Overcoming the tyranny of distance and scale

Overcoming the tyranny of distance and scale

During the past decade New Zealand has developed the building blocks for digital local government services.

During the past decade New Zealand has developed the building blocks for digital local government services. The internet has been introduced at varying levels of operation, and legislative changes will enable local councils to work collectively to implement e-services. What is now required is an industry and enterprise-wide strategy to ensure an efficient, results-driven and customer-centric e-government. The path to a successful e-government network includes three themes: scale, customer demand and technical infrastructure. Each theme represents a way to maximise e-government success, leading to its transformation from being a traditional, static service provider to a truly adaptable customer-focused organisation.

In this sense, e-government is more than the introduction of internet services to government organisations.

E-government stands for a new era characterised by challenges to the traditional ways that people thought about government operation, structure and communication.

The first theme, scale, refers to the challenge New Zealand faces as a country with geographically isolated local councils, servicing small groups of constituents with little individual purchasing power. Auckland’s population of a million, for example, is serviced by multiple councils. Any move towards introducing digital services will be costly when considering that each council will replicate council services. In order to achieve the elements of an enterprise-wide e-government network, local governments will need to build a collaborative local government network, pooling together to build shared e-solutions and reap the benefits of economies of scale. By reducing the level of costly repetition and sharing expensive infrastructure, local governments will substantially reduce strain on financial resources and human capital. A collaborative network would also bring the benefits of knowledge transfer, best-practice expertise and cross-cultural learning.

The creation of larger scales of economy may drive the demand for sufficient bandwidth required to support sophisticated e-government organisations. New Zealand’s geographical distance from world leaders in North America and Europe has contributed to slower technology readiness, and in the initial stages of the IT era New Zealand lacked the leading industry professionals who are abundant in countries such as America and India. Partnering with industry experts in the private sector will ensure that increasing New Zealand’s IT capabilities is a top priority for local government.

When assessing the degree to which New Zealand’s local government network will be able to collaborate, it is necessary to acknowledge the cultural, geographic and political disparity between the north and south islands. It is improbable that one single e-government network would succeed. The political and cultural differences are represented by both customers using local government services, and by the people working within the local government network. By building joint infrastructures for both islands, as opposed to one single network, local councils will be able to make the

most of collaboration without being forced to halt at the barrier of substantial regional culture and policy difference. Even two networks per island may be sufficient to gain most of the benefits of collaboration.

New Zealand’s position as early adopters, not leaders, of technology allows us the benefit of learning from the successes and failures of countries that are technology leaders. New Zealand’s distance from those leaders means we are able to assess with clarity local e-government models that have worked and those that have resulted in costly mistakes. New Zealand’s e-government networks should, in the end, equal or outperform those early leaders who may have been slow to assess and correct their mistakes.

The key learning from those leaders, and the starting point of Deloitte Research’s study into e-government earlier this year, is that, if New Zealand’s e-government is going to develop lasting business value, a strategic framework is required before building any singular internet functions. The framework must include: an assessment of how “e” the offerings should be; a link from the “online” to the “bottom-line” — that is, how technology and human investment affects the business case; having tactics that create “digitally loyal” customers; and lastly implementing an entire

customer-centric enterprise, mentioned earlier.

The level of “e” required by an e-government depends on the demands of their customers. In other words, to what degree will we, as citizens, use the New Zealand government’s online services? This is essential if New Zealand’s local governments are to determine the scale of New Zealand’s e-government offering, and the investment that will be required to satisfy residents’ needs as customers. This demand side argument is a far more efficient base from which to grow e-government offerings than the supply side argument, which dictates that governments should offer as many online services as possible.

As companies learnt in the initial dot-com era, the extent to which they offered digital services and the extent to which customers used those services was, in many cases, entirely different — certainly not always justifiable as management had initially thought. The success of e-government will be predicated on the level to which customers use and embrace digital channels as their primary channel. New Zealand’s local government bodies will need to undertake proactive research, customer feedback and monitoring of newly introduced internet channels to ensure they are investing in services desired by New Zealand constituents, who may or may not differ from those in other countries or from each other on the two islands.

Providing services demanded by constituents will mean their continued use of that channel as the favoured channel and will result in what we call “digital loyalty”. Digitally loyal customers will view online channels as the most efficient for their needs, using them exclusively rather than compounding costs by entering more traditional and costlier channels. Governments that know both the potential and limit of online adoption will build digital loyalty most effectively. Local governments must properly communicate the benefits of e-government offerings to ensure New Zealanders are aware of new service channels available to them and that these new channels represent a satisfying transactional experience.

New Zealand’s high technology saturation point — that is, the number of internet users and owners — will assist in customer take-up of e-government offerings. The high saturation point is due to several reasons, including our country’s relatively homogenous population, our high educational standards, a skilled workforce and a high middle class population percentage with significant purchasing power. In this respect, New Zealand is in a better position than countries such as America, which experience a more disparate approach to technology take-up as a result of massive socio-economic inequity.

Achieving constituent-awareness and significant digital take-up, however, should not distract us from those customers who will never, or will rarely, use digital channels. An e-government network will succeed only if it continues to deliver efficient service through all channels, not just digitally. By taking into account the fact that customers will continue to access government services through non-traditional channels and in fluctuating volumes means that transactional unit prices will fluctuate correspondingly.

It is not enough to measure e-government success by measuring per unit transaction cost as a result of shifting customers from traditional to digital channels. E-governments also need to reduce business costs — that is, to continue to invest in improving efficiencies in traditional channels — as well as develop more digitally loyal customers in order to create a two-tiered savings strategy. This is contrary to the widely held belief that the internet would, just by being implemented, save money.

Encouraging take-up of e-government services also depends on what the Deloitte Research report calls e-government “value chains” — chains of differing lengths reflective of differing customer needs. By packaging transactional types into value chains it is possible to view the best way to deliver customer value. Offering maximum value means allowing customers to fulfil their needs by the shortest path. Giving positive experiences each time a customer conducts a transaction will encourage use of e-government digital services exclusively.

Transaction needs can vary from learning — that is, finding simple information — which can be completed entirely on the internet, to single-task transactional needs, to “bundled” needs where a customer wants to complete an entire, multi-step transaction in one place. There are two ways of approaching the latter — either by breaking down the bundles into several singular tasks, some of which may be fully completed online, or by combining value chains from related services, which rely on the same technology. The latter may include functions for which New Zealand local governments have the most experience, such as online billings.

But solutions to complex transactional tasks such as these rely on comprehensive back-end technology, an area in which New Zealand needs to improve along with bandwidth access. There is fundamental work to be done in building the technical architecture to support the services our e-government would hope to offer. Back-end processes include the databases, data collection pools and IT platforms supporting front office processes. These resources again need to be shared across the e-government networks on each island in order that purchasing power is maximised, consistent service is delivered to all customers and costly duplication of infrastructure is eliminated.

Building e-government networks involves a major shift in thinking of local government as segregated, small-scale bodies to integrated, large-scale systems and a complete focus on providing customer — not process — solutions. New Zealand needs in place a strategy that will ensure customer demand for digital services is fundamentally linked to the business case of the local government network.

A strategic framework for e-government

1 How “e” should you be? — what services are your customers demanding be provided online?

2 Build the business case — link online to the bottom line by improving efficiency across all service channels to create savings.

3 Tactics — create end-to-end service for customers to complete their transactions.

4 Complete the transformation — implement a customer-centric enterprise for maximum business value.

The 8 principles of a successful e-government transformation

1 Provide strong executive leadership and commitment.

2 Take an enterprise-wide view of the transformation.

3 Develop the strategy — build a map for success.

4 Build the business infrastructure.

5 Diagnose the current situation.

6 Leverage core competencies; access the rest.

7 Create an organisational structure to drive development.

8 Prioritise the future.

Cobus Scholtz is the local government leader of Deloitte Consulting’s Public Sector practice in New Zealand. He can be contacted on Deloitte Research’s report e-Government’s Next Generation is available at

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