That approach appears to be working. The most recent Citizens First report (January 2003), which collected responses from 9,000 Canadians across the country, indicates an increase in citizen satisfaction with government services across all three levels of government. According to the report, satisfaction with federal services was 56 percent, up from 47 percent in 1998. Satisfaction with municipal services was 59 percent, compared to 53 percent in 1998.

The American Customer Satisfaction Index, in contrast, reports no significant increase in satisfaction ratings for U.S. federal government services since 1999.

The government also reaped the benefits of taking a whole government approach, so the same tools and services are available across all delivery channels, whether the user is in line or online, said d'Auray. While the online channel is growing, the latest survey from May 2003 shows the phone, at 41 percent, remains the preferred channel for contacting government. The Internet was favored by 34 percent; snail-mail by 17 percent; and in-person, 7 percent.

While Canada has celebrated many e-government successes, it still has a ways to go to move to full-service transformation. The government has yet to overcome the challenge of streamlining its internal operations to support "seamless" services to citizens and business -- across departments, across delivery channels and eventually across jurisdictions.

The Unexpected ROI of E-Government

One of Canada's biggest e-government success stories, however, is of the Canada Customs and Revenue Agency (CCRA), which offers a range of Internet and telephone applications, such as its cargo release and invoice information system, and its e-filing applications for businesses and individuals.

CCRA Deputy Assistant Commissioner Roderick Quiney said while the cost of building and maintaining systems that are "100 times more complex" than earlier systems has not rendered any savings, there is another kind of payback -- one that is perhaps far more valuable, at least for a tax collection agency.

For example, he said, the CCRA now gets 15 times fewer errors with Goods and Services Tax (GST) returns filed over the phone than when the tax was filed on paper. In Canada, there is a 7 percent tax levied on all goods and services, paralleling the provincial taxes of six provinces. Brought in by the Conservative government in the 1980s to replace a previously hidden federal tax, the tax has never been popular -- not just because of the cost it imposes, but because it requires many more businesses to keep track of it than the tax it replaced.

"If we and the client make fewer errors, it's good for both of us," said Quiney. "Whoever causes the error, there's always a bad feeling at the end of the day, and it's more difficult to explain why we didn't understand the error and correct it than to have a system that is nonjudgmental and nonargumentative automatically correct it."

According to Quiney, there are many new Canadians, as well as young entrepreneurs, entering the labor market every year with little or no knowledge of the tax system. Because it's less expensive in the long run to provide self-serve options -- the CCRA handles about 24 million calls to its call centers every year -- the agency developed an interactive Web information system with answers to the 400 most common questions people ask over the phone.

"We found our biggest problem dealing with inquiries over the phone is just getting the right question," said Quiney. "People will call up and say, 'Is my dog taxable?'"

Call center agents are trained to ask questions until they understand what the client wants, but it would take a lot less time -- so the theory goes -- if clients were to use the call center as a last resort, once they have exhausted the Web site's interactive information system. That's where answers are structured as decision trees, which users can follow until they are satisfied. They are also provided with references for further information as well as technical bulletins.

"You can spend hours with it," said Quiney. "It's an interesting machine, and it's got infinite patience. In the end, you may want to talk to a human being, but by then you're very well informed."

However, he adds, "We still have some work to do on making an Internet site replace a human being."

Although the CCRA was motivated by benefits of moving to e-service delivery, it could theoretically have continued to function as it always had -- processing all returns manually.

Postal Service E-Enabled

Not so for Canada Post, which processed 9.8 billion pieces of mail in 2002. "For us, it was do or die," said Pope of the corporation's move into the electronic world. "We realized the Internet was going to significantly impact the core business, and we couldn't just sit back and do nothing, or we would have become irrelevant in time as that impact had a greater and greater impact on our volumes."

But building a new business model takes time, he said, and while e-services "in the scheme of things in a company the size of Canada Post are not a big business area yet, it's a strategic business area and one that's looked at as having high-growth potential."

To maximize that potential, Canada Post underwent a business transformation initiative four years ago to help it become more process-oriented, rather than function-oriented, he said. All the business's core processes have been re-engineered using SAP technology.

"We used to be an organization that was very stovepipe-oriented, with hundreds of databases, most of which didn't talk to each other," he said. "That's gone. It has been a very difficult, challenging time changing the way we work. But we've re-engineered every process and extracted anything that doesn't add customer value."

Adding customer value is key to all government online projects, in terms of citizen acceptance and take-up. But key to long-term success is measuring that value, said Brian Freeman vice president of single window government initiatives at CGI Group.

Freeman cites a recent IDC study that measured the economic impact of New Brunswick's e-government services. New Brunswick has a population of about 750,000.

According to the study, Service New Brunswick (SNB), the self-funding corporation owned by the province that delivers 160 e-services, realized approximately $108 million in net economic benefits to the province in 2002. That figure is based on estimated savings to citizens in productivity costs by using e-services ($44.5 million), as well as to businesses ($54.5 million) and to municipalities ($4.8 million), aggregated processing and labor savings to municipalities ($3.8 million) and a one-time cost avoidance to the provinces ($.7 million).

"While intrinsically people in public administration knew electronic service delivery was a good thing, there was no hard measure they could point to and say, 'This is of economic benefit to the jurisdiction,' largely because there weren't many examples that were mature enough," said Freeman. "With New Brunswick, they have been able to look at long-term changes and make some measurements."

Overcoming Investment Obstacles

New Brunswick CIO Lori MacMullen explains that SNB was created in 1990 as a means of consolidating the province's 1,700-plus points of contact for government services. "That's kind of ridiculous, especially for transactional services," she said.

The province decided to create a separate corporation because it allowed SNB to do something governments can't -- invest and wait for payback over a number of years. "Governments are not set up to carry money," she said. "They're not able to invest now and get the benefits over time. That's not the way it works. Governments are measured on debt and cash flow in a year."

SNB is run by a board of directors much like a private-sector organization. It was built, said MacMullen, on a "spin the terminal" model. "The delivery of the service was designed in such a way it doesn't matter if you do it over the phone, over the Web or at an SNB center. The person at the desk uses the same tool to deliver that service as the person who takes your call at a call center or on the Web site."

Despite Canada's apparent maturity in e-government at all government levels, it still faces challenges. Accenture's Gordon points to another study it conducted, called E-Government: The Citizen's View. "In this one, Canada didn't fare as well. It was actually third in usage, behind the U.S. in the number of Internet users that have actually visited a government Web site."

What that indicates, he said, is that Canada, like all governments, must learn to market its e-services better, perhaps through incentives. "In some cases that's a great idea," he said. "We're seeing some innovative practices all over the world."

D'Auray agrees. "That's why the government launched niche marketing campaigns specific to the type of service," she said. "We have a challenge to break the barrier to completing transactions online, whether in the private or public sector, because of concerns around information sharing and privacy. Security of transactions is still top of mind among a lot of Canadians."

But if past successes are any indication, that barrier is one Canada will soon overcome.

Kathleen Sibley  |  Contributing Writer