The UK government’s current strategy for delivering online services is failing to make the grade and is consequently jeopardising £3.7 billion in cost savings, according to a new Report by Forrester Research (Nasdaq: FORR). Recouping these monies will require a new approach to private-sector partnerships, one which includes revenue-sharing models, Forrester advises.

In November 2000, Forrester conducted in-depth research with 14 UK government agencies, grading these departments on the vision, implementation, partnerships and savings sharing of their eGovernment efforts.

“All government agencies suffer from gaps in knowledge and understanding, and the inability to implement innovative services is holding the government back,” commented Forrester analyst Caroline Sceats. “By mid-2002, the government will drop the go-it-alone strategy, opening up business processes and service opportunities to new partners.

“The government will adopt the eBusiness network framework, where a ‘resilient structure of interdependent players co-operates in real time over the Net to get a job done’. This will require the government to share its savings on data and financial transactions with the private sector, creating a commercial market worth £730 million by 2005.”

Established eCommerce Integrators (eCIs) will dominate business payments, and pre-processing business taxes will result in £11 million in government fees per year by 2004. Technology giants will partner to build financial-management hubs. But the area of greatest opportunity in an eGovernment network will be for the small, fast-moving technology vendors that create a layer of continuously moving data flows. The fees available for successfully migrating data matchmaking to the private sector will cost government £207 million per year in 2005.

“With consumer-facing services constantly changing and developing at the pace of the Internet, the smaller, nimbler eCIs will be the ones best suited to matching demand from consumers to the relevant area of government,” Sceats adds. “As well as fees direct from government processing savings, match makers will take a piece of the £18 million in revenues that their attracter partners receive.

“The government should let go of fears that private-sector charges will lead to preferential services for the wealthy. Private-sector data transactions will never get off the ground if the government doesn’t accept that differentiation on services will drive £3 to £5 convenience fees from consumers. Instead, the government must concentrate on improving the performance of base-level services to all consumers through the £406 million per year in savings that match makers bring by 2003.”

Survey Methodology

Forrester interviewed a representative sample of government departments. We scored each department against 12 criteria across four categories — long-term vision, functional capability to deliver on that vision, strategies for building external partnerships and understanding of potential savings. Each criterion had a maximum score of five and a minimum of one, giving a maximum category score of 15 and a potential total score of 60. We then graded overall scores between an A (53-60 points) and an F (12-20 points). We also invited feedback from graded departments, and grading results were returned to interviewees before publication for comment and correction of any factual errors.