Electronic Commerce and Government

André Vallerand
President, Electronic Commerce World Institute


We are going through a revolution, and the changes we are facing have the potential to be more significant than those resulting from any previous revolution we have known.

This revolution is the result of several factors that have come together over time, due largely to that unavoidable, unstoppable, universal law of evolution, namely, that human knowledge expands, and this expansion is accompanied by change.

Change, in turn, is shaped by the knowledge that makes it possible. As we approach the beginning of the 21st century, society has attained an unprecedented level of knowledge. The real significance of this new level of knowledge is that it has led to profound changes in the way we learn and how we organize, both as individuals and as societies.

I do not intend today to provide you an exhaustive overview of this situation, but rather to acknowledge it and affirm several points:

During the 1960s and 1970s, many nations enjoyed almost uninterrupted economic growth, the exception being during the oil crisis of 1970 and subsequent minor setbacks. Then came the recession of 1981-83, followed by the 1990 recession.

One thing that clearly distinguished the previous period from the current one was the capacity of business, then, to foresee or forecast economic results, taking into account that growth. International markets experienced no or little outside competition. We mass produced and we conditioned, or even planned, consumer expectations. Not all economic sectors were taken up, which led to a certain interventionism the result of too little competition.

Today, things are different: the irreversible phenomenon of the globalization of markets and the growing closeness of these markets in real and virtual time through the new information technologies has meant increased competition in every economic sphere. There are no more private economic spheres. Free trade agreements are being negotiated and implemented the world over, while, at the same time, protectionist practices are being widely denounced. The international World Trade Organization even succeeded in having agriculture, that historically and strategically difficult topic, added to its agenda. These examples illustrate clearly to me that the coming changes are not temporary, but rather permanent ones.

This new economic direction has little place for centralization and any other form of top-heavy administrative procedures. The conjunction of the globalization of markets, their accessibility and increasing proximity through the new information technologies, the changing tastes of consumers, and the limits to market growth create a profitable environment for companies that are able to react rapidly to the changing market conditions. Management needs to reorient its organizational strategy to develop its ability to react and act rather than anticipate and plan.

Anticipation has traditionally been part of the planning process. However, in a world in constant change, it is no longer possible to predict or plan based on the premise of continual growth; rather, the capacity to react rapidly to the political, economic and social environment will become the rule for survival and success.

Governments also must work within the same imperatives. The concept of the state-driven and dominated economy is giving way to the concept of state as economic partner and facilitator. Decision making is being decentralized and is closer to the level of the taxpayers. The debt crises among most Western nations provides one explanation for this. The end to rapid, unlimited growth has had a negative impact on wealth, in the private sector as well as the public sector.

Looking towards the integrated, automated, global markets and products of the 21st century, there is no doubt that governments will have to adapt in a fast manner to respond to that global shift. This is where the alliance of personal computers, multimedia capabilities, telecommunications, and networking comes in. The strategic integration of electronic commerce technologies generally provides higher quality information, while improving speed, accuracy, flexibility, responsiveness, and cost savings. The technologies that will have the greatest impact in the government sector are already here, but it is the integration and synergy between these computer, telecommunications communications technologies and networking that will bring the greatest benefits. The digitizing, networking and processing of information will have profound impact on government's administration and services to the public. Governments that take a lead role in adopting these technologies stand a better chance of improving the quality of their services to the public by decreasing, in permanent manner, the cost-related dimension. Obviously, governments have a clear role to play in facilitating these changes and making government's applications a strategic component in view of developing a national expertise of IT that could be transferred internationally.

It is nonetheless imperative that governments undertake this transition hand in hand with the private sector, that is, in partnership with private industry, without, of course, giving up their responsibilities for the control and management of information. That public administrations occupy a role of leadership in this area is not surprising they are quite simply the largest information managers around.

This, however, leads governments to specific actions to be undertaken to open the way to the progressive implementation of electronic commerce within their respective public administrations.

Canadian Governments Online

The Canadian Governments OnLine (CGOL) objective is to improve government's use of online technologies through an interjurisdictional repository of services they each provide or plan to provide to the public, using new means such as the Internet, interactive TV, kiosks, electronic bulletin boards, or other innovative online means of serving the public.

The cross-country study was awarded to the Electronic Commerce World Institute (ECWI) and to the DMR Group.

The deliverables include (1) a discussion paper on issues related to interjurisdictional online services, (2) a classification scheme, (3) assessment criteria to apply to these services, (4) an online catalogue of government online services across Canada, and (5) recommendations for further action.

The potential advantages of online delivery channels for public administrations and their user communities are many: cost savings through efficiency gains, improved response times and the ability to make the right information available to more people when they need it. In addition, the role of online services and catalysts for reengineering government processes is key, and needs to be showcased.

Obviously, the implementation of online services by public administrations, either individually or cooperatively, raises a number of issues. It is our understanding that this study must provide information and recommendations for the resolution of these issues. It must also indicate how these issues are currently being addressed by Canadian governments, private industry, and the governments of other countries.

For the sake of this panel let us try to list the major questions that ought to be raised in the conduct of this study and which could also be use to provide some answers.

For instance:

What are the social and economic issues associated with the delivery of online services and information?

The role of governments in fostering the growth of the information society and its global and regional implications for the competitiveness of the economy, the protection of privacy, the penetration of online services, technology trends, accessibility (in terms of physical access, affordability, user-friendliness, and literacy).

How can separate public administrations share the same online services? What are the jurisdictional and political issues? How are they being addressed elsewhere?

The nontechnical barriers to the implementation of electronic commerce and other online approaches represent probably the greatest challenge to their adoption by public administrations. Important lessons can be drawn from the current experiences of Canadian public administrations, such as joint efforts of federal and state administrations in the U.S. and Australia, as well as the initiatives sponsored by the European Commission at the national and municipal levels. Many of these efforts have already been documented by the Electronic Commerce World Institute and its international members.

How can we classify the various types of services that governments can provide online?

A classification system is to be evolved from the work of the Electronic Commerce World Institute and the DMR Group on the Infocentre project, and the UBI and BEACON initiatives. Also, the study does benefit from the research and development efforts of the Electronic Commerce World Institute on the Electronic Commerce Maturity Model, the international TEMPLET project, its EDI for SMEs research project and its experience in establishing an international resource center on Electronic Commerce, EDI, and CALS on the Internet.

Once the online services are classified, the resulting catalog will inform decision-makers on the range of online services that can be provided by public administrations. It will also document challenges, difficulties and lessons learned, and provide a degree of implementation guidance.

What government services are best candidates for online delivery? For what audiences?

The catalog of online services has documented a broad range of applications targeting a variety of end users. The catalog also includes document information on the benefits of specific online services for both the government and its user communities. Information from the Electronic Commerce World Institute international electronic commerce database from both the private and public sectors, and DMR's Results Chain analysis tool which was developed within the scope of the DMR Macroscope project.

How can the benefits of added value of online services be measured?

The most promising applications in terms of benefits potential will be analyzed in depth in the best practices section of the catalog. Also, costs benefits data, tools, and methods developed in Canada and other countries to justify the implementation of online services will be surveyed in the Discussion Paper section of the study. These techniques and tools will come from both the private and public sector.

Which technology (or combination of technologies) can be used to support online delivery?

The catalog will document a broad spectrum of online technologies including: bulletin board, Internet, interactive TV, electronic forms, interactive kiosks, automated teller technologies, automated voice response, electronic catalogues, EDI, CALS, workflow software, and imaging.

What are the key technical issues associated with the implementation of online service delivery and how are they being solved?

Some issues that will be addressed specifically in the catalog are: interoperability with existing systems, telecommunication infrastructure requirements, standards, technology cost, security of data, privacy, confidentiality, authentication.

How can governments finance online services?

The economic aspects of online service implementations will be documented in the catalog and covered in the Discussion Paper section of the study. The financial aspects of best practices will be documented in more detail and various approaches to financing online government services will be examined, documented, and assessed, such as: incremental implementation, financing through cost savings, usage fees, partnerships with the private sector, exporting the technology to other administrations, and participation in private consortia.

What are the implications of online service delivery for government employees?

Making the transition to online and paperless modes of delivery has important implications for Canadian government personnel. The cultural aspects of this transition are not to be underestimated and need to be addressed. For example, impacts on staffing levels, communication and organizational change management issues, education, and reskilling requirements will be covered. The catalog will contain a section on "Implementer's Advice" where the implementation manager of an online initiative will have the opportunity to share lessons learned. For certain best practices, video interviews with implementation managers can be documented in the multimedia section of the catalog, thus enabling future implementers of online services to share the lessons learned.

What is the impact and potential of online service delivery on government business processes?

A specific section of the catalog will seek to document the impacts that online services have had on the delivery of government services. Furthermore, the role of electronic commerce as catalyst for business process reengineering and the merits of evolutionary vs. radical change approaches will be covered in the discussion paper.

What online services should Canadian governments offer cooperatively?

"Exportable" best practices will comprise the core of the recommendations. They will be accompanied by an opportunity analysis (proposed implementation plan, issues to be resolved, technical alternatives, cost estimates). The best practices from foreign administrations and private industry will also feed these recommendations.


Regardless of the difficulties resulting in addressing and counteracting these issues, governments have the sole responsibility to subscribe to the improvement of efficiency and productivity. Since government spending of most western governments accounts for half or more of their gross national product, efficient reengineering of their business processes could lead to substantial increase in productivity.

For instance, and to put things in perspective, let us recall what has been accurately stressed recently by Stephen S. Roach, economist at Morgan Stanley: "Small differences in productivity add up to big changes in income over time. If the United States raises its productivity trend growth rate by just 0.5 percent a year to 1.5 percent, that increment cumulates to about $300 billion over ten years, sufficient to compensate for about three garden variety recessions."

"If the current 2 percent pace remains, national output will rise about 10 percent more than it otherwise would over the next decade. Put differently, real per capita gross domestic product (GDP) in the U.S. increased by 1.75 percent a year from 1870 to 1990 to the world's highest level from $224 to $18,258 (in 1985 dollars). Had the U.S. growth rate been just one percentage point less 0.75 percent a year, then real per capita GDP in 1990 would have been $5,519, or around Mexico's level and about $1,000 less than Portugal's," according to calculations made by Robert J. Barro, economist at Harvard University.