Costs, Benefits, and Risks of E-Government Portals

Costs, Benefits, and Risks of E-Government Portals

Rostislav Markov (University of Erlangen-Nuremberg, Germany) and Shota Okujava (University of Erlangen-Nuremberg, Germany)
Copyright: © 2008 |Pages: 10
DOI: 10.4018/978-1-59904-885-7.ch047
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In recent years, a lot of research energy has been devoted to the planning and implementation process of electronic government (e-government) information systems and specifically the empirical derivation of success factors in e-government projects (e.g., Burn & Robins, 2003; Jaeger & Thompson, 2003; Becker et al., 2004; Mahrer & Brandtweiner, 2004; Scott et al., 2004 Gil-García & Pardo, 2005; Ni & Ho, 2005). However, with e-government initiatives slowly reaching higher stages of growth in many countries, research focus is shifting toward the assessment of what has already been achieved, and for public administrators the justification of substantial investments. To best reveal the key issues in investigating the economical success of e-government projects, this article draws on literature from information systems, investment valuation, organisation and public administration studies, as well as the authors’ experience with the economic evaluations of information technology (IT) investments in the public sector. The focus of this article lies on the discussion of findings and lessons learned from the economic evaluation (also termed valuation) of a large e-government portal, encompassing 62 applications developed between 2001 and 2005 at a German municipality. The valuation of this e-government portal is based on a framework that defines a standardised procedure model in order to enable both ex ante and ex post valuation of IT investments throughout the whole project lifecycle. This procedure model operates on a framework that can easily be adapted to different IT investment projects such as enterprise resource planning (ERP), supply chain management (SCM) or portal projects in general. The additional support by appropriate methods and tools enables the user to build up valuation routine in order to emphasise the valuation process itself.

Key Terms in this Chapter

Economic Evaluation: Economic evaluation (also termed valuation) of an investment project is the process of analysing investment profitability through the calculation of project-specific costs, benefits and risks. The result of the evaluation is positive and profitability attained whenever the total benefits outweigh the costs and risks associated with the investment.

PDCA Cycle: Originating from the field of quality management, the Plan Do Check Act (PDCA) approach is used to systematically implement continuous (quality) improvements. It is structured as a closed loop (cycle), suggesting that the implementation of continuous improvements often incorporates ex post changes of initial plans and actions over time.

Total Cost of Ownership (TCO): Pioneered by Gartner Group, the Total Cost of Ownership (TCO) is an approach to identify and assess the total costs associated with a particular IT investment over the course of its lifecycle within an organisation.

Activity-Based Costing (ABC): Activity-Based Costing (ABC) is a method to estimate the costs of products and services based on the activities needed for their delivery. The relevant business processes for a specific product or service are identified and then their costs calculated.

Business Case: A business case is typically prepared preceding an investment decision in order to provide a detailed overview of project requirements and the value-adding and technical characteristics of the investment.

Public Private Partnership (PPP): Partnership between a public and private organisation for the purpose of collaboratively implementing a novel project within the public organisation or delivering a public service.

Business Value of IT: On the micro level of analysis, the business value of IT is an indicator of the profitability of single IT investments by evaluating their costs, benefits and risks. On the macro level of analysis, the business value of IT may describe the economical impact of IT on business models and industries.

Digital Divide: As citizens without access to computers or the Internet are practically excluded from any online services, the term digital divide describes the virtual division of society by the deployment of online public services into two separate groups: citizens with access to Internet-connected computers and those without.

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