In simple terms, electronic governance is the application of information technology to the processes of government functioning to bring about greater efficiencies and productivity enhancements. In the US, the federal, state and local governments are harnessing the advances in IT and the opportunities so presented to restructure themselves and the citizen and business interfaces with a view to providing better governance.

The idea is for governments to use IT as a tool for bringing government services online and offering them to constituents through the Web. Routine legal transactions such as tax filling, vehicle registration and business licensing, can now be conveniently undertake online. This process is saving governments substantial revenues by reducing administrative costs associated with paper filling and staffing. At the state and local government level, many states and provinces have also deployed online employee self service functions, using web enabled ERP for costly activities like benefit plan enrollment, job posting and applications and budgeting and financial management. Many departments and ministries are also experimenting with online systems to improve efficiency.

Driving government projects
Analysts state that e-government is becoming a key driver of government projects across the US. This sentiment is also echoed by leading global systems integrators featured in the latest annual survey by Washington Technology, on the 2002 Top 100 prime contracts in the US Federal IT market.

Despite a challenging economic environment in the US systems integrators companies have claimed to have witnessed steady growth in their e-government business. IT budget squeezes at the federal, state and local level notwithstanding, most companies claim revenues have upped from this segment during the 200-01 period. The growth however fell during 2001, a sign of the fact that a slowing of the economy affected state budgets and that state legislatures were debating where to make budget cuts because of tax revenue shortfalls.

Role of Indian companies
What Indian companies have to realize is that implementing projects for the government and PSUs is very different from say, addressing the corporate marketplace. Both markets have different characteristics and different needs. Indian companies have to work towards understanding the US Government market and create a strategy that successfully extends their existing capabilities into the on-line realm. Companies such as IBM have been using their e-business skill sets to capture a larger share of the e-government market. The expertise and experience gained while addressing commercial/ corporate customers is now begin extended and applied in the government sector.

Analysts point to the fact that the e-government market will be dominated in large part by traditional applications getting web enabled. A Number of US-based Government and PSU organizations are today focusing their IT budgets on web enabling themselves rather than beefing up their legacy mainframe or client server based systems.

Growth across verticals
As analysts of the e-government/IT market at the US state and local government levels conducted by Gartner Dataquest shows that the areas within this sector that will witness significant growth are administration and finance, human services and transportation, followed by public safety, health and justice. The trend today is for some state and local governments to use health and human services contracts to upgrade their infrastructures. The contracts creates further opportunities for IT vendors, analysts point out. The Gartner Dataquest study indicates that spending growth within agencies for IT components is the strongest among software and external services, which are growing at rates of 9.5% and 13.5%, respectively. Other high growth markets are internal services and hardware.

E-governance trends in the Federal market
Industry analysts said three major trends will shape the federal e-governance market in the year ahead. The first key trend is centered around the issue of security. A significant opportunity exists for the Indian software industry in this space as even large US systems integrators are looking for partnerships with other large integrators as well as smaller software and solutions provider’sAnother trend among vendors catering to the US Federal market is acquisitions and mergers. These collaborations are aimed at adding relevant skills sets to cater to the rather large and complex needs of the Government market. The fiscal 2003 budget has allocated nearly $ 380 million for the project. A core piece of this project is e-governance and involves on line work. It will also entail the development of the IT and communications infrastructure to support the initiative.

Wider playing field through partnerships
Systems integrators tapping the Government have rarely worked in isolation. Even the largest among them have always reached out for partners on their large-scale IT projects and readily outsourced components of their contracts. Here, in fact lies a significant opportunity for Indian vendors. As US and other global Government contractors seek partnerships with other integrators, the Indian software brigade can make a collaborative pitch, based on their existing levels of skills and services. A similar strategy could prove beneficial for Indian IT software and services companies as well. The right partnership can provide an Indian company with the relevant credentials needed to make an entry into US government markets

As mentioned earlier, in the US, systems integration companies are intending to rely on another tried and true method for obtaining new business-acquisitions and mergers. This is a route that large Indian software companies can also follow. In fact, leading Indian software companies have been acquiring smaller, yet focused and niche companies in the US to gain access to the market and a base of existing customers.

Opportunities for small players
Companies involved in e-governance projects are claiming it’s a big revenue opportunity. Analysts also state that there is great potential for software and services players, especially small firms. A number of SME companies are participating actively in the e-government market and this number will rise over the next few years. Indian SME companies within the software industry can start out by getting involved in Web development contracts outsourced by the larger systems integrators involved in key government projects.

Team DQ
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