business consulting services © copyright ibm corporation 2002 the business case for e-government...

Business Consulting Services

© Copyright IBM Corporation 2002

The Business Case for e-Government

Oliver Kent, Partner

IBM Business Consulting Services

FMI PD Week

November 29th, 2002



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



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



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.



ESD Toolkit – Ontario MBS

Context

Decision Tree

Business Case Template

Implementation Issues Checklist



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



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?



Decision Tree Part 1

Is there potential for delivering this service electronically?

Can the generic service feature be delivered by ESD?

Will there be demand for electronic channels?

Already Electronic

Service Delivery?

Yes

No



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:

Client accountmaintenance

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.

HighHowever, there are privacy and security issues that will need to be addressed.

e-forms, Registration, Authentication, e-Payment

Electronic viewing and submission of Employer Health Tax remittances

Service FeatureName

Description Potential for Electronic Delivery

Required Common Components

Example



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.



Assessing the potential for ESD

High

Moderate

Proceed with Screening

Factor channel switching incentives into business case.

Optimistic


High

Proceed with Screening and Business Case

Moderate

Limited

Proceed only if strategically important.

Moderate


High

Proceed with Screening and Business Case A

bilit

y to

e-E

nabl

e R

atin

g

Low

Low

Do not proceed at this time

Moderate


Moderate


Weak Moderate Strong

Potential Demand Rating



What priority should be placed on preparing the business case for delivering this service electronically?

Core business

alignment?

Process readines

s?

Decision Tree Part 2

Business Case Priority Indicators

Infra-structure availabilit

y?

Regulatory or

Governance Barriers?



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”



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.



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



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.”



The Decision

Prioritize Several Potential Projects

OR<11 Proceed with business case

11-16 Proceed with business case but consider the issues

>16 Do not proceed, unless...

What priority should be placed on preparing the business case for delivering this service electronically?

Core business

alignment?

Process readiness

?

Business Case Priority Indicators

Infra-structure

availability?

Regulatory or

Governance Barriers?



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



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



Sample Cost Detail

• Infrastructure Self-Provision

One-time On-Going Application servers Web servers Database servers Telephony infrastructure

o Workstations o Phone lines

Disaster recovery site Network cabling Back-up devices Desktop systems for processing and

support staff (if upgrades are required to run ESD software)

Infrastructure installation costs Total: $____________

Data back-up media: disks, tapes, etc Infrastructure support staff Accommodation costs for infrastructure Server and Network Maintenance fees

Total: $____________



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



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 NPVProject Costs

Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5

1. SoftwareInitial LicenseMaintenance and SupportUpgradesOther

2. InfrastructureServersNetworkPhone SystemsInstallationOther

3. ImplementationInitial ImplementationUpgradesOther

4. Ongoing Support

5. Transition Project CommunicationStaff TrainingSeveranceOther

6. MarketingInitialOn-goingOther

7. Other ImplementationOn-going

Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Present Value Discount Factor 0.930 0.865 0.805 0.749 0.697 0.930 0.865 0.805 0.749 0.697 0.930 0.865 0.805 0.749 0.697

Present Value of Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Staff Salaries, Wages, Benefits DOE ODOE



Other Considerations

• Sensitivity Analysis• Qualitative Factors• Risk Analysis• Stakeholder Analysis



Issues Checklist

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



Checklist Subheadings

• Key Inputs• Key Tasks• Key Outcomes

• Manage Stakeholders• Manage Communications• Build Teams



Sample Checklist

Analysis Stage Key Inputs Existing cost and volume data

Inventory of existing technical and telephony infrastructure Process Maps

Key Issues What are the existing business processes and business rules? o Are the processes described from the client perspective? o Are the value-added activities, necessary inputs/outputs, and

business rules in the current processes identified? o What are the issues, problems, and performance gaps with the

current processes? o What are the improvement opportunities?

What is the appropriate scope for the initial project? What are the possible options for delivering the ESD initiative? What data is available? Who are the impacted stakeholders?

Key Outcomes Scope and Overall Timeline Established ESD Decision Tree Completed Detailed Timeline for Design Stage



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



Ontario’s Plans for the Toolkit

Phase 1 (COMPLETE)- Develop and demonstrate beta version - embed in Program Evaluation Package

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

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



Thank You

Oliver Kent

Partner

Strategic Change

Public Sector

IBM Business Consulting Services

Canada

[email protected]

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