Government ECM
by Dan Elam, eVisory

When it comes to knowledge management, state and local governments are a white-hot market. Why? Because the booming economy has lasted long enough that agencies are finally seeing the increased taxes roll in. Budgets such as these only arrive every 15-20 years, so government agencies are rushing to implement long overdue technology upgrades to help them move into the next century.

Agencies which generate revenue – and can pay for technology out of savings – have been at the forefront for some simple knowledge management technologies for several years. For state government, tax processing and unemployment reporting have been very important. Local governments have seen widespread use of imaging and GIS technology for land records applications. In each of these cases the departments have been able to show an increase in revenue or direct cost savings to make their justification very easy.

As new technologies mature within the knowledge management industry, some other applications are beginning to also be justified on traditional hard dollar savings. Child welfare, for example, is rushing to adopt various new technologies to track “deadbeat parents” thanks to mandatory federal requirements. Freedom of Information Act (FOIA) requests have become so frequent – and costly – for local governments, that correspondence management and similar knowledge management systems are being employed to help organize information in anticipation of FOIA compliance.

But the biggest growth in the knowledge management industry is coming from more soft dollar justifications. Secretary of State (SOS) offices, for example, are responsible for tracking business debts and trademark registrations. Today, law firms or specialized research firms collect this information and search databases to look for liens or prior use of various trademarks. But increasingly, SOS offices such as Ohio are using technology to reduce their data capture costs and provide lower cost research for their taxpayers. Such approaches haven’t gone unnoticed by the taxpayers: Ohio’s Secretary of State, Bob Taft, was just elected governor, in part because of his aggressive use of technology to reduce costs and improve service.

Some traditional vertical market strongholds for knowledge management are still slow to take root in government agencies. Invoice processing in Accounts Payable, for example, has been a popular application for commercial firms looking to reduce costs and avoid payment penalties. The complicated approval process for government agencies means a large number of users and the software licensing fees have largely kept agencies from adopting the technology.

Contact management software – vital for some commercial entities – is just beginning to work its way into some government agencies, but in a very limited fashion. Most attempts to manage organizational knowledge are restricted to departmental pockets within an agency or are limited to automation attempts that focus on a single individual (usually the head of the agency).

Vendors are also seeing that working with government agencies has gotten slightly easier as managers understand the importance of technology. From a contract perspective, several states have greatly simplified the procurement process by using master contracts. Similar to the federal GSA schedule, master contracts allow state and local government agencies to purchase imaging systems and knowledge management services such as consulting and business process reengineering without full fledged competitive procurements. In California, for example, any state or California local government agency can purchase these services from a pre-approved list of vendors. Kansas, Wisconsin, and Pennsylvania have somewhat similar contracts and West Virginia is currently in the process of evaluating vendor proposals to be included on the master list. The use of these master contracts is allowing agencies to move faster than they might normally move in the standard Request for Proposal (RFP) environment. By shortening procurement cycles, vendors can give agencies greater discounts since they avoid most of the expensive and complicated procurement regulations.

One downside for vendors to improved funding has been unrealistic requirements on the part of the agencies. Since agency officials know that it will be many years before they get a chance to have another major technology buy, RFPs are increasingly being released with “wish lists” of requirements. The people writing the RFPs often read all the vendor literature and list the features from many products as requirement for their new system. The result is often conflicting requirements (such as a relational database for full text indexing) or unintentional slants to particular vendors. In virtually of these situations, the wish is so comprehensive that it drives up the cost of solution and even keeps some vendors from bidding because of what they say as inflexible “mandatory” requirements.

In most cases, these “mandatory” requirements are not in the agencies’ best interests and most will waive the requirements – but only after the vendors have submitted their bids. The situation makes it very difficult for the vendors as they “guess” about what the agencies will pay for. The biggest drawback to all of this has been a sharp increase in the number of procurements that have been cancelled after everyone bids and the agencies discovers that the prices (due to unnecessary requirements) are more than they can spend. In the last year, some cancelled procurements have had the lowest bidders being as much as 600% higher than the state’s budget or procurement authority.

As the economy slows, smart government officials know that this may be the last wave of money for quite some time. With projects competing for tax dollars, agencies know they must carefully justify each project to show that it is the most important one. Cost justifications – neglected for the last few years – are beginning to reappear as a requirement to help get a project sponsored. Expect procurement cycles to stretch out a little longer as everyone makes sure that knowledge management is where agencies want to spend their money.

Even if the economy slows, the government market place will still stay for hot two reasons: budget cycles take time to correct and the technology is desperately needed to help solve some very pressing needs. As new knowledge management tools become available, there will always be progressive thinkers in government looking for ways to apply the tools to solve these problems.