Speech by Mr. Stephen Mak, Acting Director of Information Technology Services at the Microsoft E-government Symposium
06 - 11 - 2002

Mr Rawding, Mr Phibbs, Distinguished Guests, Colleagues, Ladies and Gentlemen,

I am glad to be here today, meeting so many colleagues and industry partners at the Cyberport, to share with you our experience in E-government implementation. I notice the theme of today's event is to explore the ways in which Government can collaborate and partner with the IT industry in the development of E-government initiatives. As our Permanent Secretary for Commerce, Industry and Technology will be addressing you later today, I would therefore focus my presentation on the building blocks supporting our quest for E-government, our major E-government initiatives, and some of the opportunities and challenges in implementing them. I shall then round up with some of things we can be considering to forge closer partnerships among Government departments as well as with the private sector in implementing our E-government strategy.

To set things in perspective, I shall briefly review our E-government vision and targets. The Hong Kong SAR Government formulated its Digital 21 Strategy in 1998. The first strategy focused on building a foundation of capabilities and infrastructure. In May 2001, the Digital 21 Strategy was revised with "Hong Kong: Connecting the World" as the main theme. The strategy strives to position Hong Kong as a leading e-business community and digital city in the globally connected world. The strategy covers 5 key result areas, one of which is to ensure that the Government leads by example. Specifically, it aims to introduce IT-enabled business change that leads to significant improvements in customer service quality and efficiency. It is important to note that although these key result areas are distinct, they are inter-dependent in terms of implementation.

The 2001 Digital 21 Strategy has set out clear targets for E-government, and that is to provide e-option for 90% of all public services amenable to the on-line mode of delivery, and to carry out 80% of Government procurements electronically by the end of 2003. A tall order, one may say, considering there are literally over a thousand services that need to be considered.

Apart from developing innovative public services and e-business applications, usually referred to as G2C and G2B applications, we also strive to improve the efficiency of our internal procedures and re-engineer back-end processes, through the development of Government-to-Government (G2G) and Government-to-Employee (G2E) applications.

Setting E-government targets is just the beginning. To ensure successful implementation, we have put in place a strong governance and management framework. With strong support from the highest levels of Government, the E-Government Coordination Office (EGCO) was set up in the Commerce, Industry and Technology Bureau, with a dedicated E-Government Coordinator to set targets, coordinate and drive E-government initiatives and steer their implementation.

The Information Technology Services Department (ITSD), as an executive arm for the implementation of E-government, develops and supports central facilities and infrastructure. It provides advice on and facilitates sourcing of technology solutions ranging from hardware, software components to data centres. It also assists departments in the funding and technical implementation of specific IT projects, as well as in developing the IT management and capability of departments so that they can take full advantage of the benefits of IT.

Under our E-government framework, all departments have designated an E-Business Coordinator (EBC) at a very senior level, and today I'm glad to see a large number of them here. The EBCs in departments take ownership of their IT planning and coordinate individual E-government programmes and initiatives. To better integrate IT in the core business of departments, we have formalised the establishment of IT Management Units (ITMUs) in departments early this year. To-date, some 30 bureaux and departments are supported by ITMUs that are staffed by professional colleagues from ITSD, or a combination of contract IT staff or outsource contractors. The role of ITMUs is multi-faceted - enhancing departments' ability in shaping their demand for IT, developing IT plans, setting expectations on service levels, delivering e-business solutions, and participating in inter-departmental IT collaboration and sharing.

Within, ITSD, apart from re-focusing our core services we have also set up a small E-Government Coordination Division to spearhead the ITMU policy, facilitate knowledge management support and access to central services, and more importantly to identify applications of common utility and make proposals for consideration by the E-Government Coordinator.

Developing E-government requires the active participation of the whole community. The Government has adopted a vigourous outsourcing strategy. In this regard, the IT industry plays a very important role. Apart from obviously providing the hardware, software, professional services, and vertical application solutions, there is an increasing body of knowledge being built up around the E-government strategy and interoperability among Government IT applications. This last element is crucial to our long term success. It is also for this reason that where security considerations permit, we would be as open and transparent about our application requirements as much as possible.

There are yet other important partners who can help in our delivery chain for E-government applications. These include the non-government organisations, industry associations who can help in promoting adoption of e-commerce in respective industries to dovetail with government e-options, professional organisations and the academia in applied technology research and adoption.

I shall now turn to some important building blocks that are conducive to success in our drive towards E-government.

Hong Kong is an early and mature user of information and communication technologies. We have achieved a good record of technology diffusion in the community. We have a PC penetration rate of over 60% and an Internet penetration rate of over 50% among our households, with 40% of them using broadband services. Indeed, broadband coverage reaches all commercial buildings and over 95% of domestic buildings in Hong Kong.

We have more than 2.5 million Internet accounts serviced by over 250 ISPs. Internet services in Hong Kong are amongst the cheapest in the world. Hong Kong is well linked to the Mainland and all major cities in the world, with an external connectivity exceeding 500 Giga bits per second, which is the second highest in Asia, only next to Japan. With such a well developed infrastructure, the challenge is of course in finding the right applications for the right target groups. In this regard, we have been progressively building up our IT architecture.

Over the years, the Government has built a solid, robust and flexible IT architecture and infrastructure, based on open and international standards, that interconnects all bureaux and departments.

Today, this infrastructure is already providing comprehensive support to all of our E-government initiatives. Common applications including the Central Cyber Government Office (CCGO) and various internal and external electronic communication systems provide information and electronic services needed by Government users to support their daily work. I shall touch on some of these new systems later. Indeed, with e-business technology solutions abound, the list of applications is only limited by customer demand and the creativity of our departments.

I'm sure you are already familiar with the Electronic Service Delivery (ESD) scheme. To support our growing base of E-government applications, we shall be progressively enhancing our infrastructural components that will provide a common, shared platform for intranet and extranet applications for use by departments.

A sound legal framework is another building block and critical success factor for our E-government development. Hong Kong prides itself in being one of the first places to have enacted legislation to support e-commerce. The Electronic Transactions Ordinance (ETO) was enacted in January 2000 to give legal recognition to electronic records and digital signatures, thereby providing a solid legislative foundation for the conduct of electronic transactions.

To ensure that Hong Kong has the most up-to-date legal framework for the conduct of e-business, we are in the process of reviewing the ETO. Factors including operational experience gained since enactment, technological advancement, social changes and international e-business development are taken into consideration. Public consultation on the review was completed in April 2002 and the plan is to introduce the proposed legislative amendments in the 2002-03 legislative session.

I would now talk about how we enable Government systems to talk with one another and, more generally, to external systems. I am referring to the Interoperability Framework, which is a major development in support of our IT architecture. The Framework is primarily a collection of guidance documents and specifications that would facilitate the seamless integration of applications and interconnections of Government and public applications. It embodies the technical specifications, conventions, procedures, data schemas, etc. for use by departments when developing joined-up E-government systems that interact with the public as well as among the departments themselves.

The Framework comprises -

- Interface specifications, a set of technical specifications defining the interface between different systems and the format for exchanging specific categories of information;
- Other specifications, which are documents that define infrastructural architectures, conventions and procedures that affect interoperability; and
- Data exchange specifications, which is a set of core and business specific schemas for data exchange between applications.

The Interoperability Framework Coordination Group will promote and facilitate the adoption of the Framework, as well as co-ordinate its update to reflect technology advancement and application requirements. We will also consider more extensive use of common services, such as XML and web services, to further facilitate interoperability and enhance cost effectiveness.

To support our bilingual business requirements, a common and consistent interface for using Chinese in electronic communication and data exchange will help to promote electronic transactions within Hong Kong and with other parts of the world.

In consultation with the Chinese Language Interface Advisory Committee (CLIAC), the Government published the Hong Kong Supplementary Character Set (HKSCS) in September 1999 and the latest version HKSCS-2001 was published last December. The Government has been actively participating in the development of the ISO 10646 standard under the aegis of the International Organization for Standardization (ISO), and has submitted the HKSCS-2001 to the ISO for inclusion in the ISO 10646 standard. Inclusion of Hong Kong unique characters in international standards has meant that they are more amenable to inclusion in IT products and solutions. In this connection, we are glad to note the effort made by Microsoft in providing Chinese language support for its products, in particular the recent Add-on supporting the HKSCS-2001.

We are also happy to note the contribution from the academia in applied research based on this standard. This includes the "Standardisation on Cantonese Romanisation and the Building Blocks for Phonetic-based Applications" project being undertaken by one of our universities. It aims to deliver a standard romanisation method, providing phonetic labels for ISO 10646 characters. This will have significant positive impact on the further development of voice-related technology in e-business in Hong Kong.

In the area of technology and sourcing, we have put in place various Standing Offer Agreement contracts to facilitate departments in their implementation of E-government initiatives. These contracts cover hardware and software ranging from PC/LANs all the way to mainframe computers. For professional services, we have signed, with 12 contractors, 23 Information Technology Professional Service Arrangement (ITPSA) standing offer agreements that provide a wide range of services. We also contract with a number of prequalified firms on the supply of qualified IT professionals on a temporary, on-demand basis under a term contract. Given the momentum of our E-government strategy, we shall continue to generate substantial demand for products and professional services from the local IT industry.

Under our outsourcing policy, we continually monitor the market situation to look for opportunities to maximise use of resources and expertise from the private sector. A recent example is our consideration of whether some of the Government data centres can be outsourced under a facilities management or IT-on-demand arrangement. In doing so, we will have to ensure that the service level and other security requirements can be met.

To leverage on technology innovations for application in E-government, we maintain close surveillance over local and international IT developments. We have established the Information Technology Solution Centre (ITSC) which serves as a 'window' for introducing new technologies and solutions for consideration by departments, while at the same time providing a venue for IT seminars, exhibitions and roving shows with our business partners. We believe that, in the long run, there is merit in some form of clustering between the ITSC and similar facilities in the industry.

To enhance the utility of our E-government applications and websites, we adopt comprehensive guidelines on dissemination of information through government homepages to maximise accessibility by the local and international communities. An exercise to revamp Government web sites to facilitate accessibility by people with disabilities was completed in mid-2002.

The EGCO has also commissioned a study on the common look and feel for Government web sites. The design guidelines are being finalised and will be made available for reference by bureaux and departments shortly.

We will also provide a Simplified Chinese version of all Government web sites so as to enhance accessibility, especially for people outside Hong Kong, to Government information.

Yet another building block in support of our E-government programme lies in holistic IT planning. We have been actively assisting departments to establish their own ITMUs. By setting up a proper IT management structure and decentralising IT activities to business units, responsiveness to changes in business environment, business awareness of IT and alignment of IT with business needs can be improved.

We have also enhanced, in consultation with the EGCO and the Efficiency Unit, our approach to examining opportunities for business process re-engineering (BPR) both within and across departments. BPR opportunity assessment is now infused throughout important stages of the IT system development life cycle.

We encourage departments to plan IT requirements in a systematic and strategic manner, identifying areas where IT potential can be further exploited to enhance efficiency. More than half of the departments have drawn up their own IT plans. Some departments with a high IT potential have conducted Information Systems Strategy Study (ISSS) before formulating their IT plans, while others have taken the simpler route of mapping out a departmental IT plan that is rolled forward annually. We have found these approaches equally effective, as long as they reflect the changing business and customer demands for information and transaction processing.

With close liaison with the EGCO, we also look for more joined-up initiatives across bureaux and departments.

Let me now share with you the major joined-up E-government initiatives. I may be talking to the converted, because some of you may well be the owners or active participants of some of these initiatives. But I thought you would like to see how the big picture is fitting together.

Our ESD Scheme continues to offer a major channel for delivering our e-options, with over 130 kinds of public services from over 40 departments and agencies now on-line. With over 700 million hits since the scheme was launched in early 2001 and having supported over 2.2 million actual transactions, it is fast becoming a popular channel for our user community. We will continue to work with our business partners to market the ESD transactions, some of which have seasonal cycles.

Our Multi-application Smart Identity Cards (MASC) programme is also progressing well. As you may well know, value-added applications will allow the smart ID card to be used as a driving licence and a library card. A digital certificate that is free for the first year can be installed in the smart ID card at the cardholder's option. We believe that the card will provide the impetus for more citizens to take part in secure, PKI-enabled E-government and e-commerce applications. The new smart ID card will also provide a platform for future applications such as an electronic purse and automatic passenger clearance at border control points. To facilitate the smooth take-up of the new smart ID card by making suitable card readers readily available and at affordable cost, we have recently surveyed the market. The response is very encouraging, with a good number of suppliers claiming readiness to supply card readers or integrate them in other products within a short timeframe. We will be making public the final specifications for the card readers very soon.

Later this year, the Information Services Department will launch an on-line, multimedia news bulletin. This customer-oriented service will allow personalisation and provide e-mail subscription to Internet users, which will further improve the transparency of Government and connect the Government and the public more effectively.

To lead by example and to inculcate a stronger sense of e-business within the civil service, we are introducing an Accessibility Programme to enhance computer access for all colleagues, providing shared IT and e-mail facilities. The Programme will be implemented by phases. The first phase is a pilot involving 7 bureaux and departments covering close to 10,000 staff. The target completion date for this pilot exercise is mid-2003.

The CCGO is a Government-wide intranet service to facilitate inter-departmental electronic transactions and dissemination of reference material in digital form. Since its launch in August 2000, the user base has grown to some 41,000 users from various bureaux and departments. In view of its popularity, we have recently launched a common e transaction platform on the CCGO that makes use of web services technology, allowing departments to join up their electronic services in a systematic and collaborative manner. We will continue to enrich the contents of CCGO, and enhance its capacity as an electronic medium for G2G and G2E transactions.

Other joined-up E-government projects being explored include a Property Portal and a Business Portal. Under the steer of the EGCO and with active participation from the relevant departments, we have commissioned a consultancy study on the provision of a one-stop portal for the on-line delivery of property information and related services. The business model and IT architecture for this portal are under review by the consultants. If the recommendations are taken forward, the plan is to make available the initial services on the portal by the end of 2003.

Separately, a Business Portal study is nearing completion. This initiative aims to provide an entry point for the business sector to the different unconnected business-related web sites in Hong Kong. Businesses, especially the small and medium enterprises (SMEs), will be able to access necessary business-related information more conveniently.

In the area of E-logistics to speed up the flow of goods and information to facilitate communication amongst players in the supply chain, the consultancy study on a Digital Trade and Transportation Network (DTTN) is at the concluding stage. No doubt any implementation proposals coming out of this study will have significant effects on the scale and pace of E-government initiatives for the relevant departments.

To introduce competition and to replace the complex EDI standard by web-based application and XML, Government will appoint at most two more service providers to provide Electronic Trading Service after the expiration of Tradelink¡¦s franchise on 1 January 2004. The contracts for this will be awarded later this year.

The Government intends to exploit IT solutions to facilitate information sharing and exchange where appropriate through electronic means across departments involved in dealing with arrested, accused and convicted persons as part of the criminal justice process. A feasibility study for the implementation of an Integrated Criminal Justice System will soon commence to explore the potential for joining up and improving operational efficiency among various departments.

We also have a number of E-government initiatives internally. A major one is the new Government Financial Management Information System (GFMIS), which will be rolled out by phases before 2007, to replace the existing Ledger Accounting and Financial Information System (LAFIS), which has been used since 1983. Some 5,400 users in bureaux and departments will access the new system using browser software. With the adoption of open system architecture and standards, the new system will have the capability to interface efficiently with other Government systems, and to facilitate e-business across Government systems.

The Computerised Human Resource Management Information System (CHRMIS) will facilitate collection and compilation of human resource and civil service management information for use by the Civil Service Bureau. It will also define a core departmental human resource management system for use by other bureaux and departments. A consultancy study to define the user requirements will be arranged by the end of this year.

The Environment, Transport and Works Bureau is taking forward a major Public Works Programme Information System (PWPIS) to improve the quality of management information for monitoring the Public Works Programme. The new system will be a web-based G2G application, serving about 850 users in various departments.

These joined-up E-government initiatives provide excellent opportunities for cross-departmental collaboration. They also present great potential opportunities to partner with the private sector in the development of the projects and delivery of the ongoing services. In this regard, we find the 3-'R' and the 'M' approach in implementing E-government initiatives highly applicable -

- Re-prioritise our projects, focusing on those that generate maximum return at reduced expenditure;
- Re-organise our IT management and resource structure to align to the new mode of service delivery;
- Re-engineer our mode of operation to improve the quality of service and operational efficiency; and
- Make the greatest use of Market capabilities to expedite E-government implementation with the best quality and at the same time providing impetus for the local IT industry to develop.

Furthermore, ITSD will provide full support to departments by providing more generic, Government-wide common solutions to achieve better economies of scale and consistent adoption of international best practices in the electronic delivery of public services.

While we have been making noticeable progress in implementing E-government initiatives, we are also facing new challenges, especially those resulting from the stringent financial situation. In the light of the efficiency savings programme and containment of recurrent expenditure, we have to step up our pace to drive E-government development, in order to reap the savings and benefits brought about by these E-government projects as early as possible. In this connection, we have been discussing with our partners in the IT industry to explore alternative pricing and charging models and service delivery approaches. In doing so, we have to ensure that our procurement and project funding strategies are fully in line with our established procurement and financial management principles. To shorten the time to market and to facilitate earlier realisation of project benefits, we shall also need to review our systems development approach in ways that make best use of prevailing technology solutions and our IT infrastructure.

We have a conviction that implementing E-government is all about partnership in action. Earlier on, I mentioned the close interplay among these partners. In the last part of my presentation, I will talk about some of the specific areas that present such partnership opportunities.

We will continue to partner with departments and the IT industry to pump-prime the development of IT standards and infrastructure. Earlier this year, we consulted the industry on the coverage of the areas where technical standards on interoperability need to be specified under the Interoperability Framework. We received a lot of highly encouraging responses and useful comments. We will review the Framework and update it regularly to take account of technology and industry developments.

The Framework will be managed with the help of the cross-departmental Coordination Group and an XML Coordination Group. The XML Coordination Group, comprising XML practitioners in the Government and experienced XML adopters from the private sector, develops the policies, schema design guidelines, and core schemas (i.e. fundamental data items like name and address) in relation to the effective adoption of XML. The schemas designed for re-use will be published in a registry for reference and compliance by all departments as appropriate.

The benefits of a common IT architecture and associated infrastructure cannot be over-emphasised. We will continue to enhance these in response to changing customer needs and technology advancements. But it is equally important for departments and industry to recognize their existence and to fully exploit their potential. The recent enhancements to the CCGO provide a good example. They exploit the latest technology, Web Services, for enabling more robust and cost-effective integration among various systems in both the intranet and Internet environment. The CCGO provides a central registry to register the web services facilitating e-transaction processing across departments. Common web services can be "deployed/un-deployed" in the registry to facilitate sharing and collaboration.

Open hardware and software interface facilitates seamless integration and enhances value of our IT procurements. Adoption of web services on the e-transaction platform is just one example. Major vendors have been supporting open interfaces for their hardware and software products, but to various degrees of functionality and true compatibility. We look forward to the sustained efforts of vendors to develop products that can interoperate with other vendors' products. We believe that this synergy will help to generate further demand, encourage innovation and avoid further polarisation of the product market. Our Interoperability Framework and underlying standards will provide a good source of reference for the industry in gauging Government's needs.

The development of Open Source software and licensing schemes in recent years has opened up more choices for non-proprietary software. It has also offered new opportunities for collaboration and partnership among developers, end users and procuring parties. In implementing E-government, we have already advised departments to look for software solutions that meet the business needs and yet offer the best value for money and total cost of ownership. This will ensure that we do not miss out on the benefits of deploying open source solutions, where appropriate. Separately, we are exploring ways in which the open source approach to software development and publishing can be employed in E-government projects. This is particularly relevant if it can help reduce the cost of doing electronic transactions with government departments by citizens and the business sector, especially the SMEs.

The Government leads by example in promoting e-business. As more IT projects are outsourced to the private sector, different public-private partnership arrangements aiming at joined-up "Solutions" have evolved. Furthermore, as departments connect their own IT infrastructure to their respective industries, this opportunity becomes even more apparent.

The Internet represents the ultimate platform for resource sharing and co-location of facilities and applications. Yet because of security concerns and lack of business rules that can be easily adopted to suit specific initiatives, such sharing opportunities are often foregone. We believe that with the advent of web services and XML technologies, coupled with our robust infrastructure and security framework, there is new scope for examining such opportunities. The ESD scheme and the deployment of digital maps on a commercial web site represent some successful cases for reference.

As we continue with our policy of outsourcing, there are variants worthy of our consideration, including co-sourcing and intellectual property (IP) sharing with the IT industry. Co-sourcing involves the sharing of resource contributions in the development and operation of specific services. One of the possibilities is joint development of E-government initiatives by the Government and the private sector contractor. The Government and the contractor will co-own the product developed, cooperate to include more public and private sector services to the product, thereby providing comprehensive and integrated one-stop services to the citizens. Yet other options exist for Government and the private sector to share the IP rights arising from an E-government project, thereby reducing the cost to Government on one hand and allowing flexibility for the contractors to make further use of the IP in other cases. Needless to say, any potential for sharing and co-location should best be considered early in the inception stage of the respective projects, so that issues concerning security and other contract management are fully taken in account.

Experience has shown that software license costs constitute a substantial proportion of the development and maintenance cost for projects. The scale of Government IT projects is such that the multiplier effect of licenses at the client side could be very high, in some cases prohibitive. Upfront investments in major e-business solution suites have also become barriers to adoption because of financial stringency. We believe there is room for examining new forms of software licensing that are compatible with our procurement regulations on the one hand, while presenting Government with lower barriers to adoption on the other. After all, with the incremental development approach I mentioned earlier, this could well become a necessity. While licensing options at the enterprise level already exist for many software products, we believe there is scope for further refinement to suit our needs, especially in the delineation of capital and recurrent expenditures. In this regard, we will continue to explore options with suppliers in the software industry.

Last but not least, I should like to mention the role of applied research and commercialisation of local IT innovations in our E-government initiatives. Over the years, we have implemented a number of research outcomes in our E-government projects. These include the use of cryptographic security modules in support of digital certificates, development of the HKSCS, the recent project in the romanisation of Chinese characters. Some departments are also undertaking pioneering work in the adoption of web services through the ebXML standard. We believe our E-government IT architecture and infrastructure present an ongoing platform for creation and pilot use of innovative research solutions to help deliver some of our E-government services. We will continue to work closely with our tertiary institutions and the IT industry to identify suitable partnership opportunities.

The Cyberport is a symbol of collaboration, partnership, clustering and synergy. This bears striking resemblance to the many opportunities for partnership and collaboration that I outlined earlier.

I would like to thank our host for organising this event and the opportunity to speak. I look forward to having a long and sustaining relationship with all our partners in our E-government journey.

Thank you.

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