The Business Case for e-Government

1. The Business Case for e-Government Oliver Kent, Partner IBM Business Consulting Services FMI PD Week November 29th, 2002

2. E-Government started as a policy commitment, not a business strategy “By 2004, be known around the world as the government most connected to its citizens, with Canadians able to access all government information and services on-line at the time and place of their choosing” – Federal Throne Speech, 1999 “By 2003, increase Ontarians’ satisfaction with government services by becoming a world leader at delivering services on-line” – Ontario Cabinet, 2000

3. The Business Case is there if … • Electronic self-service clearly has the potential to • Give clients more control, more convenience, more customization … and more satisfaction • Be dramatically cheaper than labour-intensive delivery methods … by orders of magnitude • Getting there means significant investments in • Technology • Including interfaces to legacy and ERP systems • Process redesign, including consultations with partners • Knowledge management to keep content fresh and accurate • Organization and human resource transformation – the “soft stuff” critical to any major change

4. Ontario’s Initial Experience • Inconsistency in degree of rigour, and assumptions • No set criteria to prioritize candidate ESD initiatives at the program or ministry level • Business cases were not defensible, savings were not reap able, a lot of allegations, very little supporting evidence • Little effort to explore alternative service delivery models, or to collaborate with other program areas • Costs were incomplete (total cost of ownership), or did not consider common infrastructure and reuse. • ROI did not consider routine/high-demand over complex, low volume opportunities • No consideration to opportunities to generate new revenue.

5. ESD Toolkit – Ontario MBS Context Decision Tree Business Case Template Implementation Issues Checklist

6. What the Toolkit does • Helps program managers think about service delivery differently • self-directed look at the potential for E delivery • Produces qualitative and quantitative results • Identifies partners in other program areas to work with for developing and implementing ESD • Identifies linkage to ISD (MCBS) for high volume services early in the decision making process • Includes services that fall below the ISD high volume threshold • Complements MCBS Business Case by relying on similar qualitative analysis

7. Decision Tree • 6 questions that will help you understand the potential for an ESD project. • Can the service be e-enabled? • What is the potential demand for ESD? • Is the service aligned with your core business? • Is the process ready to be e-enabled? • Are there governance and/or regulatory barriers? • Is the infrastructure ready? • Answers the question: • Should I spend the time on a business case? Potential for ESD What should the priority of this of this particular initiative be?

8. Decision Tree Part 1 Already Electronic Service Delivery? Yes No Is there potential for delivering this service electronically? Can the generic service feature be delivered by ESD? Will there be demand for electronic channels?

9. Client account maintenance Service Feature Name Sets up and maintains an ongoing “account” for clients that will have multiple financial transactions associated with one or more services. Typically invoked by registration. Description High However, there are privacy and security issues that will need to be addressed. Potential for Electronic Delivery e-forms, Registration,Authentication, e-Payment Required Common Components Electronic viewing and submission of Employer Health Tax remittances Example Can the Service be Delivered by ESD? • Working from the Public Sector Service Definition Handbook, each of the generic service features is classified as having one of a high, moderate, or low potential for e-enablement. • Sample:

10. Will there be demand for ESD? • Combines current service volume with indicators of potential uptake of the electronic channels. • Survey data of the clients, • Case studies of comparable programs in other jurisdictions, • The value proposition of the electronic channel from the standpoint of the client, • Whether the service is new or existing, • The frequency of the interaction with a specific client, and • Demographics of the clients. • Builds off of MCBS criteria and provides explicit link to ISDD if their criteria are met.

11. Assessing the potential for ESD

12. Decision Tree Part 2 What priority should be placed on preparing the business case for delivering this service electronically? Process readiness? Infra-structure availability? Regulatory or Governance Barriers? Core business alignment? Business Case Priority Indicators

13. Core Business Alignment • Two central questions: • Does this ESD initiative support one of core businesses of the Ministry? • Does this ESD initiative respond to a stated customer need of a core client group of the Ministry? • Scoring System: • Strength of agreement/disagreement with: • “This ESD Initiative is critical to the stated strategic direction of this Ministry”

14. Process Readiness • Is the service delivery process ready for e-enablement? • The strongest business cases are generally found where the entire service delivery process, from end-to-end can be e-enabled, including: • Inputs • Tasks, and • Outputs • The ability to e-enable each part of the process (currently or in the future) is rated. For example, inputs: 1: All information can currently be provided effectively electronically. 3: All information could be provided electronically if the process was redesigned. 5: Some of the required information will not be available in an electronic format in the foreseeable future.

15. Infrastructure Availability • Two main questions: • Does the initiative use existing common components? • Will the initiative create common components? • Rating Scale: 1: Uses existing common components. 2: Functionality is available through a partnership with an existing service provider with existing service delivery capability 3: Project will result in the creation of one or more of the identified components. 5: Custom build

16. Governance + Regulatory Environment • Does the enabling legislation mandate a process that precludes e-enablement? • I.e.: Is there a requirement in a regulation for a signature on a particular form as part of the service delivery? • Is the ESD initiative completely contained within one program area with a clear governance and accountability structure? • Does the initiative involve more than one: • Program? Branch?Division? • Ministry? Level of Government? Jurisdiction? • Scoring: Strength of agreement with: • “There are NO significant regulatory or governance issues that need to be resolved before this ESD initiative can proceed.”

17. The Decision <11 Proceed with business case 11-16 Proceed with business case but consider the issues >16 Do not proceed, unless... Prioritize Several Potential Projects OR

18. Business Case Template Approach • Total Cost Approach • Attempts to estimate the baseline cost of service delivery and then compare the total cost of delivery under a number of different options • Intensive information needs regarding existing service delivery • Time-consuming • Incremental Cost Approach • Compares the incremental costs of a “project” against the estimated benefits from implementing the the project. • Less information intensive • Generally quicker

19. Major Cost Headings • Software Costs • Common components • COTS • Custom Development • Infrastructure Costs • Hosted • Self Provision • Implementation Costs • Ongoing Support Costs • Transition Costs (Change Management, Communication, Training, etc) • Marketing Costs • Other Costs and Resources Issues

20. Sample Cost Detail • Infrastructure Self-Provision

21. Benefits • Cost savings, • Reductions in the cost of service delivery • Cost avoidance, • Costs that would have been incurred if the project had not been undertaken • Revenue offsets, and • Increased revenues because of the project • Economic development impacts • Cost or time savings that accrue to the user of the service • Economic benefits from providing wider and easier access to the service

22. Net Present Value (NPV) • Uses the discounted cash flows from the project to determine whether to proceed. • A positive NPV means the benefits outweigh the costs • Preferred decision criteria in the OPS • Excel Spreadsheet template provided for calculating NPV

23. Other Considerations • Sensitivity Analysis • Qualitative Factors • Risk Analysis • Stakeholder Analysis

24. Issues Checklist • Provides a checklist of the main activities during each phase of an ESD implementation: • Analysis • Definition • Design • Construction • Implementation • Closure

25. Checklist Subheadings • Key Inputs • Key Tasks • Key Outcomes • Manage Stakeholders • Manage Communications • Build Teams

26. Sample Checklist

27. How the Toolkit Helps Ontario The toolkit: • ensures consistency in business cases and board submissions • sets core criteria for prioritization of ESD initiatives at the program and ministry level • automates the creation of a sound business case • encourages collaboration with other program areas and between business and IT analysts. • Identifies linkages to ISD (Integrated Service Delivery) for high volume routine services to individuals and to businesses

28. Ontario’s Plans for the Toolkit Phase 1 (COMPLETE) - Develop and demonstrate beta version - embed in Program Evaluation Package Phase 2 (In Progress) - E-enable (Version 1.0) and pilot e-enabled toolkit with selected ministries and distribute to ministries on an optional basis - embed as mandatory feature in annual planning templates Phase 3: (2003-04 V 2.0) - embed standard costing formulas for common infrastructure and hosting services - embed financial coding (work break down elements) - track “saving and revenue targets” from prior year submissions for comparison to actual return on investment - embed performance targets and reporting modules - evolve toolkit to address more e-Government issues

29. Thank You Oliver Kent Partner Strategic Change Public Sector IBM Business Consulting Services Canada oliver.kent@ca.ibm.com