Bad Times Could be Good For e-Government

Just last year, all the skilled IT workers were being snapped up by the higher-paying, higher-flying private sector. Now many of these same people are sending their resumes to government agencies, saying how much they’d cherish a career devoted to public service.

Now that government has the option of hiring people who know how to develop middleware and integrate back-end systems, they can develop online services, portals and e-procurement systems, and undertake other major e-government projects without having to be a slave to the outsourcing devil.

Gartner predicts that in 2002 more than 70 per cent of governments will strengthen their central IT organizations to co-ordinate e-government developments. There’s a big attraction in doing so, considering that organizations often end up picking up the slack of outsourced IT projects anyway when they’re not completed on time or on budget or are cancelled before completion.

And if government does choose to contract out, it can now do so in a much stronger position. During the bubble years, IT services companies looked at government as a stick-in-the-mud market segment that bogged down their rapid growth rates and high earnings. The best they could do for these poor bureaucratic souls was to pawn off a replicate take-it-or-leave-it e-business solution that had been developed earlier for a large bank or retailer. If a “government industry” manager (contradictory terms, surely) could be bothered to pay them a visit, he would simply dig into the corporate PowerPoint slides, perhaps change the word “company” to “organization,” and expect the public official to overlook the glib talk of maximizing profit margins.

Whoa! What a difference a year makes. With the dot-coms all gone bust and the men in suits slashing their IT budgets, tech firms are now deciding that the stability of a government contract isn’t so bad after all.

Private sector spending on technology is expected to grow only slightly this year, if at all. But according to IDC, the public sector will hand over a hefty US$24 billion worth of business to technology services companies in Europe alone. That’s one-fifth of

the total IT services market. For companies such as Microsoft and IBM, the public sector is now the largest or second largest market segment (it still sometimes falls behind financial services) and the fastest growing.

With a surge in spending to meet self-imposed, high-profile and fast-approaching deadlines to put all services online, government is expected to increase IT spending at an annual rate of 10 per cent through 2005, compared to eight per cent in the private

sector. This differential will widen further as governments redirect funds into technology-intensive programs to tighten security and beef up defence.

Okay, it’s no secret that government is a slow market during good times and then suddenly becomes attractive during a downturn. One would nonetheless consider this a great opportunity for the public and private sectors to work to better understand and accommodate each other in order to advance e-government.

There are some encouraging signs. Government is getting better at rising above political dogma when it comes to outsourcing. And with the speed of Web technology implementations these days, there is much less temptation to change specifications halfway through a project. Yet bidding for government tenders remains a slog for most companies.

For their part, the tech companies seem more prepared to meet the public sector halfway. Companies such as Siebel are tailoring their CRM software for government and calling it “citizen relation-ship management” or even “constituent relationship management.” They are also creating sales forces to target the public sector exclusively, which should further help their understanding of the market.

Now if they’d only stop calling them government industry managers.

Canadian native Douglas Holmes is a Paris-based specialist on IT issues in the public sector. The author of e-Business Strategies for Government, he may be reached at