India has carved out a
niche for itself in the world as a leading player and a major provider of
technical manpower skills to the IT industry on a global scale. As a corollary,
India should be a leader in the implementation of E-Governance solutions and in
providing leading technologies to this segment of business. But this does not
appear to be the case.
Why is it that Indian
E-Governance sector not reached its full potential? Is there lack of effort from
the Government? Or Lack or support from the IT industry? Or Lack of Funds? Or Is
it because we are not looking in the right direction for solutions?... .. are
points for debate.
If E-Governance projects need
to succeed in the long run, the projects need to address a felt need of the
Citizens and provide cost effective solutions. Such solutions can come forth if
technology is applied properly with a vision and focus on the specific needs of
the Country. We need to appreciate the fact that solutions to our E-Governance
requirements cannot come packaged from the developed world since our
requirements are different. We need to develop our own indigenous solutions
which could in fact be a guiding force to many other developing countries. It is
also not necessary that we need super computer technology. We only need
“Innovative Thinking” to apply existing technologies tailored to our
requirements. This note highlights some of the issues that may be hindering
India’s progress in E-Governance segment and proceeds to suggest some systemic
changes.
Some of the problems observed
normally in e-Governance projects are as follows:
1.
E-Governance and E-Government:
Often,
E-Governance projects end up only as E-Government projects and not go beyond to
become whole some E-Governance projects. In other words, the projects may
fulfill the objective of Computerization and Connectivity within the Government,
without directly benefiting the public. The only benefit such projects can
bring to the public are reduction in Government expenses through better
efficiency. However, given the nature of Government machinery and “Sunk” nature
of costs, the residual work reduced by Computerization tends to expand and fill
the available manpower and infrastructure. Many times, costs actually increase
due to the addition of new cost centers.
While an
E-Government initiative is often a prerequisite to the implementation of
E-Governance, it is necessary to remember that it is only the means to the end
objective of E-Governance. Focus of the E-Governance project is to ensure that
the benefits of IT are used in the Citizen interface so that delivery of
Government services to the Citizen are improved and such improvement is felt by
the Citizens.
The main stake
holders in an E-Government project are the officials and the Legislators, while
the main stakeholders in an E-Governance project are the public.
Cost
effectiveness and Transparency are the hallmarks of the E-Governance projects
while these are not necessarily the objectives of an E-Government Projects.
For example, a
project to connect all Police Stations in a State through a VPN may be a good
E-Government project but is not an E-Governance project. But a simple Website
where online FIR is accepted from the public is a good “E-Governance Project”
though not an “E-Government Project”.
Similarly,
engaging a Bank as a “Substituted Treasury office for issuing Stamp Papers” may
be a good E-Government Project, but its utility as an E-Governance project is
low due to the limited practical benefits to the members of the public.
There is
therefore a need for focusing on the E-Governance/Government projects under
implementation and ensure that they have a good measure of E-Governance
component so that the benefits can be felt by the public.
2.
Fund Allocation for Implementation
One of the
inevitable aspects of any project implementation is that the funds available are
always finite. This is more so in a Government project where the allocation of
funds is budget driven. A complete E-Governance project has the following
components.
a) Hardware
b) Software
c) Digitization
of backend documents/process
d) Training of
the back-end personnel
e) Education of
the public
f)
Publicity/Information Dissemination to public
g) Maintenance
For an effective functioning of
any E-Governance project, all the above seven components should get sufficient
allocation of funds. If the needs of all these sub components are not properly
estimated and factored into the project at the beginning itself, the project is
likely to encounter funding problems during its implementation stage. In the
process, either the project is sub optimally implemented or unduly delayed.
It is often
observed that E-Governance project ideas are kicked off under hardware vendor
pressure and the interest often wanes once the hardware purchase process is
complete. Excessive funds are spent during the hardware and software
installation process leaving no funds for the subsequent processes. As a result,
even good projects languish because of lack of training of staff, lack of
E-readiness of the back end process or lack of knowledge and training of the
public in the use of the service.
It is therefore
important to realize that the project should have sufficient allocation of funds
in the very beginning for each of these processes including the tail end
processes of publicizing the benefits of the service to the public and training
them in its use as also further maintenance.
3.
Access Costs hidden in Projects
In some
E-Governance Projects where the access to information is an integral part of the
project, it is necessary to take the cost of access as an important component of
the total cost of the project.
There are many
projects in India which are being structured on the basis of the use of Smart
Cards and hand held Computers. Cost of such projects have a high proportion of
the cost of acquiring proprietary or special purpose devices such as “Smart Card
Readers” or PDA s without which the solution is not effective at all.
It is in such
projects that the failure of technology suppliers to find a “Total Cost
Efficient Technology Solution” is exposed.
4.
Cyber Law Compliance
Yet another
problem in the E-Governance projects in India has been that some of the Projects
were either conceptualized in the Pre-Cyber Law era or are driven by solution
vendors who were not conversant with the laws of the land inherent in
E-Governance applications.
The Project
co-coordinators from the Government who are conversant generally in the legal
aspects of the service are not tech savvy enough to identify all the automated
processes involved in software development. This often results in lack of proper
specifications leading to solutions which are non Cyber Law Compliant.
The current
working norms in a Government inhibits the project co-coordinators from
admitting if need be, that a mistake was done during the specification
development and the solution developed based on the faulty specification needs
to be modified. Such modifications involve additional costs not budgeted and the
Government system is not flexible enough to either accept such changes as
natural or the system users honest enough to prevent misuse of flexibility if
such flexibility is given.
As a result,
faulty decisions are often defended beyond reason and cause inefficient
E-Governance projects being perpetuated.
Software
development process is a “Natural Reiterative Process” and corrections are
inevitable during the process of development. This would require continuous
review during the development process, dynamic decision making and course
correction and if necessary increase in the development cost. If the solution is
being provided on the basis of a Contract with fixed cost considerations,
neither the developer nor the Government would be bold enough to suggest
mid-course corrections as may be possible in a trusted relationship between two
commercial private sector parties.
5.
Participation of Private sector
One of the
problems in getting a good technological solution to Indian E-Governance
projects is the lack of sufficient participation of Tech Savvy Indian Companies
in the E-Governance projects. The lure of dollars is too strong for many
Companies and Indian Contracts that too from the Government Sector are projects
which they would avoid both for commercial reasons and for the procedural
difficulties in handling Government business.
One of the
procedural problems in Government Contracts is that the decisions are always
based on competitive quotations with common specifications. While this is a time
tested mechanism that has its merits, in some cases the system does not provide
scope for any innovative technology to be applied since “Innovative Solution” by
definition may be an “Exclusive Solution” and is not amenable to competitive
bidding.
Some IT
Companies are apprehensive that if the details of their solution are shared with
the Government, they become part of the published specifications and do not
leave any room for the innovator against a competitor who enters the fray based
on the specifications and armed with other non technical credentials. Threat to
the IPR of the supplier is therefore an issue which prevents some IT Companies
from taking up Government projects.
If front
ranking IT Companies need to bring in their technical ability for E-Governance
projects, there has to be a system of Contract selection which preserves the
technical superiority of an innovative bidder against the price competitiveness
of another.
It is therefore
necessary to find a balance between public accountability and private sector
viability in choosing vendors for E-Governance projects and the process should
be transparent enough for professional companies to feel comfortable in
participating in E-Governance projects.
6.
Preventing Digital Divide
In all
E-Governance projects the ultimate solution should be such as to ensure a smooth
transition of the present systems to the new systems. Quantum jump in
technology with a need to use technological gizmos and low priority for proper
training of the public are likely to result in widening of the Digital Divide
and create a long term disharmony in the society.
Hence the
introduction of technology should be in such moderate steps that the Digital
Divide can be managed through public education.
Finding a Solution
Considering all the issues
enumerated above it is necessary for E-Governance solutions to adopt such
technologies that are “Optimal” avoiding an “Over-use of Technology”. Optimal
technology would be one which is legally sound, technically secure, serving the
end objective at a reasonable total cost, implemented by a Competent Company
through a trusted relationship and involving measures that prevent widening of
digital divide.
Being the repository of the best
IT skills in the world, a very high degree of technical expertise should be
available in India for the implementation of the E-Governance projects. Today,
out of the top ten IT Companies in India, only one Company seems to be involved
in the E-Governance initiatives. Others, though perhaps equally talented do not
seem to be interested in E-Governance projects. One such reputed Company also
indicated that the marginal benefit of unit manpower investment in the overseas
project is higher than in the case of Indian projects and hence it is not
economically feasible for them to consider domestic projects.
It must be remembered that the
“Optimal Technology” will be available from top IT Companies only if the process
of participation in an E-Governance project by a vendor is conducive to attract
top IT companies. This can be achieved not only through making E-Governance
projects financially more attractive to the private sector participants, but
also make the process of participation hassle free and professional.
In order to ensure that the
system of E-Governance project implementation is tuned to encourage entry of
such “Optimal Technology Solutions”, certain basic changes are needed in the
approach of the Governments in planning and executing E-Governance projects.
Some of them are enumerated below.
A. Financial
Incentives to attract IT Companies
There was a
time when India used to provide fiscal incentives to promote Exports. In today’s
context of comfortable foreign exchange reserves in the country and the natural
markets for Indian software companies abroad, as well as the WTO considerations,
this incentive has not been considered necessary. However there is a need to
debate if financial incentives are required for IT Companies taking up domestic
projects and contributing to a “Better India”. Over dependence on export
contracts by IT Companies has also resulted in the drain of IPR from the country
and if top IT Companies take up more of domestic projects, some IPR wealth of
the Country would remain in the country itself.
It is therefore
suggested that Indian Companies taking up E-Governance projects may be
considered for some form of fiscal relief within the WTO provisions. The
incentive suggested for this purpose is,
a) “The
Remuneration paid to IT workers attached to E-Governance projects should be
partially exempt from Income tax (This reduces the manpower cost of the project
by the solution provider)
b) Sales
Tax/Excise duty exemption must be made available for investments made by IT
Companies towards supply of E-Governance services. (This reduces the hardware
investments of the solution provider)
B.
Modification in Buying Process:
Apart from the
financial incentives suggested above to attract top IT Companies into the
E-Governance projects, the following two suggestions are made for modification
of the buying process to attract the IT Companies into the E-Governance bid
process.
1. Tendering
on Unit Service Cost Basis
One principal
change that is required in the E-Governance project tendering is to float
tenders only on “Unit Service Cost” basis and not on “Project Cost” basis. The
tender specification should be indifferent to the technology to be used as well
as the hardware and software platform.
As an
illustration of the impact of this approach, let us take the example of the
project for a “System for issue of Driving Licenses”.
One of the
approaches being considered for this purpose is the “Smart Card” based approach
where in smart cards will be issued as Driving License, Smart Card writers will
be installed at appropriate data entry points of the Government and Smart Card
readers would be made available at all the information access points.
In a normal
tender for such a project, the bid would be based on the total cost of
implementation of the project upto the time of enabling issue of Smart Card
Licenses at the Regional Transport Offices.. The tender specification would
define the required solution as “Smart Card based” and all bidders have to
necessarily abide by the basic nature of the specified solution. The cost of
operation could be a consideration for selection of the vendor but within the
Smart card solution implementers.
Let us now
assume that there is an alternate solution which is functionally equal to or
better than the Smart cards such as the DVIIS
Cards
and is costing only a fraction of the cost of the Smart card solution. The
provider of DVIIS would however not be able to participate in the bid because
the technical specification of the bid based on the smart card would not match
the DVIIS card. Once the tender specification committee has decided to make the
tender Smart Card based, even if an offer is made in the bid document for a
better solution through DVIIS, the tender approving committee would not have any
discretion to consider the alternate solution.
At the time of
tender specification drawing, the choice of technology is done through a closed
door discussion of some technology specialists and there is a possibility of the
alternate solutions not being considered.
Such
“Specification Doctoring” either intentional or through “Lack of appropriate
Market Analysis” is one of the reasons for optimal technology being sidelined in
preference of technology offered by “Contacts”.
Further, if
DVIIS happens to be a Patent protected technology and is not being offered by
any other vendor, it cannot be the subject matter of a competitive bidding
process and may be rejected even for this incompatibility.
The solution to
such problems is to invite the tender bid only on the basis of “Lowest Unit Cost
of Solution to the Consumer” with open specification on technology, hardware and
software. At best the cost of project can be used as a “Qualification Parameter”
such as “Total Cost of project at pre-implementation stage not to exceed a
stated limit”
Such approach
to tenders will ensure that the long term cost of an E-Governance service would
be less than the cost of a system based on “Lowest Pre-Implementation Cost”.
2. Selection
of Vendors on BOO Basis:
As a further
Complement to the suggested modification in the tender focus, it is suggested
that invariably, the E-Governance bids should be offered on “BOO System” (Build,
Own and Operate). It is only in such a system that the vendor would be
accountable for the quality and service requirements.
For example, in
the previous illustration of the “Digital Driving License” project, a vendor who
supplies “Smart Cards” at the cost of Rs 50 per card can be made to compete with
a vendor who can supply the DVIIS Card at Rs 10 per card, only under the BOO
bid. They can each quote the service cost to be charged for issue of one license
which shall be the basis for choosing the successful bidder.
Even if the two
technologies differ along with the associated capital costs and service costs,
the choice of the vendor can be based on the total service maintenance cost
estimated on the expected volume of business.
Advantages of the Modified
Buying Process:
“Unit Service Cost Quotation” on
the “BOO” basis as a success parameter of a competitive bid would provide
several advantages some of whom are listed below.
i)
The System will ensure that the E-Governance project Costs are insured
against “Technology Failures” since the contract is awarded on the basis of “End
result achievement at best cost” and technology is the responsibility of the
service provider.
ii)
The only cost which the Government bears is the cost of change over in
the event of a failure which can be covered to some extent by an indemnity from
the service provider.
iii)
The projects can therefore start off with zero cost or only a commitment fee
payable to the service provider and the rest of the cost is co-synchronous with
the usage.
iv)
The risk of failure can be controlled with a parallel running of the new system
by the service provider along with the legacy system so that the legacy system
will be available as a fall back if the new system runs into teething problems.
This will also ensure that the public can gradually shift over from the old to
the new system without the pangs of Digital Divide. Multiple vendor systems can
also run concurrently if the end result is indistinguishable.
v)
This system of result oriented bid process will provide necessary confidence to
vendors who hold proprietary technology to participate in solution structuring.
They will be safe in the thought that their IPR is under their control. Since
the technology administration is also in their hands, they will also be
comfortable that the performance of the solution cannot be diminished by wrong
handling at the user end. This will encourage innovative companies to
participate more in E-Governance projects.
vi)
This system will also shift the training and maintenance responsibilities to the
vendor and the Government’s responsibilities in ensuring success of the project
will be shared to a large extent by the vendor. Government can use its limited
budget more on education and content development supporting the project.
vii)
The system would also relieve the burden on the Government to procure
proprietary hardware or software which would be a sunk cost in case the vendor
has to be dismissed later for lack of performance.
viii)
Since the Vendor of this system would be paid on “Pay as you use basis” by the
Government, he will have an incentive for generating increased usage of the
system. He would therefore be keen to maintain the quality of service and also
voluntarily undertake training of the public to use the system more often. This
will also shift the responsibility of “Bridging of Digital Divide” to the
vendor and save the Government of the publicity expenditure.
ix)
In the interest of better Citizen service, the vendor may also be able to
suggest Business Process Reengineering measures that would enhance the
efficiency of the back-end system resulting in further benefits to the
Government.
x)
The legal compliance will be the responsibility of the vendor and the Government
will be indemnified against any omission after due diligence.
Thus, a mere change of the
system of the Buying process of tendering and vendor selection in e-Governance
projects can effectively address many of the implementation hurdles that the
E-Governance system is now facing including lack of private sector participation
and availability of the optimal technology.
Some State Governments have
already tried the out sourcing model tentatively. Their experiences have been
positive. Full benefits have not been reaped in all these cases since the
original choice of technology was done by the Government and only the operation
was outsourced through a BOO type contract. Had the entire solution been out
sourced from the tender stage, the results would perhaps been better. There is
therefore a need to improve the system and develop a standard model for
implementation all across the country. BPO model for E-Governance implementation
should be the order of the day rather than an exception. If this is achieved, it
would not only benefit the Governments, but also provide a new avenue of
business to the BPOs who are presently looking only at the west for business.
It is envisaged that the
benefits of the financial incentives and the change of buying process suggested
above, can bring all top IT Companies into the E-Governance segment and
contribute to India becoming one of the global leaders in E-Governance
implementation.
Na.Vijayashankar
February 1, 2004
