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186 Hinnant & O’Looney

Abstract

We examine the adoption of information technology within local governments in the United States. The social and technical factors that impact the process of technological innovation are discussed in reference to the adoption of advanced electronic government (e-govern- ment) technologies in local government. In particular, we discuss how the adoption of IT, and e-government, is influenced by the local government’s motivations to innovate, technol- ogy characteristics, available resources, and stakeholder support. We then discuss several strategies that may address these factors. We argue that local governments should seek to formally assess the need to adopt e-government technologies, develop new funding strategies, and develop a mix of in-house and contracted IT services. While local governments have aggregately adopted advanced transaction-based forms of e-government at a lower rate than state and federal governments, it is our contention that local governments are merely reacting to innovation factors within their social and technical environments.

Chapter X

IT Innovation in Local Government:

Theory, Issues, and Strategies

Charles C. Hinnant, U.S. Government Accountability Office, USA

John A. O’Looney, University of Georgia, USA

IT Innovation in Local Government 187

Introduction

Within the governmental framework of the United States, it can legitimately be argued that local governments play a far more prevalent role in the day-to-day existence of both individual citizens and private and nonprofit organizations than do state and federal governments. After all, a simple assessment of the numbers reveals that local governments outnumber state and federal governments 87,586 to 51 (U.S. Census Bureau, 2002). In addition, many citizens and organizations are simultaneously subject to a diverse array of local government jurisdic- tions and authorities, such as city, county, or special-district authorities. Furthermore, local governments play a crucial role in the provision of key public services, such as education, community development, public health activities, public utilities, solid-waste removal, law enforcement, and public safety. Given the critical services that local governments have traditionally provided, it is not sur- prising that, like other public institutions, they have long employed information technology as a means to improve internal operations in the production of those services. If we take a systems perspective, we can define IT broadly as we might any “computer-based informa- tion system [which is an] information system that requires hardware, software, databases, telecommunications, procedures, and people to accomplish goals” (Stair, 1992, p. 27). Employing this broad definition, it is obvious that the use of IT is necessary for even the most ordinary of activities undertaken by local governments. For example, examinations of local governments in the United States indicate that there has been a growing trend toward adoption of IT within local government over the past 25 years and that today virtually all make use of IT to one extent or another (Kraemer & Norris, 1994; Norris, 2003). In fact, a 1997 survey of city and county governments carried out by the International City/County Management Association (ICMA, 1997) indicated that only 3% of respondents did not use computers of some kind to support operations. As new forms of IT became available and adopted within society, local governments learned new ways of employing the technology to achieve their own institutional goals. For in- stance, during the 1970s and 1980s, much attention was given to the adoption and impact of mainframe and then personal computers on the operations and internal environment of local governments (Kraemer, Dutton, & Northrop, 1981; Kraemer & Norris, 1994; Norris & Kraemer, 1996). By the mid-1990s, the increasingly widespread use of distributed networks, such as the Internet and World Wide Web (WWW), began to shift the focus toward how public-sector organizations could harness this new form of IT to deliver information and services directly to the public. This new focus on electronic government, or e-government, reoriented the focus on how IT could be used by broader government reform initiatives to have agencies provide programmatic information and services to citizens and other stake- holders (Kraemer & King, 2003; Watson & Mundy, 2001).1

Local governments have quickly adopted at least rudimentary aspects of e-government. As indicated in Table 1, the U.S. Census reported in 2002 that 45.1% of counties, 31.1% of cities, 13.4% of townships, 17.8% of special districts, and 64.3% of school districts responding indicated that they provided information regarding their central activities via a Web site. Similarly, 54.1% of counties, 40.6% cities, 21.2% of townships, 34.6% of special districts, and 73.7% of school districts indicated that they provided a means for the public to communicate or transact business by use of the Internet or another computer-based

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information system. Furthermore, the size of the government, as measured by population, seemed to have a distinct impact on the adoption of e-government.2 For governments with populations under 25,000, only 19.8% indicated that they provided information regarding their activities on a government-controlled Web site, and only 30.7% indicated that they provided the ability for the public to communicate and conduct business via the Internet or other computer-based information system. Conversely, 93.4% of local governments with populations over 500,000 indicated that they provided information on a government- controlled Web site, while 90.6% indicated that they provided the ability for the public to communicate and conduct business via the Internet or other computer-based information system. Similarly, a more recent ICMA survey conducted in 2004 reported that almost all (99.4%) of respondents indicated that their local governments had Internet connectivity and 91.1% indicated that their local governments had a Web site.3 Furthermore, 92.3% indicated that they employed DSL (digital subscriber line), cable, or high-bandwidth connections to facilitate Internet connectivity (ICMA, 2004).

Central activity information is provided on an Internet Web site that is maintained or controlled by the government.

Public can communicate or trans- act business with the government using Internet, e-mail, or other computer-based system.

Government Type

Total Respondents

(n)

Yes (%)

No (%)

Response Rate

Yes (%)

No (%)

Response Rate

County 2,453 45.1 54.9 80.9 54.1 45.9 71.2

Municipal 15,116 31.1 68.9 77.8 40.6 59.4 73.8

Town or Township 10,397 13.4 86.6 63.0 21.2 78.8 61.4

Special Districts 20,337 17.8 82.2 58.0 34.6 65.4 57.9

School Districts 10,880 64.3 35.7 80.6 73.7 26.3 79.8

Total governments 59,183

Governments by Population Size*

under 25,000 25,125 19.8 80.2 70.1 30.7 69.3 68.1

25,000 to 49,999 1,329 69.4 30.6 85.5 67.1 32.9 70.8

50,000 to 99,999 784 81.0 19.0 92.9 74.5 25.5 71.0

100,000 to 249,999 458 91.5 8.5 96.0 83.3 16.7 74.2

250,000 to 499,999 149 91.3 8.7 98.7 85.3 14.7 67.5

500,000 or more 121 93.4 6.6 99.2 90.6 9.4 69.7

Total governments 27,966

Table 1. Local government use of Internet to interact with public (Source: 2002 Census of Governments, Vol. 1, n. 1)

Note: Calculations performed by author; *includes only county, municipal, and township governments

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While almost all local governments have adopted at least basic forms of e-government, such as a simple Web site or providing the ability for the public to communicate with the government through the use of e-mail, there is some question as to the extent to which local governments have pursued the adoption of more advanced forms and use of IT that might improve both the production and delivery of public services. Research indicates that many local governments have initiated at least rudimentary attempts to post information and provide basic online services, but few local governments have adopted more advanced forms of ICT that foster high levels of interactivity, communication, and actual political participation (Moon, 2002; Norris & Moon, 2005). Results from a 2004 ICMA survey of cities and counties also indicate that local governments may be relatively late adopters of more recent advanced forms of Web-based technologies. While a majority of respondents indicated that their Web sites provided the ability to download information or forms (council minutes, codes and ordnances, job applications) and participate in online communication with officials, relatively few offered more sophisticated abilities to interact or conduct transactions online.4 Similarly, the survey indicates that local governments also seem to be slow in adopting Web-based information systems, such as intranets, which are purported to improve internal information exchange and operations. Only about 50% of the local governments who responded indicated that they currently used an intranet. Of those local governments employing an intranet, most used them to facilitate internal communication and few used them for more sophisticated purposes, such as online training (29.4%), online procurement (26.6%), online project team collaboration (33.4%), and the management of time sheets (27.3%; ICMA, 2004). Most local governments seem to be late adopters—adopt- ing e-government technologies only after they have become established technologies and practices. There is little evidence to suggest that there exists high levels of adoption by local governments for relatively advanced IT, when compared to advanced IT’s rate of adoption by the private sector or state and federal governments. A recent study, based on survey responses conducted as part of the Pew Internet and Ameri- can Life Project (2006), estimated that 73% of adults in the United States were Internet users and that 42% of adults had broadband connections at home. Despite the seemingly high rate of general Internet use by the U.S. public, a recent study of dial-up and broadband users indicates that Internet users still have a slightly less positive view of how much the Internet has improved their interaction with local government when compared with the perceived improvements in interaction with state and federal government (Pew Internet and American Life Project, 2004).5 This seems to indicate that many local governments are not adopting and implementing advanced forms of IT in a manner that could potentially bring the purported benefits of openness, transparency, and more efficient service delivery often associated with e-government. This chapter attempts to provide a theoretical lens through which to examine the adoption of more advanced forms IT by local governments. By examining the literature on technological innovation, as well as more recent work regarding public-sector information systems, we hope to highlight the most important factors that influence the adoption of advanced forms of IT by local governments. Furthermore, we propose several strategies that may influence local governments’ ability to successfully adopt new forms IT.

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IT as Technological Innovation

The adoption and use of IT by local governments is certainly not a new phenomenon, but the adoption of e-government across all levels of government during the past decade has rejuvenated the interest in government’s use of IT by practitioners and academics alike. Unfortunately, the growing interest in e-government has not always coincided with an im- proved understanding of how local governments adopt and implement the more advanced forms of IT. If e-government can be viewed as the latest step in a progression of innovations in government that is predicated on the use of new forms of IT, then the literature associated with the adoption of technology within complex organizations may provide some insight into the social and technical factors that influence how e-government may be adopted by local government. Since technological innovation is typically defined as “the situationally new development and introduction of knowledge-derived tools, artifacts, and devices by which people extend and interact with their environment,” it would seem that a more complete understanding of e-government adoption within local governments would be informed by a better understanding of the innovation process (Tornatzky & Fleischer, 1990, p. 11). The process of technological innovation is often described as a set of stages that includes an awareness of new technology, understanding the match between the technology and organiza- tion, adoption of the technology, implementation of the technology, and routinization of its use (Tornatzky & Fleischer, 1990). While the process of technological innovation is often viewed in terms of a linear progression of stages, there is no certainty of a linear progression or ultimately success; the process often has many delays or reverses (Tornatzky & Fleischer, 1990). Similarly, the innovation process for most complex organizations is heavily influenced by the interrelationship of social and technical factors within the organization’s internal and external environments. With regard to technological innovation, issues surrounding the technology itself, the availability of required resources, the fit with the organization’s primary task, and an organization’s structural arrangements all play significant roles in the nature and success of technological innovation. Research indicates that the characteristics of the technology play an important role in deter- mining whether or not it will be adopted by an organization. Researchers have identified a rather long list of innovation characteristics that can increase or decrease the likelihood of adoption by organizations (Zaltman, Duncan, & Holbek, 1973). With regard to the adop- tion of technological innovation, a study by Tornatzky and Klein (1982) indicates that three primary characteristics are repeatedly associated with the adoption of new technologies: relative advantage, ease of use, and compatibility. Similarly, the extent to which a particular technology alters existing organizational processes also plays a role in the innovation process. So-called radical innovations usually involve a significant alteration of an organization’s processes or outputs, or significantly impact the organization’s key stakeholders (Dewar & Dutton, 1986; Ettlie, Bridges, & O’Keefe, 1984). Radical innovations generally experi- ence more risks for failure or setbacks than do technological innovations that involve only incremental changes in an organization’s existing technological environment. The decision to adopt a technological innovation, such as a new form of IT, is predicated on the assumption that organizational decision makers have sufficient awareness of new technologies to understand their potential benefits. This awareness is often discussed as a function of the knowledge that internal stakeholders possess regarding the applicability of

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new technologies or processes to the organization’s operations. In essence, the greater the information and knowledge assets that an organization has at its disposal, the more likely it is to find new technologies to address operational problems, and the more likely it is to understand and implement the technology (Fichman & Kemerer, 1997; Nilakanta & Scamell, 1990). Although all technologies require some learning on the part of the staff participating in the adoption, some technologies place many more demands on adopters for new knowledge and skills. Such technologies are believed to have inherent knowledge barriers because the knowledge required to implement them creates a barrier to diffusion (Attewell, 1992). In addition to the availability of resources, technologies that have greater levels of congru- ency with key organizational tasks may be perceived as more useful and, therefore, as a more successful adoption of technology (Cooper & Zmud, 1990). Similarly, studies have shown that internal decision makers, such as managers, search for technological solutions to problems that they face in carrying out their jobs. For example, they may show interest in new forms of IT if the organizational task for which they are responsible requires high levels of communication with external agencies (Bugler & Bretschneider, 1993). Such interest and support by key stakeholders may be important for the successful implementation of new technologies, as studies highlight the importance of managerial support (Beath, 1991). In addition, champions who informally and enthusiastically promote the new technology are also viewed as important during adoption and implementation (Tushman & Nadler, 1986). While some researchers have focused on user attitudes and perceptions toward IT innova- tions, there is some debate over the relative importance of the attitudes held by organizational members in comparison to the importance of organizational structure and processes (Hall, 1996). Some organizational-level research indicates that the structural arrangement of the organization plays an extremely important role in the ability to fully accept technological innovations. Organizations that have high levels of structural complexity, low levels of formalization, and low levels of centralization tend to initiate relatively more innovations than do organizations with opposing characteristics (Damapour, 1991; Duncan, 1976). Most of this research assumes that an organization’s successful adoption of technological innovations is linked to a perceived need for technology to improve performance or address requirements from external stakeholders. Overall, these findings indicate that the decision to adopt and fully accept IT innovations is a joint result of technology characteristics and the social system in which they are embedded.

Social and Technical Issues to Consider When Adopting E-Government within Local Government

E-government is often associated not only with the adoption of IT, but specifically the adop- tion of advanced forms of IT, as well as organizational practices that are often employed in the private sector to facilitate electronic commerce, or e-commerce. IT innovations, such as Internet-based applications that provide integration and efficiency in a company’s supply chain or more transaction-based services for customers, are often proposed as a means to facilitate similar efficiencies for government. As previously discussed, several studies have

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highlighted the difficulty for local governments, on a whole, to adopt the more advanced forms of IT that are often associated with e-government (Moon, 2002; Norris, 2003; Norris & Moon, 2005). The slow adoption rates of many of the advanced e-government interactive technologies, such as transaction-enabled Web sites, personalization of Web sites, and online political forums, seem to highlight the relatively slow diffusion of more advanced forms of IT within many local governments (Hinnant & O’Looney, 2003; O’Looney, 2001a, 2001b; Norris & Moon). However, it is important to understand that the adoption of advanced IT almost always necessitates significant investments in resources, as well as back-end integra- tion of the new technology within the government’s technological and social processes. Our discussion of technological innovation within complex organizations provides additional insights into the sociotechnical factors that most likely impact the adoption of IT within local governments. A review of the literature on technological innovation reveals several dimensions that should be considered when evaluating the adoption of innovation by local governments. These include goals and motivations to adopt, technology characteristics, availability of resources, and the support of various stakeholders.

Goals and Motivations to Innovate

By most accounts, the reasons for adopting new forms of IT at the local government level are varied, but not necessarily surprising. The adoption of internal IT systems by local governments during the 1970s and 1980s was notably marked by the desire to increase internal efficiencies (Northrup, Kraemer, Dunkle, & King, 1990). Another motivation for the adoption of e-government is purported to be gains in efficiency within the provision of public services. Still another is the improved interaction and transparency with the public that many of the Internet-based technologies promise to facilitate (Moon, 2002). While most local governments have not yet adopted the most advanced forms of Internet-based technologies, many have implemented some type of Web site to improve communication with the public. Given that one goal of local government adoption of e-government should be to more effectively provide services to external stakeholders, it is somewhat surprising that most local governments do not seem to actively gauge what online services or features are desired by their citizens. A 2004 survey conducted by ICMA demonstrated that, while 67.8% of respondents indicated that they believed e-government has improved communica- tion with the public, only 10% of local governments actively survey citizens or businesses to establish what they actually want online (ICMA, 2004). Most local governments that have adopted more advanced forms of e-government practices seem to do so in order to facilitate or improve a specific functional area or to achieve spe- cific operational cost reductions. For example, in a few cases, local governments, such as Montgomery County, Maryland, have begun to reduce its costs for energy by consolidating the buying power of 18 county agencies and organizations, as well as conducting online auctions for energy (Robinson, 2006). In other circumstances, local government agencies or departments adopt IT systems that facilitate intergovernmental efforts within a respec- tive functional area or jurisdiction. For example, Pennsylvania’s Justice Network (JNET)

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is a system initiated by a consortium of government agencies, in order to integrate criminal justice database systems throughout the commonwealth. JNET is designed to facilitate criminal justice information sharing and has many local, commonwealth, and federal law- enforcement organizations as stakeholders (Hinnant & Sawyer, 2003). While such case studies are in many ways idiosyncratic, they highlight how local governments do not seem to adopt IT for impromptu reasons. Rather, they seek to adopt IT when it is believed that it will result in the attainment of goals that are desirable to a specific program, department, or to the broader jurisdiction.

Technology Characteristics

The characteristics associated with a specific form of IT also play a role in whether it is ad- opted within a local government. For example, studies examining the adoption of computer applications by local governments indicate that applications perceived to have greater visibility and less uncertainty with regard to cost were more likely to be adopted (Perry & Danziger, 1979; Perry & Kraemer, 1979). This also seems to be true of the more current forms of IT that are often associated with e-government. For example, this may provide some insight into why most local governments offer a basic Web site, but few have adopted more interactive online technologies. In addition, it is important to understand that some advanced forms of IT may also possess higher levels of risk for local governments. For example, the use of some advanced Web sites employed by private-sector firms, such as Amazon.com, track user behavior in order to personalize the future content that the user views on the Web site. Similar technologies and practices are available for use by local governments and could be used to provide the citizen user with tailored government information or services. However, the collection of such data by local governments may present significant challenges since they may be legally required and/or understandably expected by the public to protect all personal information collected (Hinnant & O’Looney, 2003). While it is useful to understand a technology’s specific characteristics, it is also important to understand that such characteristics cannot be considered outside the societal and organiza- tional contexts within which the technology may be adopted and implemented. At one level, the adoption of IT may be assessed across a set of local governments in order to evaluate overall levels of diffusion. However, it should be clear that the successful adoption of a particular IT, within a specific local government context, has more to do with how well the IT is judged to accomplish a specific task and the degree to which it fits within the exist- ing technical environment.6 With regard to the adoption of more advanced e-government technologies, local governments or their subunits are probably less likely to adopt IT that is significantly more sophisticated than its existing technical systems. The adoption of more radical forms of e-government technologies would most likely cause too heavy an invest- ment in resources or introduce the need for significant adjustments to internal administrative systems. For example, recent surveys indicate that local governments perceived the greatest potential impacts of e-government to be increased demands on staff, changes in the role of staff, and the need to reengineer business processes (Norris & Moon, 2005).7

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Availability of Resources

Tied closely to both the motivation to innovate as well as the characteristics of a specific IT, is the local government’s available resources. Resources may take several forms, such as financial resources, the number of available staff, or the knowledge assets that are re- quired to adopt and implement a respective technology. The adoption of any IT is known to have potentially significant impacts on the internal processes of any organization and this is also true of IT adoptions by local government organizations. The adoption of many forms of IT associated with e-government potentially requires significant departures from the organization’s existing technical and administrative systems. In order to successfully identify, adopt, and implement a new form of IT, the organization must possess, develop, or obtain significant knowledge and expertise regarding not only the technology in question, but also how that technology may be successfully integrated with the existing social and technical structures of the organization. Surveys of local governments consistently indicate that the lack of sufficient financial resources, Web staff, and Web expertise are the top three barriers to e-government initiatives (ICMA, 2004; Norris & Moon, 2005). Furthermore, examinations of advanced online technologies, such as personalization of services, also indicate that the adoption of new online services is often slowed by limitations of technical expertise and budgetary considerations (Hinnant & O’Looney, 2003). Financial resources may be crucial not only for the initial development or acquisition of IT, but also for its successful integration within an organization’s administrative systems. Integra- tion of new IT often requires significant adjustments to existing systems. These adjustments may come in the form of reengineering administrative systems or subsequent changes in the necessary skills possessed by staff who operate the new IT system. More importantly, financial resources may also provide a means for acquiring additional knowledge that the IT may require. This may be in the form of training current staff or in acquiring knowledge from private-sector consultants or vendors. Despite the need for financial resources, 81.7% of local governments had no separate budget item for e-government and only 40.6% of local governments have a separate IT department that is responsible for IT and e-govern- ment (ICMA, 2004). The more advanced the IT is relative to the local government’s current technical systems, the more knowledge and financial resources may be required since prior work has indicated that a local government’s existing level of technological sophistication influences its ability to adopt new forms of IT (Norris & Kraemer, 1996). With regard to the adoption of e-government, this may simply mean that those that are already relatively technologically sophisticated have the resources to draw on in order to adopt and implement even more advanced forms of e-government. Conversely, less sophisticated organizations are less likely to possess the skills and knowledge necessary to sidestep the knowledge barriers that are so often associated with the adoption and implementation of new IT.

Support from Managers, Political Leaders, and Other Stakeholders

While goals, resources, and IT characteristics all play important roles in whether a local government organization will adopt a new form of IT, so will decision makers from both

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within the organization and in the broader political environment. Obviously program man- agers, and in some cases political leaders and external stakeholders, should play a role in the development of the organizational goals that precede the actual adoption of any new IT. Their political support throughout the innovation process is also important for the success- ful adoption of new IT. With regard to the adoption of advanced forms of e-government, program managers, and the operations that they oversee, are more likely to experience the impacts of any changes that the new IT brings. For example, surveys indicate that e-govern- ment has the potential to alter the role of staff and the demands on staff, and necessitate the reengineering of processes (ICMA, 2004). Or, the adoption of IT may reinforce the power of existing administrative social structures (Kraemer, King, Dunkle, & Lane, 1989). While e-government, or any IT adopted, may improve operations and introduce efficiencies into internal administrative processes, it may also alter processes in a variety of unforeseen ways. Program managers are in a position to reap the benefits of any positive changes initiated by IT, but they also bear some of the risk for any negative impacts. While local government administrators and managers play a role in IT adoption, political leaders also play a potentially important role. Although surveys indicate that only 12.5% of local governments cite lack of support from elected officials as a barrier to e-government, e-government can directly impact the nature of the interaction elected politicians have with the public. Over 65% of local governments now provide direct communication with elected officials through their Web sites. Furthermore, the same survey indicates that 39.9% of re- spondents indicate that e-government did increase citizen contact with elected or appointed officials (ICMA, 2004). So, the potential exists for e-government to directly impact the political lives of elected officials. Some scholars (e.g., Ihrke, Rabidoux, & Gabris, 2000; Svara 1990) suggest that council-staff relations can also play a role in how innovations are perceived. Essentially, they argue that a positive relationship between council and staff will lead to innovations being perceived as successful by other local government actors. Such a positive relationship between council and staff may also signal additional buy-in and support from elected officials in the case of e-government adoption by local governments. In addition, a key role played by elected officials has to do with funding. A 2004 ICMA e-government survey indicated that 92.6% of local governments funded e-government initiatives through general revenues (ICMA, 2004). Therefore, regarding IT, the most important role elected officials could play is to provide the financial support, through general revenues, for local government organizations to be innovative.

Strategies for Adopting IT in Local Government

Considering the social and technical factors that influence the technological innovation process and introduce risk into such a public context, it is important to highlight some stra- tegic activities that may assist local governments in successfully adopting and implementing new forms of IT. Such activities should include an organizational assessment of needs and planning, as well as the development of funding sources and acquisition strategies. While prescriptive actions can be derived and discussed for the adoption of new forms of IT, it should be noted that the sheer variety of local governments, along with the intraorganizational variety with regard to knowledge and resources, makes a prescriptive discussion about the adoption of new IT less than systematic and certainly limits its generalizability. However,

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prescriptive discussions may be used to elicit new ideas and considerations for both future research and practice.

Formally Assess the Need for IT and Plan for Innovation

Prior to undertaking the adoption of an IT innovation that may require a local government to invest significant amounts of resources, it is important for the adopting organization to fully analyze the goals it intends to address with the IT, what tasks the IT is designed to accomplish, and the resource allocations required to implement the IT over its life of opera- tion. In the case of e-government technologies that are designed to facilitate interaction with citizens, businesses, or other external stakeholders, an assessment of goals should include an assessment of whether the IT is actually desired by the potential user. With regard to the adoption of advanced forms of e-government, such as the use of personalization of Web sites, Hinnant and O’Looney (2003) proposed that governments should pay close attention to the level of sophistication of the citizens within their jurisdiction, in order to gauge the real demand for a particular online innovation. However, an ICMA study in 2004 indicated that only about 10% of local governments conduct surveys to determine what online services their citizens want. As for other e-government technologies, such as online procurement systems, successful adoption would depend on whether private-sector vendors either pos- sess, or are willing to acquire, the knowledge and systems that may be required to use the online innovation. Similarly, any acquisition of new IT or IT-management practices should also include an assessment of the level of fit between the IT and the institutional goals it is attempting to address. This may require the organization to undertake formal evaluations of the ad- ministrative processes that the IT seeks to improve, as well as of its specific technology characteristics. This assessment may also be completed as a precursor to the development of a formal technology plan that addresses how the IT will deal with specific organizational goals, as well as analyzing the return on investment associated with acquiring the IT. While such formal assessments and justifications of new IT systems have become prevalent in large private firms, state governments, and federal government agencies, it is less likely that most local governments have developed the internal capacity to complete such tasks (Hinnant & Sawyer, 2003; U.S. General Accounting Office [GAO], 2004). Furthermore, it is important to understand that the extent of any assessment and planning activities should be considered with regard to the adoption process and the IT being adopted. IT innovations that may require significant resources during adoption or that have significant inherent risks may give reason for more formalized, thorough, and rigorous planning efforts. In addition, an early assessment of need and IT planning also serves a broader purpose to inform and, in some instances, educate other stakeholders. For example, such preparatory efforts may illuminate the benefits of potential adoption efforts to managers and political leaders, therefore assisting in garnering their political and financial support. Likewise, such efforts can also highlight the potential costs and risks inherent in IT adoption. Overall, such planning activities may not only enable local governments to better understand how the adop- tion of an IT innovation might address organizational goals or administrative processes, but

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they also provide a means to mitigate some of the risk associated with adopting IT within such a public environment.

Develop Alternative Funding Sources

The ability to acquire new IT is also predicated on the availability of the financial resources necessary not only to acquire the IT system, but implement the IT system and operate the IT system in the future. The availability of financial resources is consistently cited by lo- cal governments as one of the most significant barriers to e-government adoption (ICMA, 2004). Since the management of local government IT systems is often the responsibility of functional subunits that are often funded through general revenues, it would appear that IT innovation is often hampered by both the lack of a central IT department, as well as specific funding sources within local government. This situation is often exacerbated if the local government has limited sources of revenue with which to invest in new IT. If financial resources are limited, the local government should seek out alternative sources of revenue or participate in functionally specific IT projects that are funded through state or federal government funding programs. In assessing how e-government projects are funded, survey data indicate that currently 92.6% of local governments use general revenues to fund e-government. Some other sources of revenue, such as utility revenues (9.8%), federal and state grants (7.5%), enterprise funds (7%), and transaction fees from services (5.2%), are used by local governments to fund part or all of their e-government initiatives (ICMA, 2004). Given the somewhat limited number of financial resources that are readily available from within government administration, it would seem prudent to make use of whatever other mechanisms possible to make IT in- novations available. One alternative is the increased use of grants from federal and state governments. While such grants may be very limited for general IT acquisitions, they may be used to foster IT innovation within specific functional domains. For example, Department of Homeland Security grants aimed at enhancing emergency preparedness, law enforcement, or domestic security may be used to fund IT and interoperable communications systems, as well as cybersecurity improvements in local government IT infrastructures (U.S. Depart- ment of Homeland Security, 2005). In addition to grants, financial costs can sometimes be alleviated by seeking partnerships with state and federal governments. For example, state and federal agencies may sometimes take on most of the development costs of some intergovernmental IT systems in order to achieve a specific programmatic outcome. The financial investment for local government may be dramatically reduced, since it may be limited to smaller acquisitions of equipment or personnel training. In other situations, private-sector firms may be willing to partner with local government in order to provide online services to citizens. For example, local governments may contract with private firms to provide online for-fee services, such as the provision of marriage licenses or birth certificates, especially if there are other means of citizens requesting those services in person or by mail. Given the diversity within local governments with regard to the public services provided, existing IT knowledge, and the probability of limited financial resources, adopting innovative e-government solutions may

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require a mixed-funding approach in order to develop the different components and systems of a broader e-government initiative within local government.

Mix In-House Knowledge and External Expertise

Each local government usually provides a variety of services and, therefore, may possess a wide variety of knowledge assets across functional departments. This, coupled with differences with regard to available financial resources and the sheer variety of IT characteristics, means that local governments are faced with several choices regarding how much of a particular IT initiative to develop in house and how much to acquire through contracts with private- sector firms. According to a recent ICMA survey, only 38.5% of local governments report that they host their own Web sites, while more report that their own staff design their Web sites (55.9%), manage Web-site operations (77.1%), and integrate Web sites into existing databases (68%; ICMA, 2004). However, the mix of in-house vs. contracted IT development and operations may depend on the relative complexity of the IT being considered in relation to the knowledge and expertise present within the local government organization. It may be reasonable for a local government’s in-house IT staff to develop some IT if the technology is already fairly established or if the IT staff have sufficient knowledge and experience working with the specific form of IT. For example, the knowledge required to design and build a basic Web site would not generally be considered a complex undertaking in today’s technological environment. In fact, late adopters of any technology can employ the lessons and knowledge developed by early adopters, potentially reducing costs and risks of failure. At the somewhat other extreme, local governments may need to rely heavily on IT vendors for development and operation of IT applications and systems that are far more complex than the local government organization’s current level of technical sophistica- tion. In some instances, the high costs associated with updating and maintaining aging IT systems, maintaining knowledgeable staff, and developing new e-government systems in house are viewed as cost prohibitive. Some large cities, such as Minneapolis, Minnesota, have contracted with private-sector companies and outsourced the city’s IT operations in an attempt to reduce overall costs (Butterfield, 2006). In reality, most local governments will likely find some mix of in-house knowledge and external expertise that is the most efficient and effective means to develop, implement, and maintain new IT. Contracting for services that depend on employee knowledge of end users’ needs, desires, and behaviors, as well as accepted administrative processes, puts contrac- tors at a particular disadvantage, since they are more likely to have explicit knowledge of the technology, but less knowledge of the local government’s administrative processes and culture. Brown and Brudney’s (1998) study of the use of geographic information systems (GISs) provides some evidence as to the risks of an outsourcing strategy in an area that is likely to involve a high level of specialized knowledge. Their study indicated that there is a limit to the cost effectiveness of outsourcing core information-system functions. By surveying local government GIS managers, they found that these managers reported that small to moderate levels of contracting out of GIS services yielded clear benefits for their organizations, while higher levels of outsourcing did not appear to produce clear benefits. In fact, in cases where the government moved to near exclusive provision of these services via contractors, the costs and delivery time for the services reached unacceptable levels.

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Moreover, contract-only projects tended to produce fewer benefits in terms of operational productivity and performance, organizational decision making, and customer service. The estimated break-even point for the outsourcing of GIS projects in the study was 25% con- tracted work. That is, projects in which more than 25% of the total budget was spent on outsourced services tended to produce diminished returns. Findings such as these indicate that a local government’s own IT staff and program ad- ministrators possess necessary knowledge of administrative processes with which new IT must be integrated. Likewise, external vendors and consultants may be at times necessary to supply knowledge and support more advanced forms of IT. The reliance on contracted IT development and operation services from the private sector does necessitate additional skills within local government focused on overseeing the administration of those services. For example, local governments need to maintain communication with the contractor in order to evaluate, maintain, and assess performance information regarding the contracted IT system or services. Furthermore, in many cases, the local government must possess significant project-management skills in order to provide oversight of the contractor’s development of new IT systems (Chen & Perry, 2003).

Conclusion

The diffusion of IT within society during the past decade has refocused attention on how new forms of IT may be used to transform institutions within the private and public sectors. Academics, political observers, and vendors have often advocated e-government initiatives as a means of increasing transparency, openness, and overall efficiency in public-service delivery. However, local governments have sometimes been singled out as a group for being late adopters of IT innovations when compared to state and federal governments or private-sector firms. At first glance, the impression may be that most local governments are IT laggards that fail to serve the citizens and businesses in their jurisdictions by not creat- ing sophisticated IT infrastructures or by not offering a myriad of highly interactive online services. However, is this impression accurate or fair? Any objective assessment would probably indicate the opposite to be more accurate, as well as fair. In reality, it could be argued that local government organizations are incredibly hetero- geneous with regard to their administrative and political goals, as well as the social and technology environments in which they operate. Whether a local government should adopt a new form of IT, such as advanced online services, is a question that should ultimately be based on the government’s own specific jurisdictional considerations. A local government’s administrators, as well as appointed and elected political leaders, are ultimately responsible for allocating their jurisdiction’s resources in a manner that stands up to public scrutiny. Since many local governments are actually quite small in size, have limited resources to allocate, and may not experience significant public expectations about adopting advanced forms of IT innovations such as e-government, it could be argued that remaining somewhat behind the technological learning curve may be, for many governments, the most politically responsible course of action. This course allows other institutions to bear the costs and risks associated with developing and adopting new IT.

200 Hinnant & O’Looney

Note

The views expressed in this chapter are solely those of the authors and do not necessarily reflect the views of the GAO or the U.S. government.

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Endnotes

1 While e-government is most often touted as a means to facilitate interaction with citizens, the same underlying technologies can also be configured to interact with a variety of other stakeholders such as other local governments, businesses, state governments, or the federal government.

2 Organizational or institutional size is commonly found to be related to the adoption and use of IT (Delone, 1981). Population size is essentially a proxy measure for the amount of resources that an organization may have available to facilitate the adoption, development, and implementation of IT.

3 The 2004 ICMA e-government survey was mailed to chief administrative officers in cities with populations of 2,500 and over and to county governments with council-administrator or council-elected executive forms of government. The survey achieved an overall response rate of 42.9% with 3,410 respondents.

4 Fewer than 10% of respondents indicated that the local government Web site provided means to pay for taxes, utilities, bills, fines, fees, or business-license applications online. Only 10.2% of respondents indicated that they provided a means to complete permit applications online (ICMA, 2004).

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5 Dial-up users indicated that the Internet has improved interactions with both state (47%) and federal (49%) governments a lot or somewhat. Only 35% of dial-up users indicated that the Internet had improved their interaction with local governments. Similarly, broadband users indicated that the Internet has improved interactions with both state (59%) and federal (61%) governments a lot or somewhat. Only 45% of broadband users indicated that the Internet had improved their interaction with local governments (Pew Internet and American Life Project, 2004).

6 It is important to note that there is often considerable variation in the goals, needs, and techni- cal sophistication across the departments within a single local government. Therefore, an IT system may fit and be perceived as beneficial by some departments and not by others.

7 Norris and Moon (2005) also report that the same ICMA survey indicates that fewer local gov- ernments mention potentially positive impacts of e-government such as reduced time demands for staff, reduced administrative costs, a reduction in the number of staff, or increases in nontax revenue.