Managing Uncertainty in E-government Investments

Managing Uncertainty in E-government Investments

Though still in its infancy across the world, e-government represents the most significant change to democratic public sectors ever experienced, a change that is as fast and turbulent as it is constant.

As Western democracies struggle with global political concerns such as defining their positions on the war on terrorism and dealing with internal pressures of volatile economic growth, unemployment and declining birth rates, their rationale for divesting themselves of non-essential functions is fundamentally sound. In Australia, that divestment is large, with the public sector accounting for more than 40 per cent of the nationwide $2.5 billion outsourcing market. This is a market projected to grow to more than $5 billion by 2004.

E-government represents a key area for outsourcing, as public sectors no longer have resources to develop and execute such potentially complex programs. It is a wave building ever larger and faster, whether through organic technology developments or uncertain economic, political and social patterns. These dynamics and the resulting uncertainties affect both governments and their private sector partners in the outsourcing relationship.

Managing the unpredictability of these public-private investments can be assisted on several levels:

1. by understanding the current societal view of government.

2. by implementing public-private relationship strategies.

3. and by conducting non-traditional planning to build sound current and future e-government investments.

Negotiating the rocky path of citizens' expectations of government hinges on understanding the societal view of government today. The 1930s to 1950s produced large groups of idealistic individuals who believed in government services and who were dedicated government workers. By contrast those born in the 1960s and 1970s were affected with disillusionment of government and were enticed by the increasing gap between wealth accumulation offered by the private sector and the falling status, wages and benefits of the public service.

Predictably, the first wave of government rationalisation applying so-called market solutions to public sector programs has led to some dissatisfaction. Societies saw what they thought to be an abrogation of government responsibilities, and a subsequent betrayal of government towards its citizens. There followed a renewed interest in government and social responsibility by those born in the 1980s. These individuals are the people who will lead the coming re-energisation of the public sector - an attitude of responsibility born out of uncertain world events and an uncertain economic future.

Governments are once again seen as part of the "solution" and are being called upon to provide leadership, a level of security and service in the best interest of citizens. But these individuals born in the 1980s are looking for the creation of a very different civil service - one that accommodates their desire for equitable public-private function that contemplates a broad range of career experiences and that satisfies the socially responsible charter of their communities.

E-government seems to meet the promise, but also requires more intelligent management of investment than ever before, as our governments enter more complex, more numerous and more expensive relationships with the private sector. Outsourcing relationships can no longer be managed on an individual basis and now require a holistic approach made in response to clear, enterprise-wide strategy.

E-government investments must be made with private sector partners who will thrive in uncertain times. Deloitte Research calls such management a relationship portfolio. Relationship portfolio management encompasses the following five steps:

1. linking relationship portfolio strategy to the budget process2. intensifying market awareness3. incorporating option value into evaluation criteria - that is, assessing a private sector partner on the basis of future value4. increasing hedge in risk management, and5. formalising relationship management by appointing a chief relationship officer or redefining the role of the chief procurement officer to include enterprise-wide evaluation and assessment of current and future partnerships.

Within relationship portfolio management lies the fundamental need to reassess the way governments plan for the future. Investments in e-governments are made in response to planning by governments in answer to questions posed by their citizens. For instance, how can governments reduce basic processing time while making facilities more accessible to citizens - their customers? Logically, this question leads to planning for an e-government investment with a private sector organisation capable of providing that solution. But government CIOs need to plan beyond that solution if they are to manage uncertain elements in that investment.

One way of doing this is scenario planning, which has been particularly useful in defining and prioritising IT investments and outsourcing in the private sector. This application is now moving more fully into the public sector and e-government strategy. By constructing a number of alternative future operating environments, organisations are required to look for imaginative, unorthodox sources of information and answers in order to bridge gaps between current and future realities.

Constructing specific scenarios, and asking such questions as: "What services will citizens demand of government in the future?" or "How will technology innovation influence the structure of our agency or ministry?" helps organisations bridge a gap between what is reality now and what is plausible in the future. Building a narrative around the scenario involving social drivers (such as social, economic, political and technological elements) and predetermined elements (such as demographic changes already in process) allows for focused, energetic planning. It also results in a team that is better able to anticipate uncertainties in investments, better able to adapt when change is needed and much better aligned around the solutions chosen.

Scenario planning does not make it any easier to predict the future, but it does stimulate rigorous discussion and creative ideas about future challenges. It creates the common language needed for CIOs and their teams to dismantle persistent traditional thinking and to construct innovative, often unexpected, solutions for the future.

CIOs have heavily responsibilities as they lead the development of e-government networks across the world, managing not just current investments in e-government, but also current investments as robust solutions that will be resilient to future change, and creating solution-focused relationships for the future. To manage these investments successfully is not to try to remove uncertainty, but to manage uncertainty as a continuous environment, not an inconvenience.

Charles W Thomas is a principal in Deloitte Consulting's Boston office, advising clients on strategy development and long-range technology planning. He can be contacted on charthomas@dc.comTarquin Ralph is a principal with Deloitte Consulting and advises Australian public sector clients on strategic planning. He can be contacted on

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