Funding the Future of eGovernment

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Funding the Future of e-Government
Alternative Funding Strategies for Electronic
Commerce Projects
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Agenda

• Background
• Project Descriptions
• Interviews
• Alternative Funding Strategies
• Evaluation of Funding Strategies
• Recommendations

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Background
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Project Description

• Our mission
• Identify and evaluate agency funding strategies
• Our methods
• Document review
• General research
• Interviews

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Interviews

• Thirty-two Interviews
• Seven Agencies
• Five Private Companies
• White House and Congressional Staff
• Leaders on the issue of funding IT Projects

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Alternative Funding Strategies
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Funding Strategies

• Budget Appropriation
• Working Capital Funds
• Innovation Funds
• Fee for Service
• Rebate Funds

• Capital Funding
• Share-in-Savings
• Public-Private
• CIO Czar Model
• Hybrid Approach

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Budget Appropriation

• Direct appropriation from Congress, coordinated
  through 3-year budget cycle
• Critical Success Factors
• Presidential and Congressional Support
• Planned annual budget

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Working Capital Funds

• Funds may come from direct appropriation or from
  uncommitted funds
• Critical Success Factors
• Top-level support
• Management capability

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Innovation Funds

• Directly appropriated or surcharge on existing
  revenue streams
• Critical Success Factors
• Identification of a source of initial funding
• Top-level support
• Oversight management

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Fee for Service

• Agency business unit that provides services
  internally and to other government agencies for a
  set fee
• Critical Success Factors
• Leadership from within the government
• Internally developed core competencies within the
  agency
• Identified revenue streams

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Rebate Funds

• Percentage of purchases that is refunded by the
  vendor to the government
• Critical Success Factors
• Coordination between organizations
• Top-level support

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Capital Funding

• Funds are generated through IT bonds and are
  managed by a central authority
• Critical Success Factors
• Top-level support
• Repayment plan
• Public backing
• Standard policies

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Share-in-Savings

• Contractors are paid out of the savings or new
  revenues generated from the project
• Critical Success Factors
• Specific historical data on costs
• Metric for determining the costs savings or
  revenues generated from the project
• Mechanism to approve, capture, control, monitor,
  report on, and share revenues

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Public-Private Partnership

• Non-profit consortium of private firms brings
  expertise and funding
• Critical Success Factors
• Leadership by public-sector Champion
• Top-level support
• Participant commitment
• Agency technological maturity

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CIO Czar Model

• Government-wide fund is established and one
  authority oversees the funds
• Critical Success Factors
• Strong leadership and credibility
• Sense of crisis
• Top-level support

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Hybrid Approach

• A combination of two or more of the above
  strategies
• Critical Success Factors
• Strong Management
• Clearly identified project segments

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Evaluation of Funding Strategies
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Practical Considerations

• Agency Technological Maturity
• Stage of Project Lifecycle
• Degree of Required Inter-
• Organizational Collaboration

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Agency Technological Maturity
Cutting-edge innovators
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Have infrastructure - exploring e-commerce
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Poor infrastructure - compatibility issues
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Poor Infrastructure - Compatibility Issues

• Appropriate funding strategies include
• Budget appropriation
• Working capital fund

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Have Infrastructure - Exploring e-Commerce

• Appropriate funding strategies include
• Innovation fund
• Capital funding

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Cutting-Edge Innovators

• Appropriate funding strategies include
• Share-in-savings
• Public-private partnerships
• Hybrid models

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Stage of Project Life-Cycle
Pilot
Production
Proof-of- concept
On-going operations
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Stage of Project Life-Cycle Pilot Phase

• Appropriate funding strategies include
• Budget Appropriation
• Working Capital Fund
• Innovation Fund
• Capital Funding
• Public-Private Partnerships

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Stage of Project Life-CycleProduction Phase

• Appropriate funding strategies include
• Working Capital Funds
• Fee for Service/Franchising Model
• Share-in-Savings
• Rebate Funds

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Degree of Required Collaboration
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Practical Considerations
Phase of Project Lifecycle
Agency Technological Maturity
Degree of Required Collaboration
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Recommendations
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Current Funding Strategies are Workable - but
Flawed

• Inherently stove-piped process
• Leads to divergent results
• Current strategies are work-arounds
• Difficult to achieve economies of scale
• e-commerce not viewed as mission critical
• Hindered by uneven infrastructure development

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A Unified Approach

• Highest priority to funding infrastructure
  development
• Uniformity, standardization, economies of scale
• Appropriations, Capital Funding, CIO Czar
• Higher priority to moving pilot to production
• Working Capital Funds, Share-in-Savings
• High priority to ongoing funding of innovation
• Innovation Fund, Rebate Funds, Share-in-Savings,
  CIO Czar

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Managerial and Organizational

• Identification of best practices
• Improved flow of ideas and information both
  intra- and inter-agency
• Translation across similar agencies (citizen
  service or process)
• Overarching leadership and vision
• Agency top management support
• Direct responsibility and accountability

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Organizational Structure

• National CIO Board
• Builds on the success of CIO Council
• Strong Chair position
• Coordinating role

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Final Comments

• E-gov is not a luxury, its a necessity
• Current approach is flawed
• Consensus A common planning and oversight
  mechanism is imperative for e-commerce projects

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Discussion