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E-Government Spending on the Rise
The report anticipates moderate growth over the next two years for state-and-local e-governments, but by 2006 expects to see the beginning of a growth cycle to reach a compound annual growth rate of about 30 percent through 2007.
Posted Jul 21, 2004
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State-and-local e-government spending will make a 180-degree turn away from its diminishing growth patterns toward an upswing in 2005, and more than double the amount of 2004 spending by 2008, according to a new report by Input, a government market intelligence provider.

The report, "State & Local E-Government MarketView," anticipates moderate growth over the next two years for state and local e-governments, but by 2006 expects to see the beginning of a growth cycle to reach a compound annual growth rate of about 30 percent through 2007.

James Krouse, manager of state-and-local market analysis at Input, categorizes state-and-local e-governments as a Phase One and Phase Two approach. "Phase One was more of a developing a product of e-government," Krouse says, whereas "Phase Two would be more of the service of e-government."

Krouse describes Phase One as the "build it and they will come" scenario of putting up portals. During Phase One, "everybody rushed to do it. They spent lavishly when things were great," he says, "but the portals have been built and the easy portions of those projects are over. The repetitive transactions, the flow of information, the ease of bringing information to the citizens is more or less complete."

According to Krouse, although usage is up there has been little additional spending on e-government. "We've seen the downward trend until it more or less bottomed out in the early parts of 2004," Krouse says. During the first phase budgets were tight and priorities dictated that other areas warranted more spending. "That's not to say delivering customer-centric citizen services online is not important, but when you're in the midst of a budget crisis it can often be perceived as a nice-to-have, not a necessity," Krouse says.

Governments are looking for ways to enhance their systems. "What states and locals are having to do is take a more calculated review of back-end systems," Krouse says, "so they can do a better job or a more proactive job by developing fully interactive portals that won't just be there for you to access as you decide, but will actually be looking to send information out into automated transactions."

Krouse expects to see a gradual increase in spending over the next couple of years on consulting and systemic review and back-end consolidation. "When [governments] get that three- or four-year time frame where they're going to be prepared to spend more aggressively in this e-government type area, it's going to dovetail...[with] the same time frame where they're also going to be looking to outsource increased services across all of IT that we've been following for some time now," Krouse says. "This isn't cause and effect, it's just a happenstance.

"This next stage of e-government is going to dovetail with that outsourcing trend, where we believe [that] after the governments decide that they're going to integrate their processes, consolidate, and push this next phase in e-government, they're going to have integrators and technical folks come in, size up the work, build the work, and...say, 'By the way, why don't you manage the work or outsource it?'."

For Phase Two, Krouse uses the example of a parking ticket to convey what he believes to be an increased amount of active customer support when the customer is online. "In some cases, I would go so far as to say in Phase Two there could be a mechanism in place to remind you...that your parking ticket is about to become overdue," Krouse says. "What we're seeing is trying to move the citizen responsiveness to actually help you manage your work with the government or your processing or your everyday transactions with the government."


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