M Kashif FarooqLahore University of Management Sciences (LUMS),

PakistanSupervised by

Dr. Shafay Shamail, Dr. M Awais

Presented at

PRO-VE'089th IFIP Working Conference on Virtual Enterprises

Poznan, POLAND. 8 - 10 September 2008

Springer published this paper as a book chapter. Now this book is available at Google Books & Amazon

Objective

This paper presents

a framework of devolution

for a Virtual Enterprise (like e-government)

Working as Collaborative Network

Issues

Centralized Virtual Enterprise

Decentralized Virtual Enterprise

Devolution

Top-down

Political, administrative, fiscal

Centralized Initiatives

Typical characteristics

all IT functions centralized in one organizational unit

generally limited IT costs but less effective

impacts IT governance by providing a generally tight governance model that is easy to enforce.

Decentralized Initiatives Typical characteristics

policy is required for

decision making, project management, portals, services, funding, revenue collection and operations

distributes IT functions between the various divisions or organizations

generally has a high coordination cost

IT governance is focused on the coordination effort between central and local activities

Soufflé Theory of Decentralization Scale of devolution depends upon the size

of the country, its resource base, human capacity and governance style (Parker, 1995).

The Soufflé theory of decentralization explains the role of political, fiscal and administrative devolutions and their result.

We extend this theory for devolution in Virtual Enterprise.

The Soufflé Theory of Decentralization

Decentralization Choices System Outcomes System ResultsDevelopment

Impact

Political Political Accountability

Political Transparency

Political Representation

Soft/hard Budget Constraint

Moral Hazard

Macroeconomic Instability

Responsive Services

Effective Services

Efficient Services

Sustainable Services

Increased Incomes

Increased Productivity

Increased Literacy

Decreased Mortality

Growth of Civil Society etc.

Civil Liberties

Political Rights

Democratic Pluralistic System

Fiscal & Financial Resource Mobilization

Resource Allocation

Fiscal Capacity

Subnational Indebtedness

Fiscal Resources

Fiscal Autonomy

Fiscal Decision-making

Subnational Borrowing

Administrative Administrative

Capacity

Admin. Accountability

Admin. Transparency

Administrative Structures and Systems

Participation

Proposed Framework: (1)

Devolution in Virtual Enterprise

Based on

Soufflé Theory of Decentralization

Proposed Framework: (2)

Scale of devolution depends upon the size of the Enterprise, its resource base, human capacity, and governance style.

There are two types of devolution Enterprise devolution

among multilevel governance structure Portal devolution

among different agencies or departments

Proposed Framework (3)Extension of Soufflé Theory of Decentralization for

Devolution in e-Governance

Decentralization Choices

System Outcomes

System Results Development

Impact

e-Governance

Localization

Bridging the Digital Divide

Capacity Building

Access for all

Affordable and Secure e-Services

Innovative Services

Informative Society

Cyber State

Shadow Enterprise Architectures

Business Process Re-engineering

Change Management

Development

Cyber Laws

Operations

Proposed Framework (4)

Virtual Enterprise

E-Government is most famous social virtual enterprise.

So, we applied devolution in virtual enterprise concept on e-government.

Proposed Framework (5)Why Devolution in e-Government?

How should responsibilities for e-government establishment be divided among the various levels of government (national, regional, provincial, and local)?

To what extent should a program be centralized (i.e.,run at a national government level) versus decentralized (i.e., run at local government level)?

Which government agencies will be involved, e.g.,education, health and tourism agencies will be the partner of G2C: Government to Citizen portal?

Should there be individual efforts to provide an Electronic Service Delivery (ESD) or the need of collaboration of agencies?

To what extent should a program make use of citizens and other non-government resources?

To what extent should technical staff and consultants be integrated within a single organization and inter-organizations?

Proposed Framework (6)

e-Service delivery

e-Service delivery

Local government 1

Devolved powers of local government 1

Devolved powers of local government 2

e-Service delivery

Devolved powers of local government n

Local government 2

Local government n

Figure 1 – Vertical Portal Having Devolved Powers

Proposed Framework (7)

“the sum of Devolution Powers (DP) of e-governance is directly proportional to the sum of Devolution Powers related to Political, Financial and Administrative factors”. This can be represented in the following form:

DPeGov= Devolved Power of e-governance

DPPol = Devolved Power of Political

DPFin = Devolved Power of Financial

DPAdm = Devolved Power of Administration

ΣDPeGov α (ΣDPPol + ΣDPFin + ΣDPAdmin) (1)

ΣDPeGov = k (ΣDPPol + ΣDPFin + ΣDPAdmin) (2)

ΣDPeGov = k1ΣDPPol + k2 ΣDPFin + k3 ΣDPAdm (3)

a real scenario A Provincial Government initiated a

centralized web portal through an IT agency of provincial government

To represent 35 local governments and 40 provincial departments.

The IT agency trained personnel from portal partner departments and local governments to update contents.

a real scenario: Issues11 Local governments and 11 departments launched their

independent websites (deviation from centralized effort)

Portal partners wanted1. their own graphic design to represent their specific

cultural, geographic and professional themes, 2. multi language interface,3. local news highlights, 4. independent URLs, 5. innovative ideas, 6. more administrative authority than just content updating

and 7. more dynamic pages, database access and interactivity

Solution: Degree of devolution for a virtual enterprise We have tested our framework for degree

of devolution on three selected local governments A, B, and C

These local governments launched their own websites and came out from the sphere of centralized portal. We estimated capability maturity of these local governments by analyzing their websites and estimating how much devolved powers have been exercised in the area of political, fiscal and administration

The importance level of decentralized choices for political, financial and administrative devolved powers

DevolutionPowers

EA BPR CM Cyber Laws Development Operations

Political High High Medium Medium Low Low

Financial High High Medium Medium Medium Low

Administrative High High High Medium Medium Medium

EA: Enterprise ArchitectureCM: Change Management

Implementation

LocalGovt.

Political Fiscal Administrative

A High High High

B Medium Medium High

C Medium Medium Medium

We considered three local governments.

We assess the political, Fiscal and Administrative maturity in the governance of selected local governments

Devolved Powers

LocalGovt.

Powers to be devolved

A All

B CM, Cyber Laws, Development and Operations

C Cyber Laws, Development and Operations

Powers to be devolved as per political, fiscal and administrative maturity of considered local government

Calculation of k value

k= # of devolved powers that exercised / total decentralized choices

Local Govt. Political k1 Fiscal k2 Administrative k3

A 1 1 1

B 0.67 0.67 1

C 0.67 0.67 0.67

Conclusion It is analyzed that degree of devolution in e-governance

is proportional to other devolutions (political, fiscal and administrative).

Proper degree of devolution is important for effective e-services.

We have also proposed the extension in Soufflé theory and verified that it also supports the devolution in e-governance.

We have applied our proposed framework of devolution in a virtual enterprise in the background of devolution in e-Government and calculated the relative degree of devolution in terms political, fiscal, and administrative strengths.