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The road to e-governance

With various initiatives like the comprehensive NeGP and State WAN rollouts, IT consumption in the government sector is on the rise. Now it’s up to the IT vendors to shape their business models to capture this emerging market, writes Varun Aggarwal.

The government has conventionally been recognized as a key driver of the domestic IT market around the world. Most big budget IT projects are in the government sector and this is the market where any vendor would like to place itself. In India, government organizations have been slow to adopt IT but they are catching up fast. The success story being played out by the IT industry at the global level is also being reflected in India, with organizations embracing IT. The government is becoming IT enabled and using technology solutions to bring greater benefits to citizens and improve its internal efficiencies.

The government’s move towards information technology

The Indian Government has a comprehensive National e-Governance Plan (NeGP), comprising of 27 Mission Mode Projects (MMPs) and 10 components as the backbone of its e-Governance strategy. Apart from this, defense IT expenditure is also on the rise and there are several e-governance projects in the pipeline. There is an increased focus on information at Public Sector units and educational institutes offering state-of-the-art facilities. The government vertical is estimated to form 20% of the Indian PC market.

This projects the enormous opportunity that the government has to offer to IT vendors.

Alekhya Talapatra Director Sales, Government & PSUs, Dell India said “The government vertical in India is an estimated $500 Million market with a compounded growth rate of 30%. Dell identified the government, public sector and education as areas of strategic focus to achieve stronger growth in India and adopted a focused approach towards it. We forayed into the government segment in May 2007. Within a short span, Dell made important progress in this vertical. We have in place a strong team to address opportunities in this segment along with a comprehensive product portfolio to address their requirements.”

A M Sheshagiri, General Manager–Sales, Government, Education & Healthcare, Oracle India Private Limited said, “Oracle is well positioned to provide the necessary support and technological know-how to governments as it continues to support e-Governance initiatives with deep industry functionality and superior ownership experience.” Oracle’s strategy is to capitalize on this integrated offering across industries and verticals. As Oracle successfully implement projects across municipalities, states and central departments, the case for others improves dramatically.

“One of the initiatives taken to tap the growing market, in order to enable the success of e-Governance in India, was the setting up an e-Governance Center of Excellence in collaboration with HP,” he added. The Oracle-HP e-Governance Center of Excellence works closely with various state and central government bodies to understand the peculiarities of e-Governance in India, and tailor make technology solutions to empower government bodies to provide citizen services to the masses.

Areas of development

IT spend has grown in the justice and public safety space in response to strong market drivers such as cross police agency collaboration, increasing police force efficiency and the ever present threat of terrorism. In turn, intelligence agencies have increasing requirements to analyze and match huge and diverse data sets and sources.

There’s also a growing interest in joined-up-justice where previously disparate elements of the criminal-justice chain (crime-fighters, courts, prisons, social services) are linking up their systems and sharing important data. This change in justice systems, is causing countries in Asia Pacific to increase IT support, to facilitate border management and the use of electronic travel document, which also links into national initiatives focusing on citizen databases, unique-id projects and a rise in the use of biometrics. Underpinning this is a major trend towards Citizen Data Hubs that manage the integrity of core information regarding the citizenry.

Sheshagiri said, “In the recent months, we have seen a major increase in government shared services initiatives such as the optimization of back office costs, assurance of best-practice standards across multiple agencies and rationalization of platforms. This is a trend that we see increasing in the coming year.”

Tax and revenue agencies are amongst the largest spenders of IT and we are seeing agencies facing challenges in terms of aging systems and increasing needs both to improve citizen services and increase tax revenues. As such we perceive increased activity in this area, which will gradually build up momentum.

Case management is coming of age in the public sector with growing application to the tax, investigative policing, social services and immigration services, the latter sector being particularly strong as agencies seek to streamline such activities as passport applications, visa processing and citizenship requests.

Targeting the government

Nagendra Devariya Arkalgud, Director, Sybase Professional Services, Sybase Inc, said, “Household consumer across income segments and geographies is being exposed to technology through mobile penetration, B2C applications (Railway reservation, e-chaupal, NSE, MCX, e-seva etc). He listed some key challenges which need to be addressed to accelerate the growth of the domestic IT market.

• The pace of IT investment in e-Government initiatives
• IT usage pattern is focused on automating processes instead of enabling business transformation
• IT penetration in many verticals significantly lags behind international benchmarks (insurance, education, healthcare, travel). The government sector should focus on ensuring that this penetration goes up
• Regulatory environment needs to incentivize IT consumption

Starting FY08, Sybase has decided to take a solutions approach for this space. It has decided to create PSU and Government as an independent vertical with dedicated sales, pre-sales, consultants having domain expertise and post sales team for the same. It is also trying to leverage on the strong ecosystem of large SI partners like Wipro, HCL, 3i Infotech, Satyam etc. Its business model is broad based and aims to create wins through new customer acquisitions, retention and expansion at existing customer base as well replicating some of the Sybase Global success stories.

Dell sees the growing IT requirements in the government as a significant business opportunity and a strategic focus for the company in India and this includes the projects with public private partnerships. Dell is now empaneled for its various product categories with the Directorate of General Supplies & Disposals (DGS&D). It has addressed market needs across different kinds of government customers like the augmentation of back-end servers for IOCL to participate in some significant projects with government bodies and the Electronics Corporation of Tamil Nadu Limited (ELCOT) for client and enterprise products. Amongst others are the Indian Railways and the Indian Institute of Chemical Technology (IICT). Dell has also worked in the HPCC space for the IICT.

Arkalgud said, “In India, we have focused on key government entities namely the Indian Railways, Indian Navy, ISRO, National Board of Trade, Indira Gandhi Center of Atomic Research, the Bombay Stock Exchange and Public Sector Banks like Indian Overseas bank, Bank of Baroda etc.”

Sudesh Prabhu, Country Manager, Symantec Enterprise Services, India said, “A number of government projects include IT infrastructure built up which is an essential building block. Symantec Services provides a strategic direction to governments in line with policy goals and objectives determined by the State Program Steering Council.”

He added, “We deliver services to oversee and monitor the implementation of progress under the eGovernance Program and also advice government departments on matters relating to IT standards, interoperability, technologies security, consistency, architecture, interdependencies and shared infrastructure.”

Business models

Different vendors approach this lucrative market in different ways. While, some believe in direct sales others prefer to let their partners take care of government IT tenders and stay away from the complex process of getting these projects. One of the ways in which the government is trying to promote IT is through a Public Private Partnership model (PPP).

Sheshagiri said, “Traditionally it has been found that companies make money in the long run in growth economies when they participate in PPP projects. India is a growing economy and will be no exception to this rule. We work with system integrators who bid for projects to set up and run IT facilities in government departments. Oracle also proactively participates in PPP projects by partnering with the bidders ensuring lowered cost of operations.”

Faisal Paul, Country Manager, High Performance Computing and Linux business, Hewlett-Packard India has a different view on this, “The PPP model may not benefit all as the mere size of these projects confines the sheer number of companies that are able to bid. The government should look at models like BOOT (Build Own Operate Transfer) or BOOR (Build Own Operate Refresh).”

Sriram Viswanathan Channel Manager- India & SAARC, RSA added, “The BOOT model can be more successful as vendors will not face cost pressures. In this manner, the vendors would also have greater control over the project along with better margins.” He said that though there is money to be made out of PPPs, the margins may not be too good.

“We work with partners and our partners bid for government projects. Though we do have direct dealings, we focus more on our channel-partners model,” said Vishwanathan.

“Symantec follows a partner-led model across industries and we have dedicated business development managers that focus on the government sector,” said Prabhu.

In order to ensure better margins, HP has taken the open source route. Paul explained, “In these projects open source software becomes important to control costs. HP has implemented open source at various stacks of the solutions built specifically for the government sector. Customers save a lot of money on licensing fees using open source software.”

However, strong integration of all these pieces of software is essential. “Its important to integrate all the software—ERP, workflow, network infrastructure, database, middleware—all this needs to be done in an optimum manner,” he said.

With an endless list of opportunities that lie ahead in the government sector, careful examination of business strategies could be the key to make good money along with the pride of serving the nation.

varun.aggarwal@expressindia.com