ServiceArizona: overcoming the obstacles to e-government.

• Author: Rudolphy, Craig
• Position: Digital Government on the Internet - Brief Article

The advent of the Internet and its explosive growth over the last decade has created demand for this electronic channel as a service medium for government transactions. As Web users have become increasingly comfortable doing business online, they also have come to expect government agencies to provide services over the Internet. Progressive, customer-focused agencies are accepting this challenge.

One of the first public agencies to provide services online was the Motor Vehicle Division of the Arizona Department of Transportation. When the MVD began offering vehicle registration renewals electronically in 1997, it opened up a fast, convenient service delivery mechanism. At the same time, it created new challenges in revenue management. Arizona's solution to these challenges produced a funding model that has made the electronic channel highly popular with citizen-users and financially viable for both the MVD and its third-party vendor, IBM.

Background

According to U.S. Census figures, Arizona experienced 40 percent population growth between 1990 and 2000. This tremendous growth increased the workload at MVD offices across the state, since new residents require driver's licenses and vehicle title and registration documentation. Despite declining customer satisfaction resulting from waiting times that often exceeded an hour, the MVD could not afford to continue adding staff and new facilities to serve the growing population. By the mid-1990s, the MVD leadership was seeking process improvements that would simultaneously improve customer service and lower transaction costs.

This effort ultimately led to the decision to implement an electronic service delivery channel. The idea was to develop a mechanism by which customers could electronically transact MVD business that did not require a face-to-face visit at a customer service center. The result was Service Arizona, a 24-hour delivery channel that allows Arizona citizens to renew their vehicle registrations, obtain duplicate driver's licenses, or change their addresses either through the Internet or through an interactive voice response system. The system was jointly developed by the MVD and IBM. IBM developed the front end of the system, where customers enter vehicle registration and credit card information. The MVD developed the back end, where the customer record database is updated in real time and the new registration credentials are mailed to customers.

The Funding Question

Although electronic service channels can be more efficient for governments and more convenient for customers than traditional face-to-face channels, the costs can be significant. These costs include infrastructure, application development, maintenance and support, and transaction fees. In most cases, the new service channel does not (and usually cannot) replace the traditional channel, so governments must continue to provide on-site customer service. Although an electronic service channel may reduce a government's cost per transaction for those customers that use it, the need to maintain...