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Value generation in e-government from service-based IT integration Francesco Virili Facolta` di Economia, Universita` degli Studi di Cassino, Cassino, Italy, and
Maddalena Sorrentino
Service-based IT integration
227 Received 6 November 2008 Revised 1 February 2009, 3 April 2009 Accepted 20 April 2009
Dipartimento di Scienze Economiche, Aziendali e Statistiche, Universita` degli Studi di Milano, Milano, Italy Abstract Purpose – Understanding how value is actually generated in e-government projects is one of the most challenging, and relevant, issues in e-government research. This paper aims to investigate the contribution of service-based information technology (IT) integration for generating value in the public sector, proposing a theoretical framework based on the theory of IT conversion effectiveness. Design/methodology/approach – The paper illustrates this novel approach to electronic government evaluation with an exploratory case study of a service-based IT integration project developed by the City of Genoa, showing how and why IT integration can substantially contribute to value generation in the public sector. Findings – Contrarily to what one would expect according to the original theory of IT conversion effectiveness, value generation may happen even with no substantial growth in the pre-existing IT asset portfolio. In fact, what is truly important is not only the availability of IT assets (policy output), but also their proper use (policy outcome) and their final effects on policy takers (policy impact). The case study shows how a low-cost and small IT integration project based on agile information system development practices can significantly leverage the legacy systems, enhancing the overall degree of IT conversion effectiveness (first stage), with expected positive effects on policy outcomes (second stage) and policy impacts (third stage). The enabling effect of the web services technology has a central role in the overall value generation process. Originality/value – While addressing a literature void in the context of public sector, this theoretical approach is substantial as it can be used to evaluate and maximize the value generated by e-government projects, with a special focus on service-based IT integration projects. Keywords Government, Communication technologies, Value analysis Paper type Research paper
The authors would like to thank the Editor and two anonymous reviewers for their constructive comments and suggestions. An earlier version of this study was presented at the e-GOV 2005 International Conference (Virili and Sorrentino, 2005). Many thanks also to the CIO of the City of Genoa, Dr Enrico Bazzurro, to the management of software company “Engineering Spa”, Ing. Lanfranco Marasso and Ing. Roberto Blasioli, and to the professionals of the software development team, in particular Roberto Romiti and Riccardo Forafo`, for their active contribution and for giving access to the project documents used in our study. Last, but not least, the first author would like to express his lovely gratitude to his wife, Elena, for her valuable contribution.
Transforming Government: People, Process and Policy Vol. 3 No. 3, 2009 pp. 227-247 q Emerald Group Publishing Limited 1750-6166 DOI 10.1108/17506160910979342
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1. Introduction Evaluating information technology (IT)-based projects in the Public Administration is not an easy task, and this is particularly evident in integration projects, in which there may be no significant (and easily measurable) addition of new hardware and software systems to the pre-existing IT assets. More generally, in IT-enabled Public Administration projects, the idea that a “new system” could generate tangible and measurable one-shot “system benefits” could be challenged in many ways: the “new system” could be difficult to identify, and the “benefits” could depend on factors like the degree of actuation of the public policy; the interaction of different categories of policy makers and policy takers; the dynamics of processes evolving in a multi-stage chain of consequences. Therefore, a project evaluation approach taking into account the public policy objectives, and the different stages of public policy actuation would be desirable. This contribution is based on the idea that the value generated by electronic government is related to the degree of actuation of the public policy, enabled by IT. In particular, the contribution of service-based IT integration to generating value in the public sector is investigated, by proposing a processual framework based on the theory of IT conversion effectiveness, revised and applied to the public sector. This framework can be used as a basis to evaluate and maximize the value generated by e-government projects, with a special focus on service-based IT integration projects. This theory-grounded approach is proposed here for the first time. The intended contribution is mainly theoretical, showing limited case study evidence only to illustrate the application of our approach. Recent years have seen an acceleration in efforts to bolster e-government[1] services through IT integration projects (Hjort-Madsen, 2007; Janssen and Cresswell, 2005; Klischewski and Scholl, 2008; Maad and Coghlan, 2008; Pardo and Tayi, 2007; Wu, 2007). For example, a large percentage of the of the “Italian e-government action plan” initial funding has been channeled into the development of one-stop government portals, issuing integrated services to citizens and firms (Virili, 2001). Many e-government experiences and projects around the world (Andersen and Kraemer, 1995; Chiang and Hsieh, 2007; Choudrie and Weerakkody, 2007; Henriksen, 2006; Sarikas and Weerakkody, 2007; Siddiquee, 2008; Yu and Fang, 2005) show that IT expenditures are no longer aimed at creating an IT infrastructure from scratch, as in the first stage of e-government adoption, but are often spent to bridge, incorporate or integrate the various parts of different, often unconnected information systems (ISs) “islands of automation” (Hale et al., 1989). Even at European Union level, a Pan-European interoperability framework was proposed (European Commission, 2008). Still, understanding and evaluating IT integration is no easy task. Apart from the numerous theoretical and empirical works on ISs project evaluation, there is no explicit IS theory that provides an answer to a quite obvious question: does IT integration actually produce benefits in e-government? In particular, how and why can IT integration projects and technologies contribute to value generation in e-government? The notion of “value” stemming from IT is widely debated in the IS literature (Hitt and Brynjolfsson, 1996 and references therein), and it is itself challenging in e-government (Chircu, 2008; Irani et al., 2005): indeed, whereas value in the business sector is always somehow related to the firm’s competitive performance, presumably, in the public sector it has to be defined in a different way. An answer to these questions is proposed
in Section 2, where a theoretical framework of “IT conversion effectiveness”, based on a three-stage value generation process, is illustrated and discussed. The framework is adapted to the public sector by focusing on IT-enabled public policies, in order to investigate the role and contribution of IT integration projects to value generation. In Section 3, the empirical research methodology is discussed; in Section 4, the exploratory case study of an IT integration project by the City of Genoa is briefly sketched to illustrate our theoretical perspective. The research findings are summarized in Section 5, opening the final discussion on research contribution, limitations and further research directions proposed in Section 6. 2. Value stemming from IT integration in the public administration A good example of the empirical analysis of the IT value generation process is given by Markus and Soh (1993), who evaluate IT investments in the US banking industry on the basis of the well established “theory of IT conversion effectiveness” (Weill, 1992; Weill and Olson, 1989). The main idea in the theoretical framework used by Markus and Soh (1993, p. 378) is that organizations usually differ in their “IT conversion effectiveness”, i.e. “the ability to convert expenditures into assets that provide value to the investing firm”. In facts, IT expenditures are often a necessary, but not sufficient, condition for producing valuable IT assets. According to the underlying theoretical framework, two groups of factors are assumed to influence the capability of organizations to transform IT expenditures into valuable assets: structural factors (such as industry and firm size) and IT management factors. Therefore, the theory of IT conversion effectiveness is based on three cornerstones: (1) Value is not generated by IT expenditures until they are converted into IT assets; accumulated IT assets include IT applications and IT infrastructure. (2) Structural factors can influence IT conversion effectiveness. Industry and firm size are the main structural factors that can affect a firm’s ability to benefit from IT investments. In particular, returns from IT spending seem to be greater in firms belonging to information-intensive industries. Another structural factor is the size of firms. Big firms usually have greater coordination and control needs, therefore, these are more likely to reap IT benefits than small companies. In addition, large firms have more bargaining power when making IT purchases. (3) Internal IT management factors can also influence IT conversion effectiveness. In addition to structural factors, the ability of organizations to effectively transform their IT investments into IT assets is related to four interrelated managerial processes, originally introduced by Adler (1989): . formulating IT strategy; . selecting an appropriate organizational structure for executing IT strategy; . developing the right IT applications; and . managing IT application development projects effectively. Besides, the seminal contribution from Weill (1992) and Weill and Olson (1989), many other studies have addressed the IT value generation issue, including Beath et al. (1994), Grabowski and Lee (1993), Lucas (1993), Ross and Beath (2002), and
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Sambamurthy and Zmud (1994). In Soh and Markus (1995), these works have been analised and integrated, by adopting a processual approach. Their study is the first to formulate a process theory of IT value generation, as opposed to the variance theories proposed up to that date. For a comparative analysis of the two different theoretical approaches (Markus and Robey, 1988). The authors take into account some of the major concepts proposed in the IT value generation models cited above: the notion of “appropriate use” from Lucas (1993); the idea of “strategic fit” from Grabowski and Lee (1993); the basic pillar of “IT assets” from Markus and Soh (1993), Weill (1992), and Weill and Olson (1989); the idea of “Leveraging IS processes” from Beath et al. (1994); finally, the notion of “IT impacts” from Sambamurthy and Zmud (1994). In Figure 1, the resulting value generation process theory (Soh and Markus, 1995) is illustrated. On the left side, the “IT Conversion Process” is the first of the three major phases of value generation: the second stage (on the middle) is the “IT Use Process” generating “IT impacts” through appropriate/inappropriate use of the IT assets. The third, stage (on the right), called “Competitive Process” finally gives rise to the organizational performance, resulting from the ultimate influence of the IT impacts on the competitive position and dynamics of the organization in the market. In short, Soh and Markus (1995) have helped to highlight and interrelate into a process theory the key factors at play in a firm’s ability to leverage its IT potential. Is it possible to apply this conceptual framework to a civil service context? The next section will face this issue, discussing how the different nature and purposes of the public administration activities may affect IT value generation and measurement. 2.1 IT conversion effectiveness in public administration We start our analysis by focusing on the first stage of the value generation process, represented in the left-hand circle of Figure 1, above. As shown, this stage is explained by the theory of IT conversion effectiveness (Weill, 1992; Weill and Olson, 1989), stating that “IT conversion effectiveness” measures the capability of an organization to convert IT expenditures into potentially valuable assets. In particular, IT conversion effectiveness could be seen as the ratio between the value potentially generated by IT assets (when properly put into use) and the corresponding IT expenditures: IT conversion effectiveness ¼ Potential value=IT expenditures
"The IT conversion process" IT expenditure
Figure 1. How IT creates business value
• IT management/ conversion activities
"The IT use process"
"The competitive process" IT impacts
IT assets • Appropriate/ inappropriate use
Source: Soh and Markus 1995, Figure 6
Organizational performance • Competitive position • Competitive dynamics
ð1Þ
The “Potential value” in formula (1) is the value fostered by the IT assets when properly put into use. That value can be defined and measured in several ways, depending on the context and on the various dimensions of interest. In the business context, Weill uses the notions of “productive outputs” and “payoff”, saying: The conversion effectiveness of the firm influences the way the IT is converted to productive outputs. Firms with higher conversion effectiveness are expected to get greater payoff from their investments (Weill, 1992, pp. 313-4).
Therefore, in the business context, an expenditure would be converted to an “asset” in line with its potential to generate “productive outputs” and a “payoff” when properly put into use. This notion is in line with the traditional accounting notion of an IT asset: specifically, an IT asset is a tangible/intangible good originated by an IT expenditure; it may have an annual or multi-annual utility, i.e. capability to produce revenues, (productive outputs, payoffs) for one year (current asset), or for several years (fixed asset). It is now necessary to transpose this notion of asset to the public sector: in this context, an IT asset would be a tangible/intangible good originated by an IT expenditure; it may have an annual or multi-annual utility, i.e. capability to produce public policy “effects” for one year (current assets), or for several years (fixed assets). What is to be meant by “effects” of a public policy? According to public policy studies (Earl et al., 2001; Kautto and Simila, 2005; Mickwitz, 2003; Regonini, 1997; Vedung, 1997), three orders of effects can be identified in the public sector: policy outputs, policy outcomes, and policy impacts: Think about the anti-mafia issue: the figures about the number of arrests, of sentences passed, of barracks built, of bank account checks all give us an overview of what the public authority achieved in fighting this phenomenon, i.e. the outputs of the public policy against criminality. However, on their own, these figures say nothing about their actual ability to reduce the virulence of mafia organizations, that is, their actual policy impact (Regonini, 1997, p. 164).
Here, follows a more detailed classification: . Policy outputs. “Products of the Public Administration activity, such as the goods, services, payments, and norms ensuing from public policy approval” (Regonini, 1997, p. 163). . Policy outcome. The direct result of the action of the policymakers (through policy outputs) on the “policy takers” (Regonini, 1997, p. 163). Policy outcome does not include the impact of external factors outside the control of the policymaker (such as, other administration policies, demographic effects, economic effects, social phenomena and trends, weather, natural disasters, etc.). . Policy impact. The wider consequences, intended and unintended, of the policy on the community when combined with external factors outside the policymaker’s control. “Talking about [policy] impact, we refer to the general aims of the public policy and to the [solution of] the problem that originated the policy itself” (Regonini, 1997, p. 163). Therefore, in the public sector, IT expenditures could generate a peculiar kind of IT assets, i.e. policy outputs. It was already shown in Figure 1 how in the private sector,
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IT assets could be put into use to produce IT impacts and then revenues (organizational performance). Similarly, Figure 2 shows how in the public sector IT assets (i.e. policy outputs) could be put into use to generate IT-enabled policy outcomes and then to produce IT-enabled policy impacts. The processual schema here above should be regarded as a first attempt to adapt the theoretical framework proposed in Soh and Markus (1995) to the peculiar nature of the public administration. Comparing the two value generation schemes, respectively, in the private sector (Figure 1) and in the public sector (Figure 2), the IT conversion process and the IT use process in the left-hand side of the schema are only slightly changed: the more evident difference is in the public sector view of IT assets as policy outputs and of IT impacts as policy outcomes. In the third stage, in the right-hand side of the schema, the notion of a competitive market is abandoned in favor of a more general notion of external influence, involving all the outside subjects and forces that contribute to the final impact of the policy implementation process on policy takers. How can IT integration projects influence the value generation process in the public sector outlined above? This question is investigated in the following section, first, by introducing the notion of IT integration, then by discussing its effects on value generation. 2.2 IT integration and IT conversion effectiveness in the public administration Among the numerous studies on IT integration in e-government, including Hjort-Madsen (2007), Janssen and Cresswell (2005), Klischewski and Scholl (2008), Maad and Coghlan (2008), Pardo and Tayi (2007), and Wu (2007), a valuable analysis of the concept of integration in e-government is given in Klischewski (2004, p. 57): To fulfil the many promises of e-government, organisational and technical performances of different administrative units need to be interrelated. This requires cooperation, pointing to a common cross-organizational strategy and its implementation, as well as interoperability, pointing to the technical means which enable IT systems to exchange messages in order to realise machine performance across system borders. Given these two enablers, integration is the result of both cooperation and interoperability between administrations and their partners.
According to Klischewski: [. . .] integration denotes a state of readiness (or the effort to reach this state) to provide services (information, transactions, production, etc.) which are only possible through successful incorporation of informational or functional elements which had been isolated before.
The IT conversion process
Figure 2. IT value generation process in the public administration
IT expenditure IT management/ conversion activities
The IT use process
The IT-enabled policy implementation process IT-enabled policy outcomes
Policy outputs (IT assets) IT appropriate/ inappropriate use
IT-enabled policy impacts Influence of external factors out of control
Notice how integration occurs when bridging informational and functional “elements” that were formerly separate. The “state of readiness” can be viewed holistically as the outcome of a dynamic process, embedded in four different but related contexts: technological, organizational, interorganizational, and political (Pardo et al., 2004). What is the connection between the concept of integration in e-government and the value generation process shown in Figures 1 and 2? In other words, how does IT integration affect IT conversion effectiveness in the public administration? We can observe that the IT integration expenditures are often relatively insignificant compared with the historical investment in the legacy systems. Therefore, one would expect the policy outputs to be also marginal. Actually, as it will be shown, this is not always the case. Let us take for example an investment in an IT integration project aimed at bridging different “islands of automation”, like the “SEAP” one-stop service portal mentioned in the following section, connecting four separate administrations involved in the business start-up authorization process. Post-integration, to start a new company, the applicant no longer needs to submit four separate requests (to the commerce, health and safety, building, and environment office desks, respectively): she/he now interacts solely with the integrated services officer at Sportello Unico per l’Esercizio delle Attivita` Produttive – single access point for enterprises (SEAP). Once the initial application has been filed, the applicant can then use the internet to monitor its processing status directly. Therefore, the costs deriving from issuing certificates, collecting documents, re-inputting data, checking formal requirements and copying redundant information from system to system typical of the “islands of automation” are significantly reduced in favor of delivering a speedier, higher quality service. In consequence, while the overall expenditure on IT integration can be relatively small compared with the original IT expenditure on the legacy systems, the additional value generation potential – in terms of policy outcomes and policy impacts – can be fairly significant. Such a surprising disparity between IT expenditures and value generation potential could be explained by a change in the IT conversion effectiveness of historical IT expenditures on legacy systems. Given the fact that integration denotes a “state of readiness” to provide services, such services (potentially issued when IT assets are properly put into use) can be viewed in terms of potential policy outcomes and policy impacts. After integration, the whole portfolio of IT assets originated by the accumulation of historical IT expenditures ideally achieves a “state of readiness”, fuelling additional value (if properly put into use and when not inhibited by external factors). 2.3 Hypothesis development In consequence, as a first working hypothesis, IT integration could be seen as a way to enhance a posteriori the IT conversion effectiveness of historical IT expenditures on legacy systems. As a second working hypothesis, further research by the authors (Virili and Sorrentino, 2009) suggests that the enabling role of the web services technology may be a determining factor in the technical context. The following section presents an empirical illustration of an IT e-government integration project in the form of an illustrative case study. In particular, our working
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hypotheses will be challenged by exploring the effects of the investigated project on value generation in e-government (first working hypothesis) and the enabling role of the web services technology (second working hypothesis). The case described here is a small but significant success story, illustrating how integrating pre-existing systems could potentially generate significant new value in e-government, even in presence of limited additional investments. In this context, a relatively new integration technology (web services) has played a key enabling role. We found that, thanks to the enabling effects of the web services technology, a low-cost and small IT integration project based on agile IS development practices could enhance the degree of IT conversion effectiveness (first stage), with expected positive effects on policy outcomes (second stage) and policy impacts (third stage), with a significant leverage of the pre-existing legacy systems. 3. Research method A case study is used here to illustrate the application of the theoretical framework discussed above as well as to broaden the horizons of further inquiry and empirical investigation. The illustrative case study described in the next section is the story of an e-government IT integration project, enabled by the application of the “web services” technology. The case study illustrates an IT project evaluation based on policy effects (outputs, outcomes, impacts). In this case study, thanks to the enabling effects of the web services technology, even limited IT expenditures could potentially generate significant policy outcomes. The methodological choice of case study is quite diffused and usually well accepted in ISs literature. As opposed to purely quantitative research methodologies, case studies can give a holistic understanding of cultural systems of action (Dyer and Wilkins, 1991; Eisenhardt, 1989, 1991; Yin, 2003) and facilitate a multi-perspective analysis directed at the study of complex, dynamic social phenomena that are both context and time dependent (Orlikowski and Baroudi, 1991). The sketches of empirical evidence offered here do not by any means offer an exhaustive and detailed analysis of the effects of IT integration on IT value generation in Public Administration; they have exploratory nature, in the effort to draw a preliminary picture of the phenomena under observation and provide an orientation for further data collection and analysis. The exploratory orientation of the study is also suggested by the early stage of the system’s adoption. Taking into account that at the moment of data collection, the project had only just been delivered, our interviews and observations focused mainly on understanding the enabling role of the web services technology and its influence on the system development processes. Indeed, while the effects on IS development practices were already clear, with a direct impact on the first stage of the process as shown in Figure 2 (IT conversion process), the overall outcome of the IT use process and of the IT-enabled policy implementation process could not yet be observed directly. Instead, by using the above-mentioned theoretical framework, the researchers sought to indirectly prospect and analyze, on the basis of the available evidence, the relative implications in terms of policy outcomes and policy impacts. The illustrative case study is based on two cycles of open interviews and on the project internal documentation collected at the project site.
3.1 Data collection, informant selection and interview protocol The first cycle of interviews took place at the external software company. The software development team of the external software company was composed by three members: the project leader and two software developers, only occasionally supported by other colleagues. Therefore, the researchers decided to interview all of them. The interviews were mainly centred on understanding the enabling effects of the web services technology. The interviews were carried out with very broad, open-ended questions based largely on the interview structure developed by Baskerville and Pries-Heje (2004) and reported in the Appendix. The interview scheme was structured in five main parts: (1) information on the interviewee and the organization; (2) software development methods and tools; (3) software applications; (4) teams and people; and (5) problems and challenges.
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The second cycle of interviews took place at the IS department of the City of Genoa and involved the City of Genoa CIO together with the project leader of the external company. In this case, the main focus of the interviews was not only on the technical aspects, but also on the project motivation and story, on the related policy issues, on the potential and actual effects. The interviews were based for the IT development aspects on the interview guide mentioned above; for the project evaluation aspects on the schemes reported in Tables I and II. The City of Genoa municipality CIO, with a significant history and institutional experience, had a higher level view on the project story and the related policy issues, therefore he was the natural first informant for an exploratory investigation. Also the project leader of the external company was involved in the second cycle of interviews, offering an outside view on the issues debated. The two authors were both present at the interviews, asking general questions on the main issues from the interview guides and taking separate notes, which were later compared and integrated. The project internal documents used to integrate the primary sources were the following: . general project description and objectives; . project work-plan, including milestones; and . functional specifications of the main software modules.
Outputs/IT assets Hardware/software platforms and working procedures of the CR system, replacing the old paper-based practices
IT-enabled policy outcomes (IT assets put into use)
IT-enabled policy impacts (affected by external factors)
Reduced bureaucratic burden: more efficient and lighter administrative procedures
Stimulate economic vitality, by facilitating and sustaining existing businesses and promoting start-ups
Table I. Commerce regulation system before IT integration with the SEAP portal (CR)
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Table II. Integrated commerce regulation system after IT integration with the SEAP portal (CR þ CRI)
Outputs/IT assets CR system þ CRI system. CR assets now include (a few) new hardware and software systems dedicated to integration with the SEAP portal
IT-enabled policy outcomes (IT assets put into use)
IT-enabled policy impacts (affected by external factors)
Lighter bureaucratic load: fewer, more efficient administrative procedures; citizens have easier and broader access to services via the internet. New administrative processes, cross-functional information flows. More transparency and accountability: online process tracking. Availability of data sets on patterns of system use by citizens, helping to better understand their needs and improve the quality of services
Stimulate economic vitality, by facilitating and supporting existing companies and promoting start-ups. Improve quality of life for citizens. Better image of the administration: open to innovation, modern, closer to citizens and firms, more accessible and readily available
Two simple forms of triangulation and bias control were adopted: the comparison and integration of two different sources for the interviews; the participation of the project leader of the external company to the second cycle of interviews, offering an alternative and external point of view the issues debated. 4. The City of Genoa web portal case study The e-government project of our case study, here called commerce regulation integration (CRI), aimed to connect a software application originally built as a stand-alone solution (commerce regulation – CR), with a one-stop e-government portal called SEAP. The interviewees briefly summarised the history of the original CR system, although that is not our main focus here. The CR was recently designed to enable the issuing of retail commerce permits by the City of Genoa. The benefits achieved thanks to the CR system compared with the old paper-based procedures and practices were in line with the conventional view of a more modern, more efficient, leaner, and less bureaucratic administration, although the system was strictly confined to its original area of operation. A few months after the completion of the CR, the City of Genoa launched SEAP, a new project based on an integrated one-stop services portal for businesses. This project was co-financed by the first tranche of the Italian e-government action plan. In order to provide integrated e-services, the SEAP system had to be designed to interact with four legacy systems: CR, health and safety regulation, building regulation, and environment regulation. All of these had been implemented as independent systems at different times by different administrative units, on different hardware and software platforms, using different architectures, with inputs from various software providers. The scope of the SEAP integration project was huge and required substantial effort as well as the involvement of several administrative units in partnership with different vendors. Our investigation focuses on the CRI project, i.e. the IT integration (sub)project aimed at integrating the CR system with the SEAP portal. CRI was a relatively small yet relevant part of the whole SEAP integration project. In addition, it had just been
completed and delivered at the moment of data collection and was, therefore, the ideal candidate for our investigative analysis. The CRI system was developed and implemented entirely by the external software company that had released the earlier CR system. The new system was based entirely on “web services” (Alonso et al., 2003), a powerful IT integration technology. Owing to its ability to easily enable inter-application communication, ubiquitous access and incremental adoption, it has a great potential to help heterogeneous and distributed systems work together (Sorrentino and Virili, 2004). The CRI project started in April, year 1 and began operating in January, year 2. Six software components, some of the main functionalities of the CR system, were published as web services. This way, the SEAP portal was enabled to activate the main functions of the CR system via the internet. The integration project was fairly small, agile, low-cost and conducted in a straightforward, informal style. 4.1 Discussion To go back to the question: “how and why can IT integration projects and technologies contribute to value generation in e-government?” the working hypotheses set out in Section 2 may be recalled here, the IT integration process (including the enabling technologies adopted) may have a positive impact on the existing IT assets by increasing their value a posteriori. To challenge our working hypotheses, special attention will be placed on the following aspects: H1. The effects of the CRI integration project on value generation. H2. The enabling role of the web services technology. H1. Effects of the CRI integration project on value generation According to the theory of IT conversion effectiveness, the CRI project would have a positive effect on value generation if it converts IT expenditures into IT assets. Did the CRI generate new, specific IT assets? Not actually. Indeed, after integration with SEAP, the CR systems hardware, software, and application portfolio featured only marginal additions. As reported by the interviewees and confirmed by the project documents, the overall effect of the new CRI assets on the entire CR system (estimated at cost, following asset valuation accounting practices) translated into only a few percentage points. Therefore, more than producing new IT assets, the CRI project was a way to enhance a posteriori the IT conversion effectiveness of historical IT expenditures, i.e. the original investments in the CR system. The post-integration CR might have acquired new capabilities that enable it (when properly put into use and if not inhibited by external factors) to produce effects, i.e. policy outcomes and policy impacts. Is the post-integration CR system capable of achieving the underlying policy objectives (outcomes and impacts) better than before? Given that the CRI project was delivered only recently, the researchers were unable to collect any direct tangible evidence on this issue, apart from some of the stakeholders generally positive attitude to the CRI system impact. Therefore, at this stage, only indirect estimates and reflections based on information available at data collection time could be provided.
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After integration of the CR system into the portal, the CR Office of the City of Genoa reported the introduction of only a few functional changes. For example, the request for a new license is no longer initiated by the CR system operator, but by the SEAP manager of the integrated service. The citizen no longer has to submit four separate requests (with the commerce, health and safety, building, and environment offices, respectively) to start a new business: she/he interacts with the SEAP manager and can access the internet to personally monitor the progress of their application. Nevertheless, evaluating the overall effects of the CRI project on policy outcomes and policy impacts requires a broader viewpoint. An extensive empirical analysis might be based on the comparative evaluation of the contribution of IT assets to value production before and after integration. Given the lack of available data and established metrics, what is offered here is a brief qualitative analysis of some of the envisioned policy effects of the CRI integration project, based on the notions reported in Tables I and II. The statements in the tables are purely for illustrative purposes and draw on the general impressions recorded during the interviews and data analysis, mainly for the purpose of highlighting the different dimensions of value generation along the process chain. The comments raise the issue of selecting the appropriate metrics, data collection procedures and evaluation strategies for the empirical appraisal of IT-enabled policy outcomes and impacts, an issue that does not fall within the scope of the present work, but which, in our opinion, would both advance and reward future research efforts. For an introduction to this topic and the related issues applied to e-government projects (Danziger and Andersen, 2002; Hoff, 1992; Jones et al., 2007). Table I outlines the CR system before IT integration. Table II shows the CR system after IT integration with SEAP, i.e. after the delivery of CRI. The three columns of the tables, correspond, from left to right, to the three stages of the value generation process depicted in Figure 2. Table I shows how, in the first stage, the original introduction of the CR System (to replace the old paper-based practices) generated a large portfolio of IT assets (column 1). The actual use of the CR system cuts red tape and shortens procedural times (column 2: policy outcomes); this leads to a potential benefit for the economic system as a whole, generated by the lighter bureaucratic load on the business[2]. Table II shows the effects of the CRI integration project on the existing CR system. The first column shows the slight increase in IT assets after integration, as discussed earlier. Column 2 shows the policy outcomes likely to be produced, once the new integrated system is definitively up and running. In addition to further cutting red tape, the city has now given citizens broader access to its services by deploying the internet channel. New administrative processes with cross-functional information flows have been introduced, thanks to interaction with the other systems in the SEAP portal. New processes and work practices are potentially disclosed. The online process-tracking capabilities of the integrated system are likely to heighten transparency and accountability: it is now possible to retrieve and distribute updated information about the status of any open application. Finally, the policy outputs now include not only the benefits for the economic system, but the improvements made to the quality of life, indirectly related to switching masses from city offices with a limited reach and capacity to virtually unlimited remote
electronic access. In addition, the introduction of the integrated system is likely to enhance the image of the administration in terms of the citizens’ perception of its innovative and open approach, combined with its closeness, accessibility and availability. Potentially, all these policy outcomes and outputs (and possibly more) can be generated by the relatively contained IT investment made in the case study. Despite the absence of specific measures and rigorous quantitative observations, such a wide range of (potential) effects, if confirmed, would support our first working hypothesis. The policy outcomes and impacts might not be explained by the IT integration expenditure alone, but also is a result of an a posteriori increase of the IT conversion effectiveness generated by the historical expenditures on the legacy systems. In other words, after IT integration, the legacy systems could potentially generate more value than before. H2. The enabling role of web services technology in IT integration The available empirical evidence shows how the enabling role of the web services technology in this project is not limited to its infrastructure for cooperating networks (Bolici et al., 2003; Sorrentino and Ferro, 2008), but, by influencing IS development practices, also extends to the value generation process. We asked the software company’s development team and CIO whether the web services technology peculiarities could be considered a determining and unique factor in project success, and, if so, why. According to the CIO, one alternative would have been to build the CRI system using a “case-by-case” approach, i.e. creating and managing points of data interchange (based on direct data-base connections or batch file processes) in each of the different software environments to be integrated. In particular, the CR system would have required major changes using the Oracle Developer software development platform in PL/SQL language. According to the software developer’s team, another technically viable alternative would have been to use pure XML. In which case, the absence of a standardized software components architecture (based on web services description language for components description; simple object access protocol for access to components and universal description, discovery and integration for component retrieval) would have meant defining jointly, with the developers of SEAP, the content, structure and types of data interaction in much more detail. To use the developer’s words, the web services integration approach: [. . .] greatly simplifies your life, when you have to get different worlds to talk to each other; web services software components are just black boxes, we don’t have to worry about the content inside.
The key technical features of the “web services” technology that emerged in this project were both the XML-base and the component-base: the XML base favors standard, low-cost and ubiquitous inter-application communication, while the component base enables reuse and emergent, incremental development (Virili and Sorrentino, 2009). Both aspects were strongly leveraged in the CRI project. Implementing new points for data interchange in the original CR system was straightforward thanks to XML. The negotiation process to establish inter-application communication between CR and SEAP was much reduced by the standard “web services” architecture. The adoption of incremental, emergent development practices (thanks to the component-based nature of
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the web services, which support object-oriented languages) greatly facilitated the quick and easy revision and adaptation of requirements, even mid-project, helping to keep it on target at low additional cost. The overall size of the IT integration investment was therefore considerably small. Further, the second working hypothesis is also supported by the fact that the web services technology played a fundamental enabling role in the CRI project, not only by standardizing the communication infrastructure, data flow, and inter-application communication, but also by enabling incremental and emergent development practices, enhancing flexibility and radically reducing complexity and costs, even when key, unexpected revisions had to be made in the middle of project implementation. The total IT integration investment was kept fairly low, but still had an important leverage effect on the value generation capabilities of the legacy systems. 5. Contribution to literature on evaluation in e-government This study contributes in a new way to the existing debate on e-government projects evaluation: the attention here is not focused on the classification of system benefits (e.g. strategic, tactical, and operational benefits, Irani, 2002), or on the different forms of capital affected (infrastructural, human, environmental, and social, Grimsley et al., 2007), but on the process itself, on the basis of a process theory. Adapting theories and concepts from the private sector, the original underlying assumptions were challenged, as suggested from recent studies in e-government evaluation (Irani et al., 2005, p. 76) and recognized in many areas of e-government research (e.g. project management, Rosacker and Olson, 2008; innovation, Orange et al., 2007). In order to challenge the underlying assumptions, the researchers took into account the peculiar nature of the public policy process, on the basis of studies on public policy and program evaluation (Earl et al., 2001; Kautto and Simila, 2005; Mickwitz, 2003; Regonini, 1997; Vedung, 1997), distinguishing three different orders of results in the public policy actuation: policy outputs, policy outcomes and policy impacts. This view is not in opposition with previous studies, but complements them. It is in fact possible to distinguish, for each stage of policy actuation, between strategic, tactical and system benefits (Irani, 2002) or the different forms of capital affected, as in Grimsley et al. (2007); or also the different enabling technologies, as in Themistocleous et al. (2004). The theoretical framework proposed here could address perhaps one of the key challenges for realizing value from e-government efforts; namely how to actually produce policy impact from IT spending. All too often, it seems that the output of IT spending is measured in a very technocratic way that has little to do with creating public value: successful IT projects should produce well designed IT artefacts. Our approach shows how the evaluator, well conscious of the fundamental and necessary role played by IT as enabling technology, could adopt a wider view in evaluation, taking into account also the degree of effective IT use (policy outcome) and the ultimate effects on policy takers (policy impacts). We used our process model in an explorative case study to illustrate how service-based IT integration projects could actually generate value in e-government, expecting that: . Even small additions at the first stage of the process (IT assets) could generate quite high value in the following stages (H1).
.
That the specific integration technology based on “web services” would have a decisive enabling role for value generation (H2).
Both the hypotheses were confirmed in the illustrative case study. The brief case study proposed here shows how to take into account for the project evaluation not only the actual production of new IT assets, but also, and more importantly, the IT-enabled wider implications and ultimate effects on policy takers. This wider view may prove fruitful, particularly in the evaluation of IT integration projects involving pre-existing legacy systems. In such cases, the final IT-enabled benefits and drawbacks on policy takers are often only indirectly linked to a specific IT spending, and only a processual view of the value generation process can throw light on their actual value for policy takers. In comparison with previous studies evaluating IT integration projects this contribution is not taking into account all the numerous technical factors affecting the whole panorama of integration technologies, like in Themistocleous et al. (2004), but it is focused only on service-based integration technology, namely web services. This is in line with recent research on web services and service oriented architectures, suggesting that the service-based model may actually have a great potential for application integration (Baskerville et al., 2005, 2009). Further research may widen the technical focus adopted here. 6. Conclusions Value generation in the public sector is a complex process and many of its aspects are still unknown, especially the various degrees and dimensions of IT-enabled policy effects. The conceptual framework discussed here appears to be simple but powerful. Simple because it reveals the complex dynamics of IT-enabled public policies in three stages: IT assets generation, use of IT assets, and ultimately, the policy impacts. Powerful because it may offer theoretical ground (based on the theory of IT conversion effectiveness) for the application of IT-enabled public policies by taking into account the system development dimension, the system usage dynamics and the influence of external factors. The process theory approach adopted here looks appealing from several respects: . It sheds light on the three different levels at which IT integration efforts may affect the value generation process: the conversion of IT expenditures into IT assets; the proper use of IT assets finalized to policy outcome; the concretization of the policy impact. . It shows how even a small-scale IT integration project may affect the potential of value generation of pre-existing IT assets, eventually with important effects on policy outcomes and policy impacts. . It puts into evidence how the web services technology could play a significant enabling role in IT integration, and, ultimately, on policy outcomes and policy impacts, thanks to intrinsic features such as component-based reusability, XML ubiquitous access and extensibility. Although the main intended contribution of this study is in the theoretical framework, and not in the sketches of empirical evidence, the illustrative case study gives a brief
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but still concrete illustration of the wide variety of factors potentially affecting value generation in e-government. In the IT conversion stage, the key factors include the IT investment, the enabling role of technology, and the IS development practices. In the use stage, the “classical” IT management practices (including user communication, training, and motivation) do matter to achieve proper actual use of IT assets. In the final stage, various contextual variables and forces which are not under direct control (higher level politics, weather, economic cycle, etc.) are likely to influence the final implementation of an IT-enabled policy. On the output side, the case study shows how even a relatively small investment in IT integration could potentially produce a significant value in e-government in terms of policy outcomes and policy impacts. What really counts, from the standpoint of the policymakers responsible for IT investments in e-government projects, is not only the ability to produce new IT assets, but also the second-stage effects on policy outcomes (i.e. wherever IT assets are put into proper use and produce measurable intermediate outcomes), and the third-stage effects on policy impacts (i.e. when the ultimate influx on policy takers is finally combined with all the other factors that are beyond the policymakers’ control). Also the technical features of web services do play here a significant enabling role. In the case study, web services made it possible to adopt agile and incremental system development practices, with the effect of radically reducing development costs and timing, while achieving a high level of flexibility in adapting to emergent or unforeseen requirements of IT systems integration. Of course, further research would be needed: this framework should be thought of more as a promising direction for further analysis than as a final point of arrival. Further research efforts may be required to collect additional evidence in order to confirm and refine the present proposal. A promising further step forward could be done on the basis of an extensive analysis of literature on IT projects evaluation, taking into account models and measures that may empirically characterize the different stages of value generation in e-government. The authors believe that specific models and measures could be desirable not only for IT assets, but also for IT-enabled policy outcomes and policy impact. This paper takes a small, tentative step towards this ambitious goal. Notes 1. OECD defines e-government as “the use of information and communication technologies, and particularly the internet, as a tool to achieve better government” (OECD, 2003, p. 65). In this study, we refer indifferently to e-government projects, and to IT-based projects in the Public Administration. 2. Policy impacts are hard to estimate here: the complexity of getting an appraisal of “economic vitality” is associated with the impossibility of isolating the net policy impacts (i.e. exclusively due to the introduction of the CR system) from the effects of external factors, like the economic cycle, financial conditions, fiscal policy, demographic factors, etc. References Adler, P. (1989), “Technology strategy. A guide to the literature”, in Rosenbloom, R.S. and Burgelman, R.A. (Eds), Research in Technological Innovation, Management and Policy, 4 ed., JAI Press, Greenwich, CT, pp. 25-151.
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4. Team and people issues How is people/team management different using WS technology in comparison with traditional development? What roles are typical? How does knowledge transfer occur? What assignment rotation and coordination strategies are used? 5. Issues, problems and challenges What are the biggest problems and challenges you have? Corresponding author Francesco Virili can be contacted at:
[email protected]
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