Web Services and Value Generation in the Public Sector

Two basic questions are investigated in this contribution: 1) How can we explain the value generation process in the public sector? 2) What is the potential role of Web services technology in this process? Our approach has been to make use of the process theory on business value generation developed by Soh and Markus (1993), adapting the original framework of analysis to the public sector. According to these authors, IT can generate business value through a three-phase process: conversion, use and competitive deployment. We focus on the first stage of the model, where IT expenditures are converted into IT assets. The role of Web services technology in this conversion process is then depicted, evidencing some implications connected to its adoption in eGovernment (e-Gov) projects. The analysis is intentionally limited to the intraorganizational level (i. e. we do not consider inter-agency systems) and to the first phase of the value generation process. In the future it may be possible to delineate a more complete picture of the e-Gov value generation process and the potential role of the Web services technology. 1 The Value Generation Process in the Public Sector The analysis of the role of IT in value generation in the public sector is not a totally new concept: for example, in [3], Kim Viborg Andersen has proposed the “political value chain” model, in which the classical Porterian framework of analysis is adapted to the public administration (PA) domain; a similar framework has also been used for the preliminary analysis given in [14] where the potential role of Web Services technology as a sort of “value reconfiguration catalyst” for inter-organizational activities is prefigured. The strategic and economic value of IT investments has been extensively and deeply analysed with reference to the business sector: for example, already in 1993 the collection of selected works in [4], was accompanied by a bibliography of almost 600 papers and books on the topic. One of the papers that appeared in this influential book was written by Markus and Soh, [9], and focused its attention on the “theory of IT conversion effectiveness”, tracing down from Weill [16] and elaborations on his work [see, e.g. 17]. The main idea underlying the theory is that organizations differ in their IT conversion effectiveness, i.e. “the ability to convert expenditures into assets that provide value to the investing firm”. IT conversion effectiveness is, in turn, influenced by internal managerial processes (like, e. g., organizational commitment and experience with IT) as originally pointed out by Weill. In addition, Markus and Soh evidenced the importance of structural factors, like firm size and industry structure. The theory of IT conversion effectiveness is based on three fundamental hinges: 1) Value is not generated by IT expenditures until they are converted into IT assets; accumulated IT assets include IT applications and IT infrastructure; 2) Structural factors can influence IT conversion effectiveness; and 3) Internal management factors can influence IT conversion effectiveness as well. In a further conceptualization, Soh and Markus [12] notice how the “IT Conversion Process” is only the first of three major phases that characterize the business value generation process: the second stage is the “IT Use Process”, and the third is the “Competitive Process”, as shown in Figure 1. Not wishing to discuss this model as a whole, in the present paper we focus on the IT conversion process, re-examining the issue in the context of the public sector. Figure 1. How IT creates business values according to Soh and Markus [12]. 1.1 Effectiveness of the IT Conversion Process The three fundamental concepts underpinning the IT conversion process relate to: accumulated IT assets, structural factors and internal management influences. In what follows, we summarize each of them. Accumulated IT Assets The central assumption here is that "It may take several years of spending to develop “productive” IT assets. Thus, we need a concept of accumulated IT assets to reflect the realized value of firms’ [...] IT expenditure” ([9], p. 379). The value of IT stems from know-how, specifically from “users’ ability to operate computing equipment and software and to integrate these resources effectively into their work” (ibidem p. 380), together with other kinds of know-how, like the professional and technical competences of IT operations units and the business knowledge embedded in software applications. IT assets include applications and infrastructure. Applications are believed capable of creating direct business value ([10]; [7]) “[...] Thus the breadth and quality of a firm’s portfolio of IT applications, more easily measured than the concept of IT know-how, is a potentially useful surrogate for the value of a firm’s accumulated IT assets” ([9], p. 380). Tangible IT resources, along with the people and procedures required to manage them, are categorized as IT infrastructure. “A critical role of the IT infrastructure is to maintain existing applications and to “enable” or generate new applications in the future”.