The Challenges of e-Gov in Times of Crisis

Maddalena Sorrentino

and Marco De Marco

Department of Economics, Management and Quantitative methods, Università degli studi di Milano,

Via Conservatorio 7, Milano, Italy

Department of Management strategy, Università G. Marconi, Via Plinio 44, Roma, Italy

Keywords: e-Government, Economic Crisis, Public Sector, Italy, Stimulus Packages.

Abstract: Two main reasons spur us to explore the nexus between e-government and economic crisis. The first, more

general, is due to the fact that this relationship has been relatively little researched. The second, more

pressing reason is the fact that in a time of recession no government can escape the tough new challenges

posed by the design of stimulus packages. The paper discusses the Italian Digital Agenda and argues that

the economic crisis spotlights the efficiency issue and also dictates the governance model between the

various decisional levels, emphasizing the centralized logic. The study is an early effort to analyze the

issues most likely determinant in shaping the IS/ICT demand at the macro level, i.e., the public sector as a

whole. The experience of previous e-government programs will provide the basis on which to make a

preliminary assessment of the growth impact of the Digital Agenda.

1 INTRODUCTION

There is rising consensus that it will prove

impossible to lead the EU out of crisis without

stimulating sustainable growth (FEPS, 2012). This

paper investigates the nexus between e-government -

i.e., “the use of Information and communications

technology [ICT], and particularly the internet, as a

tool to achieve better government” (OECD, 2003) -

and the financial crisis and the subsequent economic

slowdown that has blighted all the advanced and

developing countries since 2008. It attempts to

respond to two interrelated questions that play a

crucial role in all those settings in which the

policymakers have increasingly incorporated e-

government into their action:

 What type of relationship exists between e-

government and economic recovery?

 What are the potential implications of the stimulus

packages on the ICT options/strategies of the public

sector?

Two main reasons spur us to explore e-

government in times of crisis. First, current public-

sector transformation studies habitually under-

explore or sideline the time factor (Pollitt, 2008).

Second, the stimulus packages developed by

governments around the world invariably leverage

the innovative use of ICTs across the economy and

society (OECD, 2009). Inspired by New Public

Management ideas, the public sector must ‘work

better and cost less’ (Ongaro and Valotti, 2008), a

goal that e-government can help to attain by

improving the efficiency of the PA ‘machinery’.

Yoon and Chae (2009: 25) define an e-strategy

as a set of coordinated actions and policies that seek

to accelerate the development of a given country

through the use of telecommunications, information

systems and their associated technologies. The e-

strategies see the public institutions as important

drivers of digitisation by embracing e-government

policies, as implementers of these policies, and as

market players in the demand for ICT-related

products and services. Therefore, it is imperative

better understand the implications of ICT-based

policies.

This exploratory paper aims to contribute to the

growing debate on the role of ICT - i.e., the main

general-purpose technology of our time (Zysman

and Breznitz, 2012) - as a key driver of the public

action’s response to the crisis. The paper takes its

cue from the assumption that an ubiquitous, rapidly

changing technology scenario means that ICT ‘is

both a major source of the problem and a major part

of the solution’ (Brewer et al., 2006).

The study is split into four steps: First, drawing

on a selective literature review, it presents an

355

Sorrentino M. and De Marco M..

The Challenges of e-Gov in Times of Crisis.

DOI: 10.5220/0004355403550360

In Proceedings of the 9th International Conference on Web Information Systems and Technologies (WEBIST-2013), pages 355-360

ISBN: 978-989-8565-54-9

 2013 SCITEPRESS (Science and Technology Publications, Lda.)

updated account of the economic implications of

ICT and, in particular, e-government. Second, the

Digital Agenda 2012 (i.e., the stimulus package

recently launched by the Italian government) is used

to analyze (from the logic of an ex ante evaluation,

i.e., post-program adoption) the potential

implications for the IS/ICT demand of public

organizations. As revealed by a qualitative analysis

of the Digital Agenda, the government clearly sees

the use of ICT as a cost-cutting strategy, which also

places new constraints on the action of the public

organizations. The paper argues that e-government

programs are given a key anti-crisis role but the

ongoing recession negatively affects the resources,

nature and timing of the programs. Nevertheless,

even during a crisis the trends that make ICT a

general-purpose technology could benefit the PA

innovation effort. The ensuing discussion is the

result of the insights produced by the literature

review, a documentary analysis, and the authors’

current knowledge. The paper closes with some

conclusions for the study of e-government in times

of crisis.

2 ICT, E-GOVERNMENT

AND GROWTH

Mapping the extensive literature that has sought to

document the growth effects of ICT is beyond the

scope of this paper. Recent work to shed new

analytical light on the economic implications of ICT

has been carried out by, among others, Karlsson et

al. (2010), Weber and Kauffman (2011), Vu (2011),

Kretschmer (2012). Rather than an exhaustive

review (impossible here for reasons of space) it is

more useful, and closer to the paper’s focus, to select

sample contributions and the references cited

therein.

ICT plays a major role in shaping economic

performance in developed countries (IDABC, 2005).

As a general-purpose technology, ICT ‘affects a

multitude of sectors …, and … makes other sectors

more productive’ (Kretschmer, 2012). Therefore, the

effective role of ICT as a ‘driver of economic

growth’ can depend on a large number of often

contingent interactions and relationships (Bloom et

al., 2010).

According to the OECD (2009) the impact of the

crisis on ICTs is two-fold, i.e., direct and indirect

impacts on the ICT sector itself, but also on the

innovative use of ICTs across the economy and

society. The two impacts are mutually reinforcing. A

slowing ICT sector will generate lower productivity

increases and potentially fewer ICT innovations.

Slower uptake of ICTs slows the productivity- and

innovation-enhancing features of ICTs from

diffusing throughout the economy; and network

effects induced by a broadly installed ICT

infrastructure do not materialise.

Unlike the studies on the overall impact of ICT,

research into the economic effects of e-government

is far more recent and hence less developed. Cross-

country e-government studies (e.g., Yoon and Chae,

2009), Srivastava and Teo, 2010, Rose and Grant,

2010) agree that appropriate ICT investments, the

removal of obstacles that prevent the PA from

functioning well, and the development of an

innovation-friendly business environment help to

realize the economic potential of e-government and,

thus, to improve the public sector.

Srivastava and Teo (2010) demonstrate that

facilitating a number of online government services

for businesses increases their use of ICT and the

Internet. According to Picci (2006) the aggregate e-

government intervention has three effects. First, it

produces savings in the provision of public services.

Second, by facilitating economic activities, and by

favoring participation in the labor market, it

increases private-sector employment. Third, by

providing a ‘connected environment’ it improves the

prevailing technology that influences the production

process. The aggregate e-government effect,

observes Picci, takes time to be effective, reflecting

not only the period needed to complete projects, but

also the learning processes in the administrations

involved.

In summary, while, on the one side, financial

austerity can be a barrier to government

development, on the other, the need to select the

projects can provide an opportunity to inject

innovation into the mix of policies being adopted to

tackle the economic downturn (OECD, 2009).

Interestingly Pollitt and Bouckaert (2001)

highlight the ambiguity of the implications of the

economic crisis: ‘austerity makes reforms more

difficult, because reforms cannot be lubricated with

new money, … but on the other hand, a sense of

crisis can make it easier to consider radical options

and more fundamental changes than would

otherwise get onto the agenda of feasibility’. The

authors therefore invite us to take a realistic

approach to the economic downturn instead of

making oversimplified interpretations of the role of

the public programs and their effects.

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3 RESEARCH APPROACH

AND CASE ANALYSIS

To illustrate how the government of an

industrialized country is seeking to use e-

government as an anti-crisis measure, the paper

draws on the case of the Italian Digital Agenda

2012. The following analysis is supported by

multiple sources of evidence. Official documents

were collected and analyzed to study the

assumptions that support and steer the Italian plans.

The analysis is limited to the agenda-setting phase

because, at the time of writing, the implementation

norms required to enact the Digital Agenda had not

yet been issued. To assess the potential implications

of the Digital Agenda for public ICT strategies, the

paper further draws on insights from the academic

literature, reports, and the authors’ current

knowledge.

3.1 The Digital Agenda: Content

The Digital Agenda is crucial for the Italian

government that took office in late 2011. E-

government, e-commerce, smart communities,

computer literacy, and infrastructure are the growth

pillars of the government’s action decided by the

steering committee appointed in February 2012,

which has mandated coordination to three ministries:

Economic Development; Civil Service; Education

and Research.

The government’s Digital Agenda decree

approved on 5 October 2012 addresses the hurdles

of insufficient development with measures that

affect both the demand and the supply of e-services

and ICT infrastructure. The decree targets the

following areas: Digital identity; Digital

administration; Open data and digital inclusion;

Digital agenda for education; E-health; Elimination

of the digital divide; Electronic money; Digital

justice. The Agenda assumes that digitization can

readjust Italy’s current territorial imbalances. ICT

demand and supply (and, in particular, the PA as

acquirer and user of ICT) are closely intertwined

(Uskow and Casalino, 2012), (Dameri et al., 2012).

First Observation. Broadband, application

cooperation, electronic ID cards are recurrent themes

in the formal measures issued by previous Italian

governments, although these have mostly remained

on paper. Unlike the past, the current government

wants to accelerate the adoption of e-government by

making its use mandatory (e.g., it has introduced

penalties for those public managers who do not use

the digital signature).

Will it work? Is a legitimate doubt given that the

main ICT constituents of the Digital Agenda are

now mature and consolidated. The crucial aspect is

not so much whether the State and the more than

8,000 municipalities of Italy will manage to produce

and distribute the 60 million multifunction ID cards,

but whether the cards will provide secure access to

highly composite public domains such as healthcare,

justice and tax.

3.2 Toward a Target ICT Portfolio

The digital government switchover imposes stricter

interoperability within and across administrations.

Lanzara (Contini and Lanzara, 2009)

distinguishes three domains of interoperability:

technical (standards, protocols, modules, interfaces,

linkages, gateways, coding conventions and so on);

functional (the alignment between two regulative

regimes – law and technology – and between

different sets of work practices); and institutional

(the sharing of administrative routines to allow

communication, mutual understanding,

accountability and coordination), all of which must

be orchestrated automatically across the ICT

infrastructure. Technical compatibility ‘is a

necessary condition for the interoperability of

different ICT systems’ (ibidem: 33), but also

underpins the functional and institutional

interoperability. Lanzara thus conceptually separates

e-government from the simple ‘putting online [of]

what is currently […] delivered offline’ (ibidem,

2009: 2).

If we can accept this line of reasoning, which

presumes the reshaping of the public sector’s

‘institutional fabric’(ibidem: 4), the extent of the

future challenges to be faced by the Italian PA as a

whole become clear. Therefore it is reasonable to

assume that the efficacy of the anti-crisis stimulus

packages will depend, first, on the implementation

process and, second, on the degree of incisiveness

with which the government coordinates the project.

At present, the details of the roadmap are still

being defined but the close relationship between the

outcomes of the Digital Agenda and the

organizational and ICT choices of thousands of PA

is evident. In the coming months, each PA must

formulate its own ‘achievable migration plan’ (Ward

and Griffiths, 1997). The result of this cognitive and

planning effort must be a ‘target application

portfolio’ (ibidem) that must be compared with ICT

supply alternatives.

At the micro level, each PA must square the

migration planning and IT supply decisions for the

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Digital Agenda with the constraints and priorities

dictated by the IS in use. Therefore, the actions

taken will reflect context-specific needs that are hard

to generalize. What we can attempt here, however, is

an analysis of the issues most likely to be

determinants in shaping the IS/ICT demand at the

macro level, i.e., the public sector as a whole.

Previous e-government programs will provide the

basis on which to build a plausible picture of the

future public IS/ICT demand and, as a consequence,

to preliminarily assess the growth impact of the

Digital Agenda. The following analysis does not

address the appropriateness of the Agenda’s anti-

crisis measures nor its financial implications.

3.3 Critical Issues and ICT Decisions

Essentially, three critical issues will orient the

decisions of the Italian PA on the development,

adoption and use of ICT solutions.

Resources. The ICT budgets of the public sector

have contracted sharply in the past five years. The

slump in demand from 2010 was particularly glaring

in the central PA (-4.1%), while the local PA

demand shrank 2% (Assinform, 2012). The Digital

Agenda 2012 affects many areas, but only a few

projects (such as broadband, identity cards, e-

education, and e-justice) will receive public funding,

while the other measures will have to be self-

financed.

Implications for IS/ICT demand: the limited

availability of public money could become an

insurmountable hurdle for entities with fewer

resources and skills, such as the municipalities that

are already having to cope with shrinking budgets.

Timing. The launch of e-health, e-payments,

electronic ID-cards means the ministries concerned

will have to issue special implementation norms.

Other measures (e.g., use of digital signature) will

come into effect immediately, while in yet other

cases no date has been specified.

Implications for IS/ICT demand: some PAs could

decide to sit on the fence, postponing their action

until the implementation norms are issued. The

“wait-and-see” strategy is more widespread than

commonly believed: evidence of this is the electronic

correspondence register that the entire Italian

public sector was legally required to implement in

January 2004 but which, one year later, was up and

running in solely 34 out of 61 central

administrations (Sorrentino, 2007).

Type of Actions. The Digital Agenda has an

impact on both the infrastructure and the application

portfolios of the relative administrations, although

the application portfolio will be the primary target in

coming months.

Implications for IS/ICT demand: budget issues

will induce most PA to keep using their legacy

information systems (IS) and databases, even though

the best decision would be to replace them entirely.

Therefore, most cases of migration planning will

consist of squeezing the maximum support from the

current IS, which means that the interoperability

issues will play second fiddle to the technical

aspects. Probably, the projects of bigger scope will

affect domains that have always been highly

regulated (e.g., healthcare and justice), which are

already used to interacting and sharing resources in

a systemic logic. It is a fairly natural step in such

environments – given the sensitive data treated and

the reliability required of the ICT applications - to

progress to more advanced levels of integration and

standardization. In fact, unsurprisingly, most of the

Italian PA’s cloud computing experiments have

centered on the healthcare systems (Assinform,

2012).

In domains where standardization levels are

lower (e.g., local authorities), and where there is a

strong tendency to delegate the ICT choices to the

suppliers, private companies will seek to push the

public decision-makers into launching new projects.

Banks and telecom companies will put further

pressure on the PA to implement multi-channel

payment systems. That could boost the use of facility

management and outsourcing services.

4 FINAL REMARKS

Public programs are more difficult to implement in

times of crisis. The Italian Digital Agenda’s

trajectory is dominated by the first category of the

potential effects identified by Pollitt and Bouckaert

(2011), in other words, financial austerity, with

considerable repercussions on the resources, nature

and timing of the e-strategies.

There is widespread uncertainty on the outcome

of the implementation processes that will be

launched by thousands of subjects in response to the

Digital Agenda. Further, the effective degrees of

freedom given to the single administrations in

arriving at their ICT decisions and strategies are

heavily conditioned by financial austerity.

Therefore, the new constraints dictated by the

Digital Agenda will reduce the street-level

bureaucrats’ power of discretion.

The Agenda will have a significant impact on the

application portfolio of the PA. The stimulus

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packages are primarily focused on the development

and diffusion of e-services based on what are called

substitutive software applications, i.e., ‘machine

power for people power, economics being the main

driving force, to improve efficiency’ (Ward and

Griffiths, 1997). These are followed by

complementary applications, i.e., ‘improving

productivity and … effectiveness by enabling work

to be performed in new ways’ (ibidem). The

innovative applications, or those intended to obtain

or support new practices, concern a small number of

areas: open data, medical records, and educational

reforms.

The government therefore has decided to count

mainly on a cost-cutting strategy that replaces the

labor-intensive services with e-services. But

capturing the ICT-enabled productivity gains will

mean ‘reconstituting the services’ (Zysman and

Breznitz, 2012), which translates into investing in an

organizational innovation that is much harder to

achieve than simple technological upgrading.

Therefore, there is a risk of compromising the

realization of the expected benefits for national

performance should the “widespread minor

interventions” on the ICT portfolio predominate

over the redesign of operations and processes.

Then there is the timing issue. The multiple

governance levels that are fairly unused to

collaborating and the fact that not all the PA will be

able to respond to the Digital Agenda with the same

level of diligence probably will generate substantial

lags between the enactment of e-government and its

effects (Picci, 2006).

The second category of the effects of austerity

underscored by Pollitt and Bouckaert (2011) still

needs to be analyzed: is there truly room for the

Italian PA to consider ‘radical options and more

fundamental changes’ because of the crisis? Some

pilot experiences in Italy (CNIPA, 2008) show that

cloud computing, one of the most promising ICT

developments, gives the PA potential to achieve

economies of scale and to implement organizational

innovation. But none of these payoffs is automatic.

Organizations that replace their IS with cloud

computing while changing nothing else are doomed

to miss out on the full benefits of the new

technology (Brynjolfsson et al., 2010). Nevertheless,

the dragging on of the crisis probably will push

many PAs to become - albeit unwillingly - cloud

consumers, with yet-to-be-deciphered critical effects

on the economic system as a whole. An example of

the decisions that cloud computing can accelerate is

the spending of €450 million per year solely for

managing the 1,033 data centers of the Italian central

PA (Assinform, 2012).

We believe that our exploratory analysis will

contribute to the debate on e-government’s growth

role in the global crisis. As a preliminary response to

our research questions, we can say that the nexus

between e-government and crisis is significant. E-

government can be a major driver of recovery but its

impact on growth must not be overestimated because

the e-government is, in turn, shaped by the

recession.

Despite its context-specificity, the case helps us

to identify some factors common to e-government

change in periods of recession. First, the crisis

influences the feasibility of the stimulus packages

that leverage e-government. Second, by drastically

shrinking the available resources, the crisis shapes

the governance of the various levels, generating a

highly centralized decisional model that reduces

each PA’s discretional power. Third, even in times

of crisis, the development trends that make ICT a

general-purpose technology could reward the public

sector’s innovation effort. Therefore, the crisis could

open windows of opportunity for transformation

change and provide the ‘basis for rapid action’

(Pollitt, 2008:139). Moreover, the viable ICT

options can vary noticeably from one PA to another.

Our analysis focuses on solely three of the main

critical factors, i.e., the resources, nature, and timing

of the projects that will shape the future ICT

strategies of the Italian PA, but does not attempt to

test their prevalence or relative weight. Therefore we

cannot rule out that other factors not considered here

will instead be deemed relevant and worthy of

investigation. Future research must therefore better

clarify the implications of the hesitant economic

recovery on e-government strategies, possibly

through a plurality of perspectives and methods. A

further trend worth exploring is the PA’s adoption of

cloud computing, and its consequences on the e-

services implemented also outside the public sector.

Indeed, the relationship between e-government and

crisis is set to remain a key and fruitful concern of

research and practice.

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