The Impact of the Information Age on Government and Society

Governments around the world are struggling with fundamental changes in the way they work. They are seeking ways to provide better services for citizens and improve the climate for business growth at a time of growing pressure for flat or reduced taxation. All nations are trying to create the infrastructure and business climate to succeed in today's world markets. As many countries have already discovered, a solid technology infrastructure can play a significant role in helping governments deliver a comprehensive set of services to citizens, support business growth, attract outside investment, improve education, increase operating efficiencies and reduce costs.

In his travels, Microsoft Corp. CEO Bill Gates has talked with government officials about what he calls the "digital nervous system." He uses this term to describe the advanced technology that governments can use to manage information to improve their internal operations, their coordination with companies that do business with them, and their delivery of government services to citizens. The Internet can also improve how people live, learn and work if countries make the necessary investments in infrastructure. Providing better and faster existing services, publishing information for citizens, enabling citizens to transact business with government online, providing access to knowledge from all over the world ? these are all benefits of a good digital nervous system.

Citizens of the information society will enjoy new opportunities for productivity, learning and entertainment. This paper discusses the opportunities and issues from the application of information technology in an electronic government, and offers examples of how countries and states are using information technology today.

Digital Nervous Systems Benefit Everyone

Microsoft has extensively researched how governments are starting to deploy information technology to provide services, improve education, help businesses compete and attract investment. The approaches that governments are taking are as varied as the people of the world, but they can be grouped in the following ways:

• Using the Internet to dramatically improve information available to citizens
• Streamlining government by becoming a model user of modern information technologies
• Transforming government to provide a single point of contact for citizens, and providing direct electronic services to them
• Making major investments in the telecommunications infrastructure. This approach ranges from wiring up major government offices, schools and libraries to creating special high-tech districts to (in the case of Singapore) wiring an entire nation.
• Using technology to dramatically improve the education system at all levels
• Lifting the skills of citizens with a variety of pilot projects, grants or infrastructure investments
• Attracting investment by technology companies and encouraging electronic commerce, sometimes with financial incentives but more often with cooperative projects that benefit both the community and the technology companies

More evidence of governments publishing practical information for citizens can be found in Denmark, where, as part of its Info-Society for All program, the government intends to provide "Citizens Cards" that will enable electronic communications and transactions with government agencies. The cards will permit citizens to link directly with agencies such as the Ministry of Taxation, the Central Customs and Tax Administration, and county and municipal councils. The government views the cards as a vital component of the country's electronic infrastructure. The cards will also enable digital signatures on electronic documents for commercial as well as public administration functions.

In Hong Kong, through Interactive Government Services Directory, job listings from both the private and public sector were published, and current traffic information are posted online.

Technology is just beginning to significantly contribute to education. Recent advancements in PC technology ? such as sophisticated productivity tools and access to the Internet ? are providing students and educators with new ways to organize and use information, analyze and solve problems, and acquire new knowledge. With the right tools and proper training, teachers can use computers to adapt to individual student learning styles.

Schools are benefiting in other ways from the Internet. The Highdown School in Reading, England, is the central information hub for the entire community. Students have individual logon accounts so they can use productivity applications from home and 
e-mail accounts that let them share information with peers from school or others around the world. They can get on the Internet any time they want more information for assignments or are just curious about a particular topic. This networking infrastructure benefits the entire community. Parents now have immediate access to teachers via e-mail, instead of meeting with them only a few times a year. Government departments and local councils can establish bulletin boards and home pages with community information. Museums and libraries can provide access to the Internet and online services. And adults can get online technical training, either from the schools, which open on evenings and weekends for that purpose, or from home.

Costa Rica, a country that boasts a 95 percent literacy rate, is now installing computer laboratories in all of its public high schools and at least half of its grammar schools. By the end of 1998, every public high school student will have an e-mail name and access to the Internet.

Government operations are also reaping the benefits of low-cost PC solutions. In the United States, Massachusetts, Florida and Wisconsin publish online a list of state procurement bids. Massachusetts publishes the bids, all the documents needed for vendors to respond, and the results of the bids online. The Comm-PASS system provides a mechanism by which other public entities (cities, towns, special tax authorities and school districts) can find the state contracts from which, by law, they can also buy. Vendors can also advertise their wares. The system, which has handled more than 2,600 bids, averages more than 170,000 hits from the public a month.

Governments process huge amounts of paper, and many are looking at electronic methods to streamline the handling of public documents and records.

In Australia, the state of Victoria is working creatively to transform the way the government works. The state is building a wide area network (WAN) to connect 3,100 government offices and is sending 500 of its senior managers to training on business process re-engineering. The state has allocated $110 million (Australian) in competitive grants to spur innovative government projects that will streamline internal processes and improve service delivery. And it is creating a general call center with a single phone number to replace the 1,200 phone numbers that citizens might use to contact the government today.

Victoria is also implementing an interactive system that offers a rich array of services to citizens via kiosk, Internet and phone. This one-stop service lets citizens pay utility bills and traffic fines, re-register vehicles, book a driving exam, obtain a learners permit, and sign up for new services like garbage collection. The system is organized by "life events" and the changes in legal status that go along with them. Users can click on a life event and transact all the legal steps related to it, including change of address, and the system automatically updates records for the four state agencies that need to know.

These are just a few examples of how governments are using IT to benefit citizens, students and business operations. Other innovative approaches are apparent in the steps governments need to take to ensure they are investing wisely in technology.

Part II: Investing in the Digital Nervous System

Some Salient Points on Why, When and How to Succeed

A true digital nervous system begins with a combination of PC, messaging and Internet technologies that allows a government agency or department, a school or library, or an independent government commission to improve internal processes and communication, streamline internal paperwork and collaborate on cross-department problems. The goal is to give citizens easy access to a government with a single "face" so they don't have to deal with a tangle of uncoordinated departments. For example, a citizen should be able to conduct all business related to getting a building permit from one place, either physical or virtual, regardless of the number of agencies involved. While the ideal scenario would be for a government to roll out modern technology throughout the country, that may be an unrealistic goal ecause of cost, existing information systems, and differences in leadership and skills within various agencies or departments. It's important, then, that a government use low-cost, standard building blocks so it can roll out technology at different rates as needed and still link them together into an intelligent system at the appropriate times.

Electronic mail, for instance, is a critical tool for improving internal government communications and handling scheduling. For e-mail to work, governments need a standard e-mail system throughout. It's also important that the government infrastructure be the same as that of its citizens ? virtually all of which will be PCs ? and its businesses, which are increasingly PC-based. This, plus Internet connectivity, will ensure that a nationwide digital nervous system simply "happens" when all the pieces are in place.

The biggest cost ? and the most difficult issue ? for all countries is developing a high-bandwidth infrastructure connecting the government, schools, libraries, businesses and citizens.

Infrastructure is critical.

The time to start planning an infrastructure is now. Because countries are moving quickly to establish their markets in the global economy, there is tremendous pressure to take advantage of state-of-the-art technologies. However, building an infrastructure is an iterative process. Today many communities, schools and government agencies have laid small infrastructures, allowing people to interact and access information from the World Wide Web. Using standard PC and Internet technologies, these networks will eventually be able to link together to create one nationwide infrastructure.

A technology infrastructure is a serious investment. The flip side is that those environment with fewer existing systems can start fresh with a new infrastructure, which will give them an advantage over more developed environment that have older and more expensive systems in place and have to deal with making new systems work with them.

Investments in many PC technologies pay for themselves in reduced costs or improved operations and services.

Among its many initiatives, Malaysia plans to use PCs and the Internet to develop a model approach to medicine. Malaysia's goal is to use communication technologies to provide medical services in remote areas and help teach its people healthy life practices that will prevent diseases. This "telehealth" approach ? focusing on illness prevention, not just treatment ? will provide more equitable health care and also eliminate many costs from health care before they occur.

Given the heterogeneous nature of existing government IT environments, implementing a standardized set of new technologies, like e-mail, is a challenge. That's why it's important for companies such as Microsoft to work with standards bodies to create open systems and tools that interoperate easily with other technologies. Microsoft supports the PC platform because it offers a promising mix of flexibility, scalability and security at a relatively low cost. Also, today's PCs interoperate effectively with mainframes, UNIX environments and the Internet. Singapore's Inland Revenue Service, for instance, has automated most of its tax collection process, using PCs to integrate electronic taxpayer data from one mainframe and scanned document images from another UNIX system, so tax employees have a seamless view of information. Employees use PCs to help analyze the data and to quickly compose customized letters to taxpayers if there are questions about the tax return.

One of the major challenges governments face when implementing a technology infrastructure is how to reach an entire citizenry. Unlike businesses, where most employees and customers speak the same language and have access to the same communications medium, governments are faced with diverse populations? young, old, those with illnesses or disabilities, the underprivileged, from urban or rural communities ? who all need the same information about taxes, licensing, and public benefits. The challenge is finding ways to reach everybody, which means that paper documents will not go away for a long time. It also means that easily accessible kiosk systems need to be available to citizens and government workers.

Once investments have been made and the technology is in place, people need to use it. Most important, government needs to be a model user of technology. Government is one of the largest businesses in any country. If it is a leader in technology, it will automatically lift the technical skills and create an IT market in the country. By edict or incentive, it can also pull along all the companies that do business with it. Finally, government leaders must reinforce the government's commitment toward the use of IT by delivering compelling online information and services, providing training for computer-illiterate citizens, and improving the government's operational efficiencies so citizens have positive experiences online. They must stand up for the cost of IT, since the entire country or state ultimately will benefit, and they need to set an example by using technology as a primary means of communication.

Laying the Foundation

In the past, the social and commercial growth of a country expanded along transport routes, such as rivers, railroads and highways. The next wave of social and commercial growth will expand along digital nervous systems. Much as people have depended on effective government planning for the success of their transportation infrastructure, they will also look to government to design and deliver fast, reliable communications networks. Whether done in partnership with the private sector or solely with tax dollars, laying the foundation for national connectivity requires an investment in infrastructure that allows homes, businesses and schools across a large area to communicate seamlessly over the Internet.

Because of its small and widely dispersed population, Australia is particularly motivated to pursue the opportunities high-speed networks offer. Australia's formerly government-run PTT ? a postal, telephone and telegraph services monopoly ? has been replaced by full open competition. This change encouraged forward-looking plans for the rapid building of infrastructure based on fiber and cable. The competitive environment is so fierce that in the state of Victoria, for instance, between 3 million and 4 million Australian homes and businesses are served by competing connections to high-speed networks.

In Singapore, population density and the government's focus on infrastructure have helped the city-state become perhaps the world leader in the deployment of fiber-optic cable and interactive applications built on top of it. More than 50 percent of the city is already wired (60 percent of public housing). As of early 1998, 95 percent of all public housing has been connected with cable, and Singapore officials estimate that more than 50 percent of all homes have PCs. Today, 85 interactive applications are available. Residential developers in Singapore are required to provide every new house or apartment with a broadband cable, just as they are required to provide lines for water, gas, electricity and telephone service.

In addition to wiring, the computing platform is an essential piece of a successful digital nervous system. Most countries have systems that need to connect with newer ones. This need for interoperability between new and existing technologies is one reason Microsoft believes the PC platform is the best option for countries that are either expanding on what theye already got or are starting from scratch. People in many kinds of jobs know how to use PCs. In the United States today, approximately 40 percent of all homes have a PC. By 2000, over 15 million more households will have a PC. Fifty-three percent of all households in Korea have PCs. Countries including Germany, Sweden, Singapore, Malaysia, Australia, New Zealand, China and the United Kingdom are making major investments in the PC platform. In China, PCs are the fastest growing commodity in the market. According to International Data Corp. (IDC), sales of PCs for the home will multiply from 290,000 ? or 14 percent of the market ? in 1996 to 2.7 million in 2001 ? 33 percent of the market. One reason is that the cost of PCs is continually going down which makes them more accessible to more people. Many PCs cost under $1,000 (U.S.), and devices such as WebTV will make it possible for anyone who can afford a TV to have some access to the Internet.

Implementing Policies and Security Measures That Help the Digital Nervous System Thrive

Governments can work alone or with the private sector to establish communications networks that benefit their citizens. At the core of these networks is the Internet. Microsoft's work centers on the Internet. This presents enormous opportunities for businesses to create a myriad of Internet content. It also presents challenges for governments to manage and encourage Internet growth and development without stifling innovation.

This section explores some of the most salient issues affecting government policies for managing Internet content and creating security measures to protect data:

• Protecting intellectual property.Content is what lures people to the Internet. If the law does not protect interesting and useful content from plagiarism and other unauthorized uses, authors will be unwilling to provide it. Governments can promote the creation and dissemination of online content by ensuring that existing copyright and related rules apply fully to activities that take place throughout electronic networks, so that authors and other rights holders retain control over all valuable uses of their works. These rules should be applied globally so that commerce can flow efficiently and "piracy havens" can't exist. Remedies and penalties should be strong enough to deter infringement.

The market is experimenting with new licensing models that would permit or control how people use content and technical mechanisms, like those that combat illegal copying. These regimes will allow rights holders to distribute their work in new ways while safeguarding against piracy. Governments should not try to make any one licensing or technical-protection scheme mandatory, since that would freeze technological innovation and narrow consumer options.

• Creating market-based regulatory initiatives. The Internet's success is due largely to the fact that its market has been almost untouched by government regulation. For the Internet to reach its full potential, governments must let innovation flourish without interference. Unlike the telecommunications and broadcast industries, which are limited by the number of frequencies available in each region, the Internet provides unlimited opportunities for content providers, and the cost of delivering content is relatively low. This makes for an extremely competitive market that cannot be dominated by a single vendor. Telecommunications deregulation would have an extremely positive impact on the Internet. Deregulation would foster competition, stimulating innovation in Internet service delivery and reducing rates so that more people could use the Internet.

• Protecting private data.Once governments reach their audiences, they need to have a reliable security system in place to protect private information. Smart cards are the best answer to this problem. Users need some way to identify themselves when they are trying to access data such as information on welfare, how much they owe in taxes or their credit history. Citizens may feel vulnerable to government abuse if they are able to get smart cards only through the government. To counter this problem, some governments are looking to private institutions, such as banks, to issue smart cards. Another possibility is to make smart cards optional, which means citizens who opt not to have one could not perform certain transactions online. In several nations, it appears that at least two types of smart cards will emerge: one for financial transactions, and one for other government services ? for example, one for public benefits, another for health care.

Another problem with protecting private information is that online services can get quite a bit of information on users, including names, addresses, demographic data, credit information, details of online transactions and usage patterns. This data enables providers to offer better services and support for customers. It's also useful for marketing, either by the provider that collects it or by another company that has bought it. While governments should not impede the development of online businesses and communications, they do need to protect people from unwanted use of personal data. A balanced and workable approach is to encourage companies to create user-approved access to personal information for online commerce.

• Ensuring encryption and data security. Individual and corporate users need to have confidence in the security of their online information if the Internet is to realize its full potential as a powerful commerce and communications medium. Encryption protects the security and confidentiality of a wide range of financial, commercial and personal data traveling through an open network. It also protects telephone networks, online services, and corporate and government computer networks against unauthorized access.

Governments around the world need to agree on internationally consistent solutions that will help, not hinder, the progress of the Internet.

• Regulating content. Internet content reaches a global audience, often transcending national regulations. Yet definitions of what content is appropriate or objectionable vary from country to country. At the same time, authors of illegal content are often hard to trace. In this environment, censorship is impracticable. In light of the distinctive characteristics of the Internet, the most effective approach combines workable liability rules with industry self-regulation and content-screening software.

With so much diverse content flowing on the Internet, governments are under pressure to protect society, minors in particular, from harmful content. However, with content ratings and filtering technologies like the Platform for Internet Content Selection (PICS), users themselves can control what content they and their families can access.

Creating Localized Content

The technology infrastructure that governments create is only as good as the content that flows through its pipes. After making such a huge investment in infrastructure, governments can realize a return only if people use the system. To encourage high use, governments need to provide localized content that will allow citizens to work more easily with government, access useful information, run their businesses more effectively and improve the way they spend their leisure time.

The best way to develop localized content is by working with vendors who are familiar with the environment for which they are providing content and who have access to standard, best-of-breed building-block applications that will allow them to develop scalable, flexible solutions that interoperate easily with both existing and future technologies.

In Australia, the state of Victoria is focusing on building a software-development industry and encouraging content development. Using $130 million (Australian) in federal funds, the state is offering venture capitalists and private companies grants to develop small to medium-sized technology businesses.

In the United States, Microsoft Certified Solution Providers develop all kinds of government applications. Plant Equipment Inc., based in Temecula, Calif., develops emergency phone systems that streamline call handling and give dispatchers detailed information about the caller. They help dispatchers respond effectively in situations where every second counts.

Puget Sound Systems Group Inc., based in the Seattle area, is developing a client/server grant-tracking system that allows states to submit project grant proposals either electronically or by telephone. This method expedites the grant process and saves costs because grant checks can be issued directly to state accounting systems. Puget Sound Systems Group is also creating a client/server system that helps administrators schedule state law-enforcement officers for court. As a result, police officers can spend time on the street instead of waiting in court for cases to be called.

In Toronto, Canada, the Metro Court expects to reduce costs by $9 million (Canadian) with an electronic legal/justice system that will digitally link law firms to courts, as well as law firms to each other. The system is being developed by an alliance of Microsoft, Choice Information Systems Inc. and PC DOCS Inc.

In addition to hiring local content providers, governments would benefit from deciding on a common PC platform that serves as a medium for content providers so different applications have the same look and interoperate well. It's important that this platform be mainstream enough that most users are familiar with it and can use it easily.

Solving the Skills Transfer Dilemma

Once a digital nervous system is in place, governments need to take steps to ensure that people know how to use it, that the content stays current and that the system is properly maintained. Skilled workers familiar with state-of-the-art technologies are key to achieving this goal.

The lack of skilled IT workers presents a huge problem for governments and businesses that rely on their IT infrastructures to function and stay competitive. The growing IT skills gap has a severe impact on the private sector's ability to develop IT projects that will improve the bottom line, the channel's ability to grow businesses to service these customer projects, and the technical industry's ability to develop future technology.

To help solve this problem, Microsoft, in conjunction with a number of Microsoft Certified Solution Providers, is sponsoring Skills 2000, a multimillion-dollar, two-year initiative that started in May 1997. The initiative was formulated specifically to close the gap between the number of open jobs in the IT industry and the lack of skilled professionals to fill them. Program objectives are to keep IT professionals? skills up-to-date, help trained computing professionals look for jobs, motivate nearly trained IT professionals to complete training and enter the IT work force, and encourage untrained individuals to consider entering the industry.

In the United Kingdom, the government is making skills transfer part of its National Grid for Learning initiative. With Microsoft, British Telecom and RM, the British government is establishing a public online Teacher Resource Center. The center's goal is to help teachers in their daily work by providing online forums, access to knowledge and help with lesson planning. In addition, it provides information on IT training and online help for building IT skills.

In the United States, Issaquah, Wash., used a $2.7 million levy to implement a networked infrastructure across the school district and train future workers at the same time. High school students planned, built and managed the system from start to finish. This effort has resulted in a superb technology program that uses 2,000 personal computers to teach advanced academic skills. The system links more than 10,500 students and 1,000 teachers. Best of all, recent high school graduates have landed good jobs at local high-technology companies.

With all the effort governments are putting into education reform, the fact remains that no amount of equipment and connectivity will matter unless it's integrated with curriculum and teachers are ready to use it. Teachers need to have easy access to the technology and receive proper training to effectively integrate it into their curricula. They should have the opportunity to continue learning how they can use new technologies to improve the academic environment.

The state of Victoria, Australia, has deployed an infrastructure that will eventually connect 100,000 PCs, providing a 5-1 ratio of students to PCs across the state. In preparation, the state identified seven "navigator" schools that are chartered with setting an example for the advanced use of classroom technology. Every principal and teacher from all 1,750 schools in the state will attend a practicum at one of the navigator schools to experience best practices for themselves. The program is a third of the way complete with two years left.

Microsoft sponsors a program called Anytime, Anywhere Learning, which, among other things, helps schools develop laptop computer training programs for teachers. The program has four components: learning about the computer; software training for basic productivity applications like word processing, spreadsheets and e-mail; integrating technology into the curriculum; and ongoing training.

Getting people to use the technology once it's in place is another skills-transfer challenge that governments face. In China, where the PC market is thriving, the government wants to educate people on how to use the latest technologies. Government officials realize that a citizenry armed with IT skills will help make China more competitive economically. That's why the Chinese government gave Beijing TV and the Seattle-based firm RXL Pulitzer the task of developing a weekly TV program to educate people about personal computers. "My Computer Family," a situation comedy about a fictional family called the Zhaos, has soared in the ratings and is one of the most popular shows on TV. It is syndicated in 20 major markets in China. Microsoft and Compaq Computer Corp. help sponsor the program.

Conclusion: Successful Digital Nervous Systems Require Collaboration

Something historic is happening that will affect the world seismically, rocking us as the invention of the scientific method, the advent of printing and the arrival of the Industrial Revolution did.

Big changes used to take generations or centuries. This one won't take that long, but it won't happen overnight. Within a decade, effects of the communications revolution will be widespread, and within 20 years virtually every technology addressed in this paper will be broadly available in developed countries and in businesses and schools in others.

To make a communications infrastructure work for everybody, governments need to employ the skills of numerous technical experts and corporate partners. Content will benefit from the input of key stakeholders, whether they are business people, educators, government workers, students or citizens.

We at Microsoft believe in utilizing the expertise of providers. Since the early ?90s, Microsoft has relied on Solution Providers across the world to develop applications for and support the Windows^® platform. This model has benefited Microsoft's business tremendously by allowing the company to focus on its core competency: developing quality products. It has also benefited the technology industry, creating hundreds of thousands of jobs worldwide. This example illustrates the impact a countrywide digital nervous system can have on a local market if the government collaborates with a variety of solution providers.

Corporations can contribute a tremendous amount of value to a digital nervous system, especially in terms of education. Societies need to enlist all the resources they can to make universal access happen again with computers. Microsoft is among the many companies trying to play a role in supplying computers to our schools and libraries. Its efforts range from defining a vision for the use of technology in education called the Connected Learning Community to increasing broad access to technology through key community resources.

The Connected Learning Community defines two primary goals: that every teacher and student will someday have access to online resources, and that computers will empower students to follow individualized paths of learning, helping them become better-educated citizens. After working with a number of library systems in the United States and Canada to pilot the idea that anybody who walks in can sit down at a PC and go online, we've 

found that people will enthusiastically use the Internet if it's available to them. The next goal is to try reaching underfunded public library systems in the United States so that people who don't have computers in their homes or schools can have access through a library. Since societies can't afford to give everybody a computer at home, providing them in schools and libraries is our best hope for broad access. It will take a lot of companies and communities working together to make it happen.

Most governments cannot put a brand new infrastructure in place immediately. But there are some immediate needs they should consider. The most important thing governments can do with technology is to publish information so that citizens feel well-informed about government activities and issues and can interact easily with government agencies. In addition, governments can use e-mail internally to help streamline communications and speed processes. In many cases, technology can help governments cut costs, which, in turn, may help pay for the technology itself. These small investments lay the groundwork for future installments by helping governments get used to their new systems and enticing citizens with improved services.

Governments that succeed in creating digital nervous systems that empower citizens and businesses and educate students will fare best in the new global economy. The work required to design and build such a system is immense; it is an evolutionary process that requires good planning. Governments need to be innovative about sharing the load so they can move quickly and effectively. Their reward will be an interactive network that brings people together and opens new horizons for education, commerce and improving everyday life.