Enabling Successful Public Sector E-Business Strategies

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Europrix Scholars Conference 2004 1

Enabling Successful E-

Business Strategies in the

Public SectorEuroprix Scholars Conference 2004

Author: Kieran OHea

Date: 19 th October 2004

Abstract

The success of an organizations e -business strategy can sometimes be influenced by its corporate

culture. This is particularly true in large, traditional businesses and in the public sector.

Public sector organisations that benchmark their e-business strategies against their own internal

procedures are unlikely to become best in class on the Internet. They must use knowledgeable and

eager e-champions to implement the right Internet strategy and help align the organisational culture

with the reality of life online.

If public sector organisations were private sector companies using the web to sell products to their

customers, probably very few would succeed using their current strategies. This paper is about how to

inject private sector ethos into public sector Internet strategies, making them lean and agile in the

process.

KE Y W O R D S

E-business; Public sector; Consumers; Trust; Loyalty; Corporate culture; E-champions; Information

Society; World-wide-web.


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TA B L E O F CO N T E N T S

1. Introduction ............................................................................................................................ 3

2. The Early Days of Public Sector Engagement with Users on the Internet .............................. 3

3. E-Government Initiatives: Catering for Citizens and not Consumers ..................................... 4

4. The Effect of the Web-Savvy Consumer on the Government/Citizen Relationship................ 4

5. Blurring the Boundaries between the Public and Private Sector ............................................ 5

6. Making Concessions in order to succeed in Consumer-land .................................................. 6

7. Trust versus Choice: Where does Consumer Loyalty Lie?....................................... ................ 7

8. Re-Aligning Organisational Culture for Internet Growth ........................................................ 7

9. Conclusions ....................................................................................... ...................................... 8

10. About The Author ......................................................................... ...................................... 9


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1 . IN T R O D U C T I O N

It is not possible to over-emphasise the importance of injecting private sector ethos into public sector

Internet strategies, making them lean and agile in the process. The history of web-based public sector

projects aimed at consumers stems initially from European projects in the early nineties right up to

todays commercial offerings by state airlines, telecommunications and tourism bodies. Its important

to acknowledge this path of development as seen by the public sector:

1. First there were online public sector services aimed at citizens.

2. Then the distinction between citizens and consumers became blurred.

3. Then the distinction between public and private sector tactics became blurred.

4. Now there are public sector organizations interacting online with consumers and with privatesector competitors in an increasingly aggressive market place.

Hand-in- hand with some public sector organisations we will follow the path through these four

evolutionary st eps in order to emerge in todays e -supermarket, where we will finally be able to see

who will survive and how they will be able to do it.

2 . TH E EA R LY DAY S O F P U B L I C SE C TO R EN G A G E M E N T W I T H US E R S O N T H E IN T E R N E T

This activity has its roots in a 1993 decision by the European Commission to create a research

programme for electronic publishing. Up to then no such programme had existed with the result that

leading European publishers chose to participate in US research programmes. Afraid this would

hinder the growth of European competitiveness in this area, the Commission stepped in. The result

was a programme called Information Engineering which was actually about electronic publishing.

Within one year, electronic publishing itself had become an outmoded term and was subsequently

referred to as the World Wide Web.

The first web projects funded by the Commission were self-fulfilling in that they were large in size,

based on pan-European consortia of occasionally ill-matched partners and ran for four years. They

exhibited the typical characteristics of European research projects and were far removed from what

would later be witnessed in the dot.com era. They were also heavily over-resourced, some with

budgets of up to 8 million Euros - large by todays standards bu t enormous back in 1995.

Another feature that many of them had in common was that they were designed to be in the publics

interest they included the first website for European job seekers and another for those concerned

with the environment. None of these was particularly concerned with being commercial.


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The job seeker s website was called WATIS and was a joint-venture between technology companies

and state job agencies. Today we have services like Monster, set up with private investment. Who

knows whether Monster owes anything to WATIS for i ts existence, but one thing is for sure if Monster approached the European Commission for several millions of Euros now, it would not get it.

3 . E-GO V E R N M E N T IN I T I AT I V E S: CAT E R I N G F O R CI T I Z E N S A N D N O TCO N S U M E R S

When we think about e-Government the tendency is to think of online voting and electronic tax

payments. In other words, services which take the sting out of obligatory functions by providing

citizens with a convenient alternative. We might also think of e-Government as providing information.

E-business strategies in the public sector are not the same thing as e-Government. They require

motivating the public sector to adopt a commercial viewpoint in order to inspire the development

and implementation of imaginative and effective strategies aimed squarely at consumers.

While certain government departments such as finance maintain a relatively low profile on the web,

adopting what could almost be described as a you find us approach, others such as transport and

tourism have to be much more aggressive as they find their services competing for customers in an

almost high-street like environment. Clearly these are areas where e-business models have to be

competitive.

The same consumers who return again and aga in to use websites that inform or entertain them dont

tend to form the same emotional attachment to public sector websites. The relationship may be built

on convenience but it is not built on loyalty. People rarely use public sector websites out of choice but

because they have to. Changing this perception is one of the key challenges for public sector e-

business.

4 . TH E EF F E C T O F T H EW E B-SAV V Y CO N S U M E R O N T H E GO V E R N M E N T/ C I T I Z E N RE L AT I O N S H I P

One of the big advantages a public sector service has online is the consumers perception of trust. As

citizens, they have been raised on the belief that if a Government publishes some information, it must

be reliable. Bearing in mind current global events and media exposure of unacceptable behaviour by

public officials, it is anyones guess as to how long this situation of trust will continue. Its an ironic

side effect of the trusting nature of citizens that users of public sector websites dont expect to enjoy

themselves or to be entertained.


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A citizen with his or her consumer hat on is a different kind of animal to contend with. Commercial

websites are expected to be compelling as well as informative. Tolerance of unwieldy passages of text

is decreasing and more rich-media is expected. The trust afforded to public sector websites is

nowhere to be seen. With the huge increase in sites that are selling competing products, consumer

endorsements have become a very significant way of differentiating between product offerings. Theconsumer is less inclined to trust the provider of the particular information, product or service and

more inclined to base their purchasing decisions on the experiences of their fellow consumers.

While many sites are purely informational , the default mentality on the consumer web is Buy , buy,

buy . The functionality has been put in place to make it easy to do this and the level of trust has built

up to the point where people are carrying out almost every function online from paying electricity

bills to renting DVDs. Who needs banks and video s tores anymore?

5 . BL U R R I N G T H EBO U N D A R I E S B E T W E E N T H EP U B L I C A N DP R I VAT E SE C TO R

The Internet is primarily consumer territory and has until recently remained uncharted waters for

many public bodies. When they do decide to take the leap, they often find that the good intention of

being consumer-facing is quickly reality-checked by an insurmountable public-sector ethos. Factors

other than technology and market positioning are at play here organizational culture can also have

a serious impact.

In 2000, Irelan ds state-owned telecom company Eircom found itself in a situation similar to its peers

in other countries. Not only was it the dominant supplier of fixed-line telephone connections, but it

also operated a mobile phone network and was an ISP it had a number of Internet properties. These

were well resourced but not effectively managed and had been allowed to develop in a way dictated

by the parent organisations corporate culture, originating in different departments as individual

projects, not as part of an integrated strategy.

When interviewed as part of an Internet strategy overview, six senior managers were asked the same

question how many of your customers subscribe to your fixed-line service, your mobile service and

your Internet service? Not one of them knew the answer and in fact the calculation had never been

done anywhere in the organisation. Nobody saw the potential of offering cross-media services and

th is was a strong pointer to Eircoms inability to deliver an effective digital strategy at that time. Six

months later they shut down their stable of Internet companies and subsequently sold the mobile

phone part of their business.

In the public sector, initiatives that need to be lean in order to be successful subsequently gain a

momentum that would strangle the life out of an equivalent private-sector venture. Substantial

public-sector investment may underwrite such initiatives but does not guarantee that they will be

successful from a consumer point of view. In the above case study, the organisation set out to tell the


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consumer what was best for it, without really understanding the market, a tactic which does not

work.

6 . M A K I N G CO N C E S S I O N S I N O R D E R TO S U C C E E D I NCO N S U M E R-L A N D

Public-sector organisations that benchmark their Internet strategies against their own internal

standards and procedures are unlikely to provide services that are best in class and engage the

consumer. Enabling an aspiring strategy to become a successful reality requires a different kind of

viewpoint, one which usually has to come from the outside world.

Irelands state owned airline Aer Lingus had no web presence as recently as 2001. It had enjoyed its

status as the countrys flagship airline for many years. While it was busy resting on its laurels andkeeping its highly unionised work force contented, an upstart airline called Ryanair was busy

establishing itself using the Internet in a way that it had never been used before.

Aer Lingus had no choice but to compete head to head not just because it was losing business but

because the whole dynamic of the airline industry was changing. While Aer Lingus approach to online

booking was initially restricted to publishing the phone numbers of its offices on its website, Ryanair

customers were busy buying bargain tickets directly online and printing out the tickets on their laser

printer.

Once they decided to make their move, Aer Lingus took on the Internet in much the same way Eircom

had by diverting resources into it in a way that only state-owned organisations can. This tactic is

reminiscent of the huge investments made by the European Commission in order to kick-start

European websites several years earlier. By the way, most of those projects were now finished.

Aer Lingus first expensive attempt to put a booking eng ine on their website was delivered an

unreliable service which had to be quickly overhauled as Ryanair continued to gain ground with their

rudimentary yet highly effective service. Ryanair would still be accelerating away from Aer Lingusexcept for two things that the latter did which showed it was serious about competing online. It

introduced a similar low far structure to Aer Lingus and it started a cost cutting programme across its

entire organisation.

It adopted the Ryanair approach not only on the web but within the organisation at the risk of

coming into conflict with internal politics, the unions and all aspects of corporate culture. These were

issues that Ryanair as a start- up didnt have to face. Now there are signs that this huge transition is

succeeding and the success that Ryanair and other low-cost airlines have enjoyed up to now will soon

be challenged by a state airline that flies as cheaply into major hubs as budget operators who fly toregional airports. It will be interesting to watch for changing patterns in customer loyalty.


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assessment, several areas of activity were identified and these are currently the subject of further

analysis:

1. Performance metrics

2. Market take-up

3. IT procedures

4. Procurement policy

5. Geo-political issues

6. Relationship with consumers

7. Marketing practices

8. HR policy

9. Corporate commitment to the Internet

Organisations need to ask themselves at all stages of their e-business strategy and in other areas such

as HR and corporate culture : If we were a private sector company using the web to sell products to

our consumers, would we succeed using our present tactics? If they cannot confidently answer Yes

in all areas then it is likely that their corporate culture isnt right and/or their e -business strategy isnt

working.

9 . CO N C L U S I O N S

The Internet has spread and been adopted around the globe faster than any other known technology.

The web is just ten years old yet these can almost be regarded as doggy years 1 in terms of its impact

on society and commerce.

Some governments took a long time to react and as such have been left behind by many more agileorganizations. Google searches more than 4,000,000,000 (4 billion!) web pages and just because

youre a national government, it doesnt necessarily mean youre going to come back number one in a

search . The real power of the Internet is that its a great leveller.

As the public sector increasingly sees the Internet's potential, people within it are thinking more

entrepreneurially about Web technologies, and the many innovative ways they can transform public

service. The impact is potentially enormous, as citizens start to perceive the public sector as a

1 One doggy year = seven human years.


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responsive entity. The change is equally enormous for government, in its new view of citizen as

consumer.

Overcoming the inherent challenges and contradictions such as those outlined above and enablingthe implementation of successful e-business strategies that work in the public sector is crucial to the

fulfilment of the Information Society.

10 . AB O U T TH E AU T H O R

Kieran OHea has been working on Internet strategy in the public sector since before the birth of the

web. He was a consultant to the European Commission on research programmes in electronic

publishing from 1992-99. He was involved in the introduction of the DVD standard into Europe andco-founded Irelands first DVD authoring house in 1998. He has also worked as an advisor to the e -

Content programme. In Ireland he has provided expertise to the development of Government

strategy for digital media and has worked with a number of Government bodies in this area. He has

advised in the development of digital strategies for a number of client companies and is currently

working as Manager of the Internet Unit at Tourism Ireland where he is involved in the development

and implementation of an Internet strategy for an organisation which has a network of more than 20

websites worldwide.

Documents

Enabling Successful Public Sector E-Business Strategies