With a fervent aspiration to make government work better and cost less, the Clinton-Gore National Performance Review offers numerous suggestions to push governments to do "everything smarter, better, faster, and cheaper" (Gore, 1993, 66). While the report contains more than 100 specific recommendations, two postulates underlie many of the prescriptions: (1) Governments should seek market, rather than administrative, solutions to facilitate the delivery of services; and (2) they should make increasing use of information system technology to expedite operations. The research reported below evaluates these postulates. Specifically, it examines the degree to which government reliance on the private market for the implementation of one type of advanced information technology--geographic information systems (GIS)--assisted these organizations in realizing the benefits of the technology.
Geographic information systems (GIS) allow governments to capture manages, analyze, and call on land related data to solve complex planning and management problems. GIS allows the visual display of a map of a given jurisdiction on a computer monitor. The map is displayed along with a host of features, such as roads, health clinics, schools, voting districts, or police departments. Each of the map features is associated with data or information. The feature data may take many forms and can be political, social, or statistical in nature. For example, by selecting a feature representing a school, the data pertaining to test scores, student profiles, or financial expenditures are immediately available. When conditions changes, map features can be moved, added or deleted easily.
Additionally, with GIS, operators can shuffle, merge, and combine feature information on demand. A school can be studied from its individual perspective, or several schools can be selected and viewed collectively. The schools could also be examined in terms of the surrounding population, for instance median family income, crime rates, or unemployment levels. By combining a map display with a data manager, GIS becomes a powerful tool for public operations. The capabilities of GIS to integrate and sort data from separate databases on demand provide major benefits to government administrators.
According to the National Performance Review, the implementation of computer technologies should assist government operations substantially. The report endorses technologies such as "electronic mail, video conferencing, geographic information systems, database management, and imaging" to streamline operations and promote the attainment of effectiveness and efficiency (Gore, 1993, 80). The National Performance Review recognizes geographic information systems as an innovative technology with great promise for government operations and calls for the establishment of a National Spatial Data Infrastructure to facilitate the adoption of geographic information systems.
So convinced is the National Performance Review of the beneficial effects of these technologies that public managers are chided for overlooking the strategic role of computers for re-engineering practices, procedures, and programs in their agencies (Gore, 1993, 84). Yet, the literature is replete with examples of failed projects following the adoption of these technologies. Many of the failed projects experienced significant schedule delays or excessive cost growth. In other situations, the technology did not operate as envisioned and failed to meet operational standards or managers' expectations.
In order to surmount such difficulties, some scholars advocate the involvement of external contractors to facilitate implementation of computer technology (Minoli, 1994; Regan and O'Connor, 1994). Organizations often rely on external firms to provide the expertise needed to adopt and utilize innovative technologies. Since contract agreements may yield cost savings and other advantages (Gore, 1993), for many public managers the question is not so much whether to contract, but how much of the project to contract. Some managers invest heavily in the internal capacities needed for system development; researchers suggest that internal capacity building related to management, planning, and teamwork is effective in developing computer-based technologies (see Boynton and Zmud, 1987; Ginzberg, 1981; Ginzberg and Schultz, 1987; Robey, 1987). By contrast, others contract out various aspects of the project by improving less burdens associated with internal capacity building. Contracting (also referred to as "privatizing" or "outsourcing") for system implementation is often viewed as an attractive alternative, or supplement, to in-house development. Public managers must strike the proper balance between contracting and building capacity internally to support information system adoption.
In light of the National Performance Review prescriptions, we would anticipate that contracting with external specialist firms should reduce the risks and increase the benefits associated with the implementation of geographic information systems. To echo the National Performance Review, the implementation of geographic information systems through the use of external contractors should facilitate a government that works "smarter, better, faster, and cheaper."
Privatization and Information System Technology: Benefits and Challenges
Scholars and practitioners assert that geographic information systems offer public and private organizations innovative ways to enhance operations and promote service delivery (Newcombe, 1993; Huxhold, 1991). Benefits range from the mundane to the extraordinary, from facilitating tax assessment and handling the regulations to improving social services and coping with natural disasters. The advantages that geographic information systems might offer government organizations fall into three primary domains: productivity and performance, organizational decision making, and customer service (for example, Brudney and Brown, 1992; Budic, 1993; Onsrud and Pinto, 1993).
Geographic information systems are thought to enhance organizational productivity and performance through the automation of a variety of government tasks. Trade journals cite the use of geographic information systems in areas related to health and safety, public works, recreation and culture, urban development, administration, finance, and management. Since as much as 80 percent of service demands at the local level are spatial in nature, geographic information systems can aid the production and provision of governmental services (Huxhold, 1991). The technology provides a comprehensive tool for storing, updating, retrieving, and integrating information quickly for easy access throughout the organization
Challenges of Contracting for the Development of Computer Technology
Although contracting may spare personnel from many of the tasks of implementation, managers must still oversee and monitor the contract process. Researchers warn that organizations must devote substantial time and attention to this process; leaders must assume a watchdog role to ensure that contractors fulfill their obligations (DeHoog, 1984). Some researchers find that the costs of negotiating, awarding, and monitoring the contract can outweigh the potential benefits of outsourcing (DeHoog, 1984; Prager, 1994). Moreover, the market of qualified specialist firms may be too narrow to provide the advantages of a competitive contract process (Van Horn, 1991). In fact, DeHoog (1994) argues that in many cases contracting simply amounts to substituting one organizational bureaucracy for another, with the added cost and burden of having to monitor and control bidding and other aspects of the process.
Some researchers acknowledge that contracting allows in-house personnel to focus on core work responsibilities, but they question the wisdom of this approach. They argue that releasing in-house employees from direct involvement in the tasks of implementation can have a deleterious effect on the project and its results (Ferris and Graddy, 1986). According to Quinn (1985), assimilating innovative information technology requires organizational managers who can address the political, managerial, and technical demands that such systems create. Adopting geographic information systems is considering a risky proposition for local governments because implementation demands substantial monetary resources (costs often exceed $1,000,000) and a lengthy time frame (typically, three years or more) with no guarantee that the anticipated benefits will actually accrue.
Computer innovations like geographic information systems must be actively nurtured; rarely to employees openly embrace technological innovations and integrate them avidly into mainstream operations (Northrop et al., 1990; Keen, 1991). Providing employees with access to powerful computer technology does not guarantee that they will use it, nor does it guarantee the gains in performance, productivity, decision making, and customer service so eagerly sought by organizational leadership. Instead, successful innovations require a champion in the organization who will promote the benefits of the technology, elicit trust from other members, and encourage commitment to the project in the face of uncertainty (Peters and Waterman, 1982).
Outsourcing the development and implementation of new computer technology may undermine internal adoption efforts. Removing managers and employees from the implementation process may squander the opportunity to mobilize commitment and overcome potential resistance to the project (Regan and O'Connor, 1994). In a study of information system failures, Braverman, Castle, and McKee found that "overshadowing all of the specific complaints from staff members was a sense of a lack of direction and commitment to the development of the system as an integral part of the company" (1986, 88). From this perspective, outsourcing may create disincentives to building the internal management capacities that could aid in the development and implementation of new computer technology in public organizations.
Management Capacity and Information System Technology
Researchers consistently find that internal organizational capacities, especially project management, strategic planning, and teamwork, are crucial to achieving success with information systems. In a study of 100 management information system professionals, Keider (1984) attributed the primary reason for information system failures to poor project management. Although some projects fell prey to other problems, the most common factor was a lack of understanding and application of project management principles.
In sum, supporters of contracting claim that it saves costs and frees organizations from having to invest internally in information system development. They argue that contracting results in systems that will better meet the needs of the organization for information, while saving overhead and start-up costs. By contrast, research suggests that contracting may undermine the development of important management capacities and, thus, jeopardize the potential benefits of these systems. The analysis below investigates the degree to which the level of contracting and the development of internal management capacities affect the successful implementation and results of adopting geographic information systems. In a sample of local governments using the technology, we examine the relationship between these two factors, as well as the implementation variables (delivery of the geographic information systems on time and within budget) and the outcome variables (perceived improvements in productivity and performance, organizational decision making, and customer service).
While privatization has been the subject of copious research, the present inquiry addresses several shortfalls. First, most studies are preoccupied with cost factors; this research assesses the influence of contracting on measures of organizational effectiveness. This study is centrally concerned with the effects of contracting on project success. Second, most of the literature frames contracting as a "zero-one" dichotomous variable. By contrast, we acknowledge that organizations can employ varying levels of contracting. Accordingly, we conceive and measure outsourcing as a continuous variable. And finally, few studies have evaluated the effects of contracting on both the implementation and outcomes of an information system project. This study examines the influence of contracting on factors related to both the process of implementation and the outcomes achieved from the adoption of geographic information systems.
Contemporary research in business management echoes these concerns regarding over-reliance on outsourcing (see Lacity and Hirschheim, 1993; Quinn and Hilmer, 1994; McFarlan and Nolan, 1995; Earl, 1996; Lacity, Willcocks, and Feeny, 1996). Lacity, Willcocks, and Feeny (1996) question why the outsourcing of information technology frequently fails to produce the cost savings or benefits expected. Quinn and Hilmer suggest that outsourcing does not realize the benefits anticipated because managers fail to use what they call a "strategic approach" (1996, 43). For outsourcing to be effective, managers must identify which tasks to outsource and which to provide internally. Lacity, Willcocks, and Feeny caution managers against relying on the contract arrangement to supplement deficits in expertise (1996).
To monitor contractor performance effectively, managers should not contract what they do not understand, but rather outsource only those tasks they understand well. Quinn and Hilmer underscore the importance of approaching outsourcing from a strategic perspective (1994). They argue that managers should weigh carefully the ramifications of outsourcing on a task-by-task basis. Shapiro, Eccles, and Soske (1993) conclude that managers and contractors must work together to identify opportunities to achieve higher levels of success in implementing information systems. According to these studies, the use of strategic outsourcing in the development of information system innovations in the public sector merits further examination.
Conclusion
Among the many suggestions offered by the National Performance Review, the use of contracting and advanced information technologies takes center stage as a means to facilitate government operations. Vice President Gore encourages managers to adopt procedures that will increase the likelihood of attaining the full benefits of the new technologies (1993). Public managers challenged with taxpayer revolts and personnel cutbacks are confronted with the dilemma of how heavily to rely on external specialist firms as a method for developing and implementing information systems. The results of this study demonstrate that modest levels of contracting can yield positive results for government. However, these benefits appear to decline with higher levels of outsourcing.
Although moderate levels of contracting may prove advantageous, in this sample heavy reliance on outsourcing complicated the process and the ultimate results of implementation. The findings suggest that high levels of contracting not only threaten the ability to implement and achieve positive outcomes, but outsourcing also impedes the development of requisite internal resources to manage and oversee the project successfully. Since project success hinges on managerial effectiveness, planning, and teamwork, the finding that high levels of contracting can undermine internal management capacity is particularly troublesome. When management capacity is sacrificed for high levels of contracting, success in adopting and implementing an information system is often compromised (Boynton and Zmud, 1987; Ewusi-Mensah and Przasnyski, 1991; Keen, 1991). These results indicate that organizations relying heavily on contracting may place less emphasis on building internal capacities in management, strategic planning, and team efforts--factors shown in the analysis and in other research to be important in obtaining the benefits of computer innovations. Modest levels of contracting offered some assistance in delivering the project on time and within budget, and in achieving outcome benefits in productivity and performance, organizational decision making and customer service. Yet, the results indicate that higher levels of contracting are negatively associated with the development of internal organizational capacities, such as managerial effectiveness, teamwork, and strategic planning, capacities which are crucial to success.
Based on these findings, if the public sector is to reap the benefits of advanced information technologies, management should tap the resources that external firms can provide, but only in addition to--rather than in lieu of--devoting the time, effort, and resources to building internal capacities. In pursuit of this goal, public organizations should heed the advice of the National Performance Review and offer effective training programs for top nontechnical managers in the areas of information system management, planning, and acquisition (Gore, 1993, 78). For it is only through a combination of both internal and external capacities that governments will achieve the full benefits of new information technologies and, in fact, work "smarter, better, faster, and cheaper."
