THE ECONOMICS OF AN
ONLINE WORLD FOR LOCAL
GOVERNMENT
The way government operates is changing. Gone is the day of arriving at City
Hall between the hours of 8 a.m. and 4 p.m. to take a number and wait in line.
Much like the business sector embraced technology to change how it interacts
with customers, government is finding ways to better the citizen experience.
HELPING COMMUNITIES ENGAGE AND INTERACT
Economics of an online world
The Economics of an Online
World for Local Government
The way government operates is changing. Gone is the day of arriving at City Hall
between the hours of 8 a.m. and 4 p.m. to take a number and wait in line. Much like
the business sector embraced technology to change how it interacts with customers,
government is finding ways to better the citizen experience.
The key to this improved service is e-Government (e-Gov) – the process of delivering
information and processing government transactions digitally through web and
mobile applications.
E-Gov services make it easier for citizens and business to conduct transactions at any
time of day or night. Use of e-Gov services continues to increase, as does the demand
for new services. Citizens have come to expect online business services to be both
efficient and user-friendly. Citizens want to help themselves; local governments
need to make that possible for them.
When asked about preferences in conducting business online vs. offline, a
citizen of Merriam, KS said, “Anything that can be done online – do it!”
The Center for Public Policy & Administration at the University of Utah conducted
a study in which 96% of respondents said e-Gov solutions save time over offline
assistance. In addition, 90% of these same respondents said they prefer to conduct
business with their local government online. And 80% said e-Gov services make it
easier to conduct business.
CivicPlus has documented citizen desire to engage online in our white paper series:
• How To Get Citizens Involved Online. The demand from citizens is real and growing.
• Let’s look at how local government can benefit.
The Costs of Doing Business
In looking at the average service costs to conduct a single transaction with a citizen,
the Utah study found that the average cost per transaction to provide a service offline is
$17.11. This number represents all costs associated with mailing information or conducting
a transaction via phone or in- person. In stark contrast, the average cost per transaction to
provide a service online is $3.91. This is a difference of $13.20 per transaction.
There are a number of potential benefits of online services for consumers, businesses,
and government. Benefits of online services include financial benefits to government
(cost avoidance), financial benefits to consumers (both real and perceived), social
benefits, and the contribution to broader government objectives. 1 Let’s break down
those benefits for a closer look.
HELPING COMMUNITIES ENGAGE AND INTERACT
2
Benefits to Government
Cost avoidance is the cumulative difference between the costs of providing a
service online and the costs for providing the same service offline (i.e. in person at a
government office, by phone, or by mail.) Calculating cost avoidance resulting from
conversion of services to an online format is not an easy task. There are differences in
perception for perceived quality (level of service, efficiency, etc.) and price (actual cost,
reduced time) that cannot be included in a simple calculator.
But a quick example can show you the potential cost savings available when local
governments move some of the more common tasks online.
In Working with almost
2,000 communities, CivicPlus
has noted the following
additional benefits:
For example, if Service A is performed 2,000 times over a five-year period and the cost
avoidance for this online service is $10 per transaction, the total cost avoidance for this
service is $20,000.
• Decreased phone and foot
traffic
In addition to the cost avoidance savings, moving services online can lead to other
valuable benefits at the local government level.
• Improved and streamlined
workflow
Benefits to Citizens
• Maximized employee
accountability
• Improved staff efficiency
• Increased transparency
The major benefit that online consumers enjoy is self-service at any hour of the day or
night, including weekends and holidays. This avoids waiting on hold or taking time away
from busy schedules to visit City Hall. Savings to the citizen can be calculated in time,
transportation expense, loss of work productivity, etc.
The less obvious benefits include citizen involvement, a sense of community, and the
opportunity to offer feedback and interact on a digital forum. These benefits can be
incalculable for both the citizen and the government.
In its most basic form, citizen input requires a citizen to act – to give some sort of
information or energy to his or her government. Simple transactions are a smart
place to start. As studies have shown that 82% of Internet users have completed at
least one transaction on a government website, and 69% have completed more than
one government transaction online. Those users represent a large cross-section of a
community’s constituents.
82% of users have completed at least one transaction on a government website
HELPING COMMUNITIES ENGAGE AND INTERACT
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When handled well – with trustworthy e-Gov applications, seamless interfaces, and
timely, reliable responses – these online exchanges engender trust in local government.
Citizens see that they can turn to their city or county to easily accomplish required tasks
(bill payment, fine payment, license registration, etc.).
“70% of respondents
indicated that with more
Perhaps most significantly, these interactions give citizens a reason to visit their
community website or websites, and reasons to return as well. In CivicPlus studies,
70% of respondents indicated that with more digital interactions available on their
local government website, they are more likely to interact. If paying a water bill is easy
enough, chances are citizens will consider applying for a fishing license online too.
And if they visit the government website regularly, they’re more likely to see the other
information and tools their municipality is providing.
digital interactions available
on their local government
website, they are more
likely to interact.”
Social Benefits
There are many social benefits to engaging your citizens online. But let’s focus one that
we hear more about in the news each and every day – going green. Energy efficiency
and our carbon footprint is on everyone’s mind. People are asking, “What can we do to
help the environment, or at least to have a less negative impact on the earth?”
One thing everyone can do to help is to use less paper. For businesses and
government, a great way to start is by using digital communication rather
than printed communications.
In the United States alone, people use about 69 million tons of paper and paperboard
each year. 2 A single pine tree produces approximately 805 pounds of paper. 3 If you do
the math, you’ll see that Americans use nearly 277,725,000 trees annually for paper
consumption.
A single pine tree produces approximately 805 pounds of paper
In addition to the copious amount of paper produced for business purposes, oftentimes
the ink that is applied to the paper contains toxic chemicals that are harmful to both the
environment and people’s health.
Broader Government Objectives
The Utah study evaluated the cost savings realized by the state of Utah by moving just
nine services online. The number was impressive: $46 million saved over a five-year
period. Utah now has moved more than 1,000 services online and continues to reap
the benefits of true cost savings, as well as freeing up staff to work on the projects that
really make a difference in local government.
$46 million saved over a five-year period
HELPING COMMUNITIES ENGAGE AND INTERACT
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Do The Math Exercise:
What cost savings could be realized in your community?
In an 8-hour period, how many phone calls did your
receptionist take that could have been eliminated if
the service was provided online:
_________________
In an 8-hour period, how many in-person visits did
staff deal with that could have been eliminated if the
service was provided online:
_________________
Add lines 1 and 2. This is the total # of offline
transactions conducted in an 8-hour period.
_________________
Multiply line 3 by $13.20. This is the total amount
saved in an 8-hour period if these same tasks were
moved online.
$_________________
Multiply line 4 by 250 business days. This is the total
potential savings in one year if tasks were moved
online.
$_________________
Do The Numbers Add Up?
As technology changes and the digital divide disappears, governments throughout
the nation are finding more reasons to provide services online. The potential benefits
of e-Gov for citizens are numerous, such as saving time and money, ease of use, and
convenience of accessing services 24 -hours-a-day, 7-days-a-week. Beyond these
benefits, e-Gov produces significant cost savings for state agencies.
For both government and citizens, eGovernment is a smart choice.
1. The benefits primarily occur in the costs avoided by local government for staff and various variable and fixed items.
2. http://www.epa.gov/osw/nonhaz/municipal/pubs/2012_msw_fs.pdf
3. http://science.howstuffworks.com/environmental/green-science/question16.htm
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HELPING COMMUNITIES ENGAGE AND INTERACT