McKinsey on Government

Number 4,
Summer 2009
Perspectives on
public-sector
productivity and
operations

4
Governments
productivity
imperative

10
A leaner
public sector

18
Improving
public-sector
purchasing

26
E-government 2.0

40
Making a difference
in a crisis:
One persons story

Also in this issue

Lessons from the
US Air Force, citizens
as customers, and
stimulus performance

26

E-government 2.0
Despite spending enormous amounts on Web-based initiatives, government agencies
often fail to meet users needs online. By employing new governance models, investing
in Web capabilities, and embracing user participation, agencies can raise the
effectiveness of their online presence.

Jason Baumgarten
and Michael Chui

Early breakthroughs in e-governmentthe use

front appears to have plateaued over the past few

of information and communications technolo-

years. Many new e-government initiatives have

gies to provide and improve public-sector services,

neither generated the anticipated interest

transactions, and interactionshave enabled

among users nor enabled clear gains in operational

government organizations to deliver better service

efficiency. In the face of unprecedented fiscal

and improve effectiveness and efficiency. In

constraints, as well as users heightened expecta-

many countries, more than 70 percent of taxpayers

tions based on the integration of the Internet

now file taxes electronically, for example, and

into their daily life and work, it is imperative

many other transactionsranging from renewing

that the public sector refine its approach to

drivers licenses and paying parking tickets to

e-government to ensure that these initiatives

managing government benefitscan be conducted

achieve maximum impact.

online. Employees within government agencies

also use the Internet routinely to manage internal

In our experience, three obstacles have, however,

processes, such as human resources and travel.

limited the impact of e-government efforts:

ineffective governance, lack of Web-related capa-

However, despite the continued allocation of enor-

bilities, and reluctance to allow user participation

mous resources, progress on the e-government

in the creation of applications and content.

Brad Yeo

27

Ineffective, complex governance processes present

To reach the next level in e-government services,

a fundamental obstacle to success. Accountability

organizations must overcome each of these

for Web-based activities (the focus of this article,

obstacles. First, they must move to a governance

since such activities have the broadest applicabil-

model in which e-government initiatives are

ity and the greatest potential) too often resides

owned by line of business executives and sup-

deep within IT or communications departments.

ported by a dedicated, cross-functional team.

And because the Web is typically not viewed as

Second, they must develop capabilities in critical

a core business channel, Web-related efforts

areas such as marketing, usability, Web analytics,

are often fragmented across an agency. One

and customer insights. Finally, government

US agency found that it had more than 100 internal

agencies must shift mind-sets to proactively get

Web sites alongside dozens of external sites, as

citizens, businesses, and other agencies involved

well as multiple tools and platforms to maintain

in contributing or creating applications and content.

them. In addition to increased costs and inefficiency, this complexity impedes adoption, as, for

Implementing these changes will enable public-

example, users must endure multiple sign-ons

sector organizations to provide Web services

within and across sites.

that are used by more people with greater ease,

reduce the costs of developing and maintaining

Most government agencies also lack the necessary

the services over time, and offer more functionality

capabilities to develop and improve Web services.

and content, thereby providing a higher return

Whereas best-practice private-sector companies

on public money spent. Although focused on initia-

employ specialized talent to adapt and optimize

tives in the United States, the recommendations

their Web sites, governments rarely prioritize Web

in this article are broadly applicable, as government

capabilities and have few experts in Web design

agencies around the world continue to recognize

or analytics.

opportunities to improve their interactions with

citizens, businesses, other institutions, and their

Even those agencies that have begun to over-

own employees through online services.

come the challenges relating to governance and

1 Source: 2009 Federal IT

Budget; Federal Enterprise

Architecture taxonomy for
2008 budget; McKinsey
estimates.

capabilities have yet to join their private-sector

The plateau

counterparts in embracing Web 2.0 technolo-

During the Internet boom of the late 1990s, gov-

giessuch as blogs, wikis, and mashupsthat allow

ernment entities raced to develop Web sites,

users to participate in discussions, develop

and high levels of e-government spending became

applications, and combine data from multiple

the norm. Spending on e-government-related

sources. This stems from a mind-set that

initiatives has continued to growindeed, in 2009,

favors maintaining control over the use of data,

the US government is expected to spend more

and from valid (though manageable) concerns

than $71 billion on IT, of which an estimated

about security. But as users become more accus-

10 percent will be related to e-government.1

tomed to online participatory experiences,

governments failure to embrace Web 2.0 threatens

While the total price tag for e-government services

to reinforce the publics perception that government

has risen dramatically, these outlays have not yet

Web sites offer a vastly diminished experience.

delivered on the promise of e-government. Public

28

McKinsey on Government Number 4, Summer 2009

enthusiasm for government Web sites has waned.

as call centers or field officesor, in the case of

Americans satisfaction with e-government, which

internal efforts, as important as an all-hands

rose steadily early in the decade, has started to

meeting. Web projects should be maintained as a

decline.2 In 2004, Time featured three federal

consolidated portfolio with a centralized view

government sites in its list of the 50 coolest

of costs and benefits. Clear end-to-end ownership

Web sites, while more recent lists contain at most

of the online experience must be established

one mention.

and reinforced, with accountability for user adoption rates and costs. Specific business goals

Illustrating this trend, one US government agency

more accurate processing, for example, or enhanced

site was recognized as an innovator in online

Web self-service to reduce incoming phone

information and transactions and became a model

callsshould be agreed upon at the outset of initia-

for other agencies to follow, as it enjoyed user

tives so that the objectives can drive the approach

adoption rates that justified its e-government

to design and implementation.

expenditures. However, more recent initiatives

have failed to catch on with users, who regard the

Line-of-business leaders should be responsible and

Web site as having become harder to use and

accountable for driving Web initiatives, but to

new services as too confusing and complex. Nor is

support them agencies should establish a dedi-

this phenomenon confined to the United States.

cated product-management teamconsisting

One government agency invested millions devel-

of designers, information architects, developers,

oping a service that enabled citizens to manage

and editorsresponsible for not only the initial

their accounts with the government online, only

development process but also ongoing improve-

to achieve a disappointing adoption rate of less

ments to usability and functionality. To keep up

than 5 percent.

with real-time feedback, this team must have access

to funding that can be adjusted on a monthly

Whats more, data suggest that investments have

rather than annual or multiyear basis. The team

not yielded major improvements in the opera-

should also be expected and empowered to

tional efficiency of government. A random sample of

make quick decisions, and rewarded for adopting

six US government agencies suggests that admin-

a test-and-learn mentality so that it can feel

istrative costs have increased by 7 to 12 percent per

free to shut down pilots or programs that are

year over the past decade. Nor has public percep-

not meeting expectations.

tion of government efficiency improved. According

2 ACSI E-government

satisfaction index, ForeSee

Results, March 18, 2008.
3 Trends in Political Values and

Core Attitudes: 19872007,

Pew Research Center, 2007.
4 See Ben Gomes, Search

experiments, large and small,

Official Google Blog,
posted August 26, 2008, at
http://googleblog.blogspot
.com/2008/08/searchexperiments-large-and-small
.html.

to the Pew Research Center, the percentage of US

The management of e-government efforts must

citizens who agree that When something is run by

also become much more data-driven. Assumptions

the government, it is usually inefficient and waste-

should be challenged rigorously, and data

ful has increased in recent years, from 53 percent

from small, low-investment experiments used to

in 2002 to 62 percent in 2007.3

guide decisions. Best-practice online businesses

Creating new governance models

user experience. Google has stated that at any

continually conduct experiments to improve the

Getting to the next level of e-government requires

given time it simultaneously runs 50 to 200 exper-

agencies to regard Web development as an

iments on its Web sites. 4 Online government

integral part of the services they provide to

initiatives should adopt a similar orientation to

constituentson par with initiatives such

determine, for example, what services are most

E-government 2.0

in demand and how to make those services

easiest to access.

29

the five largest digital marketing firms were hired

five times, and the five largest Web design firms
were not hired at all.6

Finally, governments must follow a structured

approach to evaluating security issues. Organiza-

Capabilities that enable an agency to discern users

tions must balance the trade-offs between the

needs and preferences are also critical. Product-

benefits of implementing security decisions

management teams must be able to incorporate

and the costs of restrictions, including financial

findings from focus groups, surveys, usability

impact and effects on usability, convenience,

tests, pilot programs, and real-time online experi-

and adoption. When one agency realized that its

ments. One agency did not evaluate customer

Web team, IT team, and security team each

needs until after it launched a Web service. It

had a different understanding of legal and security

found that very few citizens were willing to

requirements, it clarified the requirements and

endure the authentication hurdles to access the

assigned specific responsibilities. The security team

service and its non-intuitive user interface.

was given full responsibility for assessing secu-

Usability testing and use-case analysis, which

rity, while the Web team was made responsible for

should have been done well before the launch,

understanding how security requirements would

indicated that it would be more effective and less

affect usability and deciding on the features in

expensive to offer only a few simple trans-

which to invest and launch.

actions online.

Investing in Web capabilities

Such capabilities will enable agencies to identify,

Effective Web management does not require a large

design, and implement solutions that overcome

team but should consist of a core group that is

potential obstacles to user adoption. For example,

well versed in user-centric business requirements,

Austria, which has one of the most popular

fact-based decision making, usability and naviga-

e-government offerings, uses a standard citizen

tion, marketing, information architecture, and agile

card approach to identity management,

Web development. Initial hiring should focus on

thereby simplifying the log-on process. Existing

building a small interdisciplinary team of highly

identity cards, such as bank cards, are certified

skilled Web specialists with a variety of comple-

for use with a digital signature to access all

mentary backgrounds.

e-government services, eliminating the need for

separate paper registration to access each service.

While partnering with external vendors is an option,

5 Federal Procurement Data

System.
6 Leading analytics firms were

based on rankings in TopSEO.

Leading digital-marketing
and design firms were based
on revenue as reported in
Hoovers and AdAge.

especially for capabilities that are commodities

Building internal product-management and techni-

and that benefit from scale (for example, Web host-

cal capabilities also enables agencies to better

ing), in-house skills are required to oversee

select and manage external partners. Many gov-

development and design and to manage vendors

ernment procurement and tendering processes

effectively. We have found that agencies often

are isolated from business or functional experts. It

lack the internal expertise required to appropri-

is crucial that subject-matter expertsnot just

ately select and work with these partners.

purchasing expertsbe responsible for helping

Indeed, a review of US federal government contract

select and negotiate with external partners, to

records reveals that in 2008 five of the leading

ensure that outsourcing efforts cover the right

Web analytics firms were hired only six times,5

capabilities on appropriate terms. We helped one

30

McKinsey on Government Number 4, Summer 2009

MoTG 2009
eGov
Exhibit 1 of 1
Glance: An Illustrative scorecard can help agencies rate their Web capabilities and identify
areas for investment.
Exhibit title: Online target setting
Exhibit

Capability target
setting
A scorecard can help agencies
rate their Web capabilities and
identify areas for investment.

Todays performance

18-month target

Rating (illustrative)
Low
Capabilities

High
2

Example actions

Set clear goals and measure success

Track quantitative data through dashboards
Collect user feedback
Test and learn through usability testing and piloting
Test and learn through A/B and multivariate testing

Data-based decision making

Site experience

Create user-friendly content and tools

Create user-friendly navigation and search

Target customer and user groups

Optimize search-engine results
Establish cross-channel advertising
Use online promotions and e-mail campaigns

Advertising and promotions

Multichannel coordination

agency identify a 65 percent reduction in Web-

Provide consistent experience and share

learning across channels

Some agencies across the globe are leading the way.

portal operating costs by involving its subject-

One high-profile example in the United States is

matter experts in determining the scope of an

the District of Columbias Apps for Democracy, a

outsourcing effort, the savings from which will

contest to encourage developers to create appli-

be used to fund future initiatives or reduce

cations that would give residents access to data

operating budgets.

such as crime reports and pothole repair

schedules. Forty-seven applications were created

Agencies can identify the gaps in their capabilities

in 30 days. Hiring contract developers would

and set targets by developing a scorecard that lists

have cost approximately $2.6 million, whereas the

categories of capabilities and actions relating to

cost of running the contest was a mere $50,000.

each, as shown in the exhibit. For each action listed,

The US government has also shown a willingness to

the agency should specify detailed criteria for staff

accept outside innovation. For example, it

members to use as a basis for rating their current

adopted software code developed by a nonprofit

performance and setting improvement targets.

organization for USAspending.gov, a database

of government grants and contracts. The govern-

7 See Michael Chui, Andy

Miller, and Roger P. Roberts,

Six ways to make Web 2.0
work, mckinseyquarterly
.com, February 2009.
8

The grant was provided by the

Sunlight Foundation over a
three-year period; roughly
$200,000 from the grant was
used to pay for the initial
launch of the Web site.

Adopting open innovation and

ment had initially estimated that it would cost

user participation

$10 million to create the database and $2 mil-

Strengthening governance and capabilities will

lion a year to maintain it, but it adopted the code

not only improve existing content and services but

developed by OMB Watch to run FedSpending.org,

also help lay the foundation for pursuing

which had been funded through a $334,272 grant.8

Web 2.0 technologies. A shift from a publishing

to a sharing mind-setone that embraces

Elsewhere in the world, a European health authority

user participationmust happen within govern-

has developed, with our support, an information

ment agencies.

architecture that allows health care providers to

E-government 2.0

31

access aggregated data and build tailored

publicly announced the goal to have 50 percent of

applications to improve clinical care. In another

P&Gs innovations come from outside the company.9

example, the South Korean governments

ePeople site invites civil petitions online (for

From a technology standpoint, achieving the ben-

example, policy suggestions or corruption

efits of open innovation and participation requires

complaints), moderates online discussion of sub-

IT security systems and policies to ensure that

mitted petitions, and reports back on its decisions.

public systems are appropriately protected. Many

Moreover, governments can use Web 2.0 technolo-

developed and are being used in the private sector

of these systems and policies have already been

gies to break down barriers between and within

to balance the estimated return on investment

organizations. For example, the US intelligence

with the probability-adjusted risk of loss (tangible

community has created Intellipedia to share

and intangible) from a security risk.

information among previously unconnected organizations, while the US Food and Drug Administration employed Web 2.0 tools to better engage
and capture the knowledge of its internal experts.

To embark on the journey to the next level of

e-government, public-sector organizations should

How can the shift in mind-sets be achieved to

begin by estimating the cost and time required to

enable Web 2.0 initiatives such as these across

achieve their agreed-upon business goals, taking

more government agencies? Agency leaders, both

into account realistic user adoption rates, usage,

line-of-business and IT, must embrace third-

and impact on other channels (for example, reduc-

party innovation and participation. They must

tion in paper-based forms). Agencies should then

communicate the benefits of these efforts,

ensure that their governance models emphasize

encourage risk taking, and enhance the capabili-

line-of-business accountability and develop a plan

ties of their staff to implement these initiatives

to address capability gaps, particularly in areas

for example, by ensuring that they have both the

such as Web analytics and usability. Based on

soft skills to manage informal networks of

a comparison with successful innovators in the

partners and the hard skills to connect govern-

public and private sectors, they should also assess

ment data with external systems.

their technological and organizational readiness

to open data and systems to outside developers and

To reinforce these mind-set shifts, agencies must

9

In fact, because solutions

outside the organization often
move more quickly from
concept to market, reward
systems that consider speed of
development could favor
innovations from the outside.

to use participatory Web 2.0 tools. By taking these

reward externally sourced innovation as much

steps, agencies will begin charting their path to the

as they reward producing applications and content

next horizons of e-government.

internally, the way P&G has done. A well-known

advocate of open innovationthat is, sourcing innovative ideas from outside an organizationP&G
CEO A. G. Lafley set the tone from the top when he

Jason Baumgarten is an associate principal in McKinseys Seattle office; Michael Chui is based in the
San Francisco office and is a senior expert and a leader of the McKinsey Technology Initiative. Copyright 2009
McKinsey & Company. All rights reserved.