A Methodology Framework for Calculating the Cost of e-Government Services TED Conference on e-Government “Electronic democracy: The challenge ahead” March 4, 2005 Bozen-Bolzano, Italy Elias A. Hadzilias IÉSEG School of Management - Université Catholique de Lille 3 rue de la Digue, Lille, FRANCE

® Elias A. Hadzilias Presentation outline  Introduction  Theoretical background  IDEF  ABC  Case study  Taxisnet  Conclusions  Further research

® Elias A. Hadzilias The context of e-Government Source:

® Elias A. Hadzilias The main issues  Durable and popular public management reform  The added value of Information Technology (IT)  Civic participation in the public sphere  The idolise approach [1] [1] Heeks, R., Davies, A.: Different approaches to information reform. In Heeks, R. (ed.): Reinventing Government in the Information Age: IT Enabled Public Sector Reform, Routledge, London (1999) 22-48

® Elias A. Hadzilias Motivation of the study  eGovernment is the use of information and communication technologies in public administrations - combined with organisational change and new skills - to improve public services and democratic processes and to strengthen support to public policies.  eGovernment is a way for public administrations to become:  more open and transparent and to reinforce democratic participation  more service-oriented, providing personalised and inclusive services to each citizen  productive, delivering maximum value for taxpayers' money Source:

® Elias A. Hadzilias Objectives  Provide an integrated methodology for the cost calculation of e-Government services combining IDEF and ABC methods  Address workflow issues when tax legislation is altered  Establish a reference level for defining performance indicators  Visualise the business processes supporting the e- Government landscape  Enable what-if scenario analysis

® Elias A. Hadzilias The IDEF  Method  Modelling of decisions, actions, and activities of an organisation or system  Field proven function method for analysing and communicating the functional perspective of a system  As a communication tool, IDEF  enhances domain expert involvement and consensus decision-making through simplified graphical devices.  As an analysis tool, IDEF  assists the modeller in identifying the functions performed and what is needed to perform them.

® Elias A. Hadzilias Graphical representation Inputs Mechanisms Outputs Controls ACTIVITY

® Elias A. Hadzilias Activity-Based Costing (ABC) Resources Products / Services Traditional Cost Accounting Resources Products / Services Customers A ctivity- B ased Costing Business Processes Activities

® Elias A. Hadzilias TRADITIONAL ACCOUNTINGACTIVITY BASED COSTING Activity Overhead Direct Labour Direct Material COST Activity Overhead Direct Labour Direct Material COST A less conceptual view of ABC ABC jargon: Cost drivers Activity centers Cost pools

® Elias A. Hadzilias ADMINISTRATION DEPARTMENTS PROCESS 1 Why ABC… PROCESS 2

® Elias A. Hadzilias One year ago… Business ecosystem, digital economy, etc.

® Elias A. Hadzilias The case study: TAXISnet  TAXation Information System, named after the Greek word for order (TAXISnet after 6 years)  Initiated and managed by the Greek Ministry of Finance  Strategic IT investment with an overall budget of approximately € 90 M  Cost analysis report of submitting and processing income statements E1/E1A (General Secretariat for Information Systems)  Intermediation of tax agencies for numerous tax refund cases (lawyers, doctors, engineers, etc) after a circular that was published from the Ministry of Finance

® Elias A. Hadzilias The TAXISnet portal

® Elias A. Hadzilias The workflow until 2003 Submit E1/E1A tax statement Secure connection TAX PAYER INTERNET MINISTRY OF FINANCE

® Elias A. Hadzilias …but things changed! Circular /771/A 0012/ (Greek Ministry of Finance) TAX AGENCY Submit paper documents

® Elias A. Hadzilias Weaknesses of the TAXISnet cost analysis report  Does not address the gap in the e- Government services with the intermediation of tax agencies  Assumptions are based on a traditional accounting approach

® Elias A. Hadzilias The proposed framework: IDEF  and ABC Cost objects Cost driver analysis Performance measurement Cost assignment view Process view Resources Activities

® Elias A. Hadzilias Cost assignment view e-Government services Resources Process view Cost driver analysis (Why work is done) Activities (Work performed) Performance measurement (How well work is done) Resource drivers Activity drivers Calculating the cost of e- Government services

® Elias A. Hadzilias Α1 Activity Analysis Interviews Α2 Cost Collection Α3 Cost Allocation Organisational procedures Data Project Team Employees Accumulated Costs Α4 Output Measure Definition Cost per activity Project Team Employees Project Team IDEF Activity model Α5 Activity and Cost Analysis Organisational Culture PIs Cost per activity Project Team Central Administration Cost per activity and Cost Object The integrated methodology Documentation Project Team

® Elias A. Hadzilias TAXISnet today…  less service-oriented, not providing personalised and inclusive services to the citizens  less productive, not delivering maximum value for taxpayers' money “… if the amount of tax refund exceeds € 1500 […] then there will be a delay due to necessary administrative procedures and the final decision will be made afterwards”. Source: Guidelines for declaring the 2004 income (

® Elias A. Hadzilias Calculating the cost of change Α1 Α2 Α3 Α A0 A4 A42 A-0 A4 A42 A0 0 A new + Cost Anew or - Cost Anew

® Elias A. Hadzilias Conclusions  Proposed methodology proves to be more suitable for the cost calculation of e-Government services than traditional accounting  The established IDEF model is able to address workflow issues when tax legislation is altered  Performance indicators allow for continuous e- Government services improvement  The IDEF/ABC enterprise models enable the transparent view of business processes supporting the e-Government landscape  Enable what-if scenario analysis

® Elias A. Hadzilias Further research  Determine the requirements of an information system, which will be dedicated to support the process mapping of the e-Government services with the IDEFØ tool and the cost allocation using the ABC approach  Reconsider and redesign the Weberian bureaucratic model of the Greek administration to address the e- Governance organisation  Compare the e-Government efforts in the taxing domain with other EU member-states (benchmarking and best practices)

® Elias A. Hadzilias Questions