DEMANDS Annual Report 2001
Demonstrate Efficiency in MANaging Digital Sites

Project description

Commercial exploitation of public sector information (PSI) in Europe is still difficult: there are no common principles for collecting and storing information, no common legal framework for re-using information and there is very little experience with public/private partnerships.
In this framework, the aim of the Demands project is to verify the economic and technical feasibility for the setting up of a company, based on a partnership between local authority and private companies, to implement an Internet destination to provide all users with digital services linked to public administration, that may use both narrow and broad-band. This should allow local authorities to progressively outsource their services, still keeping co- ordination and control functions. The project provides for a business plan to define all technical, legal, management, fiscal, economic and financial issues.
The model created by the end of the project (business model, public- private partnership) may be transferred and reproduced in other European cities interested in following the same path.

Summary of 2001 Activities

The project started officially on January 1st 2001, to end on September 30th.The partners were:

• the City of Modena, the local authority running Modena, a 175.000 people city located in Northern Italy;
• META, the local multi-utility company, providing energy and environmental services, starting also a new business branch in the telecommunication area;
• Codifin, an Italian company offering consulting and brokerage service in the IT field;
• Nerano, a French IT incubator.

In 2001 all project activities were carried out: from the study of the current IT situation within the City of Modena (networks, services, technologies), to the identification of the business model for the NEWCO, to the drafting of a business plan supported by a parallel legal opinion, to end up with a confrontation with potential investors.
The Demands project represents a "feasibility study" for the concrete setting up of a mixed company (PPP - public-private partnership) in the Modena area.

Demands key issues

1. Analysis of the current situation

A careful in-depth examination was carried out of the current situation of the information, computer and telematic system of the City of Modena and the multi- utility Meta, which highlighted the good level of services rendered, the exceptional databank, the information structured and arranged in computer archives, and the good prospects for growth.
The City of Modena independently manages the network infrastructure and its own servers for Internet and Intranet services. All 70 offices of the City Departments are suitably wired and about 1600 workstations are connected to the local network. All of them have access to the corporate Intranet and a good percentage is connected to full Internet.
Of the eight operators active at the beginning of 2001, currently only one is laying fibre-optic cables, the others have suspended the programmes announced; Meta on its part is laying fibre-optics above all for telesurveillance of its own systems.

It is very likely that, with a view to limiting costs, we will shortly see mergers between the various operators, and that only after a turn in the economic climate and different expectations from the new technologies (which will occur as soon as the high-tech companies resume making profits) the wiring activities can again be taken up.
The multi-utility Meta is in any case planning to install about 90 km of fibre- optic backbone in the coming two or three years. As it currently stands, procedure automation has involved all Departments and services of the administration, covering administrative, technical and professional needs.
The information in electronic format available to the administration is of enormous interest, for both quality and volume.
In particular, the information related to the territory has already been subjected to professional and thematic processing (On this issue, please visit sit.comune.modena.it) and has been sold to private persons.
The socio-economic context of the province of Modena and the region of Emilia Romagna in general and the interest shown by other local governments in the project for establishment of a service company in the information and telematic field appear to be greatly conducive to the initiative.

2. Technical feasibility

The technical work package has demonstrated the possibility of integrating and connecting existing systems, producing a standardised portal for access to the corporate services based on the current structures, with the possibility of gradual growth commensurate with the possible investments. The creation of a computerised databank of information and methods of access and fast and easy consultation are crucially important for the organisation of an automatic call centre or one handled by an operator or of mixed type, which can then evolve towards a so-called web Call Centre to support an efficient CRM centre.

3. Business Model and Business Plan

The business model and the subsequent business plan see a company formed by the City of Modena and Meta and possibly a private partner, an enterprise accelerator or bringer of technological know-how; hence an Srl with public majority which can take on new partners at a later stage, for example local governments, private persons and SMEs.
The plan is articulated over three years and shows a profit from the second year. Two risk scenarios have been identified, which move the first profit to the third year and in any case considerably lower. A "protected market" situation is highlighted since the City of Modena and Meta, majority shareholders, confirm assignment of some guaranteed services to the company, as well as the investments necessary for activation of the web portal.

4. The legal framework

The legal frame has identified the methods of establishing the company and its relations with the City and the partners. It has furthermore developed the main problems arising from data processing and the information in possession of the public administration, above all with reference to the privacy law. The model produced by the business plan was compared - from a legal viewpoint - with the provisions in the French legislation and jurisprudence.

5. Self-assessment

During the course of self-assessment, the initiative was presented to different investors in Italy and Europe. A good level of interest was encountered even though investors are quite cautious at the moment, also because of external events. In particular, they see as distant in time a buoyant family and SMEs market resulting from the effective penetration of Internet and the new technologies.
The comparison between the partners was absolutely positive and in some cases even quite lively.

6. Dissemination and verification

The survey conducted and the project results have been used to support a parallel path activated by the City in order to involve other Cities in the province and the Provincial Administration, in a hypothesis of collaboration for the exploitation of common investments and development of advanced information and telematic services.
A moderate interest in the initiative emerged, even if many maintain that it would be more appropriate to approach the market by selecting the best solution at the right time rather than giving life to a special company with high running costs and no guarantee of success. Another fear expressed is that the possible private partner will contribute his solutions practically as a monopoly, depriving the public administration of the freedom of alternative initiatives and development.

The project was presented at various national and international meetings, above all within the subject area of the Telecities network, arousing keen interest. The Cities of Bologna, Siena and Pesaro are waiting to learn in detail the results of the legal frame concerning the possibility and freedom of marketing the electronic information of the public administrations.
It would appear that at Padua a service company very similar to that proposed by the Demands project has been established.

7. A parallel path of an alternative feasibility study

The political input was the confirmation of the unwillingness to externalise the functions currently performed by the City and Meta for the development and management of information and telematic systems, an attempt at a jump in quality in sectors not yet adequately tackled. A clear willingness to utilise the common investments emerged over and beyond the general feeling of the greater flexibility and freedom of action a service company has compared to the possibilities of direct action by the City. It is in fact not considered opportune to duplicate or reproduce existing systems, since the complexity and burdensomeness would be reproduced without adding value or flexibility. This led to a parallel reflection which crossed with the Demands project, rephasing and/or reconfirming the positions, and the two initiatives undoubtedly contaminated and stimulated each other. Meetings were also held with the general management and the management of the sectors involved as well as the political component of the City of Modena with the project manager of Demands, who among other things, drew up the final document submitted for opinion of the provincial Cities and other possible interlocutors.
The City of Modena has decided to continue the in-depth studies in order to soon achieve establishment of a company most suited to the pursuit of the above declared aims.

8. Public sector information (PSI) and public-private partnerships (PPPs)

Public sector, by nature of its size and scope of its activities, represents the biggest single information content resource for the creation of value-added information, contents and services. Private partners are interested in cross- border collaboration with public sector bodies, and there appears to be a real potential to be further explored and exploited, notwithstanding the difficulties such PPPs may have.
As a matter of fact, commercial exploitation of PSI is difficult all over Europe, also because conditions for their exploitation are very different from country to country. Yet, it is possible to identify some common issues. The Demands project moves in this direction, trying to provide a model which can be followed by other Cities interested in setting up a PPP to use digital contents (According to EC definition, digital content we refer to is "any information (interactive information, transaction, education, entertainment…) published on any Internet platform, from the traditional web through wireless devices, to Internet appliances and broadband video")
Since the publication of "Public Sector information. A key resource for Europe – Green Paper on Public Sector information in the Information Society" (1998), the European Commission has shown great interest in this issue, and the launch of the eContent programme witnesses this.
In the framework of the eContent preparatory action, other projects in line with the issues dealt with by Demands are:

• DEBUT – Data Exploitation and Best Utilisation Trial, a project led by the City of Edinburgh (UK), whose aim is to address the resistance within the organisational cultures of public services providers, to exploit their data and information resources in partnership with others, through a participative process of developing practical guidelines and pilot demonstrations.
• PSINET – Public Sector Information Network, a project led by the Essex County Council Libraries (UK), which aims at creating a network of cities involved in the issue of PSI and PPPs.

• the City of Vienna and the City of Köln, on e-government;
• the City of Leipzig, for experiences with public-private partnership for IT-services;
• the City of Bremen, for integrated public and private e-services (e-government and e-commerce);
• the City of Antwerp, for digital signature;
• the City of Newcastle, for smart cards experiences.

As for Italian experiences, the issue of e-government is of great interest for the Italian Government, and some cities are working on the issue of digital signature (among them the City of Modena too, which was partner in a project called Guides, financed in 1998 under the Sprite programme).
As for examples of PPPs which may be connected to the Demands project, we have discovered that a solution similar to the one we propose in our project has been followed by a company set up in Padua (The company is called Telerete Nordest)
Such company is based on a PPP formed by local authorities, public economic agencies and private companies, and it provides different services to local authorities and to private operators, among which CRM, web services, training, marketing and communication, distance surveillance. In a way, the existence of such company makes us believe that the solution we have proposed through Demands is feasible, although the context may be different, as well as the services provided.

User Group, Promotion and Awareness

During the implementation of the Demands project, no Project user group was activated. Yet, on the grounds of exchanges with other Italian cities, both close and far from Modena, we witnessed great interest for the project and for the solutions it may provide in the the analysis of the feasibility of a PPP for the exploitation of information contents and the provision of digital services. Great interest was expressed on a local scale, by the local authorities of the province of Modena, in the framework of the Provincial TLC plan.
The Demands project was illustrated during national and international events by the Project Manager herself, from Telecities meetings (the City of Modena is a member of the Telecities network), to national exhibitions and workshops on e-government issues. It was during such meetings that we noticed the great interest paid by local authorities on "how commercial exploitation could help to maximise the value of public sector information (PSI) to governments, citizens and business"( Commercial exploitation of Europe's public sector information, Executive summary. European Communities, 2000)
Instead of a real project user group, we have to mention the interest of different City Departments for the implementation of the Demands project, led by the Telematic City and Information Systems Department. The potential economic spin-off that may come out of the start-up of a NEWCO was of great interest not only for the Department for Development and Economic Affairs, but of course also for the political bodies within the City government.
As we have already expressed in the Semestrial Progress Report, these different interests aroused, sometimes, complex relations among City administrators and officers involved, highlighting different ideas and opinions on the NEWCO. The policy expressed by the General Manager of the City of Modena, confirmed by the Town Councillors involved in the project, was to start with an hypothesis which does not foresee the externalisation of the TLC services today provided by the Telematic City and Information Systems Department, instead, to test the feasibility of a flexible and slim solution, which should not duplicate but instead exploit and increase the services offered, even looking for an added value, in line with the eContent programme for the exploitation of digital contents owned by public administrations. This hypothesis does not exclude the possibility of a progressive outsourcing of the services provided by the City administration and by the multi-utility.
Once the Demands project is over, and on the grounds of its results, it will be the City Executive that will take into consideration all the possible options, in order to determine which is going to be the best solution for the Modena context. Yet one seems to be the most probable of them.

Future Work or Exploitation Prospects

Parallel study conducted starting out from the analysis performed for the Demands project

The document concerning the hypothesis of a PPP as the NEWCO was submitted to about twenty cities in the province of Modena, the regional governments, AUSL (the local health authority) and Meta.

The legislative and regulatory system and reforms in recent years have placed the technological, computer and telematics element in the centre of the simplification and streamlining process of the administrative activities, as flywheel, accelerator and inalienable tool for reformation of the public administration and qualification of the services to citizens and enterprises. Particular emphasis is placed on joint cooperation and the link between public administrations as indispensable element to obtain a single front towards the user-customer.
A different role of the private person is more precisely outlined, no longer being only a supplier of solutions, but a possible partner who can appropriately and conveniently enter into areas and segments of operation - within the limits of the institutional role of the public administration - with a view to collaboration and subsidisation.
The Italian e-government plan of June 2000 outlines the electronic administration profile of the country, placing particular emphasis on the co- operation and interoperability between public administrations which, through certified and secure systems, open their archives to direct telematic access by the other public administrations (portals).
Standard access interfaces are required for information portals and service provider portals.
The electronic ID card and digital signature are both confirmed as the only identification tools, and the digital signature moreover as full-fledged validation tool.
The local governments are given an opportunity to obtain financing following calls for tenders about to be issued on specific lines for information and telematic projects with particular interest in solutions presented by the associated public administrations with possible intervention of private partners.
Particular importance is given to repeatability of the solutions proposed through the concept of transfer of best practices.

The Consolidation Act on administrative documentation, on the other hand, consolidates in a joint framework the guidelines for bureaucratic simplification and streamlining through the use of electronic tools introduced with Law Decree 29 with the definition of "electronic document".
The public administrations are called upon to utilise electronic forms and accept applications sent electronically, equipping themselves with certified and secure technological infrastructures (also see 675) which guarantee, where required, the full legal value, acknowledging their origin and integrity.

The experience of drawing up the Provincial Telematic Plan adopted by the Modena City Council last September, has seen the orchestration and adhesion of many Cities in the province joining the different lines of action in different ways.
Small Cities have chosen different ways of dealing with the problems of basic and managerial automation in associated and syndicated manner, so as not to be excluded from the innovation and development processes difficult to confront alone (City of Sorbara, Cities of the Northern Area).
Other Cities have chosen specific solutions, turning to companies and consultants.

Larger Cities or with more investment possibilities have consolidated situations as far as basic and managerial computerisation is concerned. They have a civic network which is evolving from a purely information portal to a service provider portal (normally forms to be downloaded).
They also have a more or less consolidated internal information structure (Carpi, Sassuolo, Maranello, Vignola).
All of them express the difficulty of deciding on the safe road to take in order to take advantage of the technological evolution and the regulatory guidelines - making a true jump in quality - in particular for the new lines of electronic value-added services, digital signature and use of cards in general. Many consider it difficult in their current status to participate in individual or even associated form in national telematic projects between local and central bodies or to produce projects to submit to financing if not with the help of expert consultants.
Particularly uncovered is the security front in the network exposure of application servers.
An interest is noted in making use of any already successfully developed systems, provided that they are non-invasive on already existing structures. Many show an interest in investigating the possibility of common investments, at least as far as the system study and design level.
Almost all are interested in joining municipal projects for loan applications. Unfortunately, because of the delays of the Region of Emilia-Romagna, it cannot be known if the same cohesion would have been maintained or will be maintained once these are granted.
With coordination by the Province a shared SW was chosen for unit banking system management and connection of the participating bodies, which is managed and maintained by the IT department of the Province.
The most interesting lines of action are: the personal data exchange system for self-certification control, connection to the central public administrations, the Territorial Information System, Territorial Portals, Civic Networks, and training and diffusion of the information culture.

It is evident that, in this context, also bodies such as the City of Modena with a good level of computerisation and development of telematic services, query and seek solutions and new forms of intervention and activity which, while safeguarding a solid structure, permit overcoming obstacles and rigidity and, with a greater freedom of action, allow confronting new fields and areas, perhaps not directly related to institutional tasks, seeking synergies, quality and added value.

A first line of action might be the proposal of services for other public administrations in evolution, as well as improvement and generalisation of services already developed or developed for their own departments.
A second line of action might regard the exploitation of information, experiences and existing professionalism.
In effect, the administrations propose themselves as suppliers of information, whose wealth and exclusivity makes it a precious and desirable asset also for the private and corporate market. Great attention is also paid on European level to ever greater diffusion of information on the network. The bet is on which methods, in which forms and with which regulatory and institutional restrictions and ties the public administrations can exploit the wealth of digital information also for commercial purposes.

A possible answer is the establishment of a service company in the information and telematic framework, which initially addresses the public administration market, the City of Modena included, with a light and flexible structure, connoting particular consultancy and design characteristics as linking and connecting tool between public administrations, first and foremost between public administrations and the City of Modena.
The public administrations as potential clients could possibly decide to enter into the corporate system, being partners and clients at the same time.

In this sense, it is of fundamental importance to define the system of relations between NEWCO, the City of Modena and possible other partner public administrations.

A broad outline

The City of Modena and partner public administrations support NEWCO, making available - in a form regulated by a special agreement - the information to be utilised, the professionalism within the consultancy framework for other client public administrations, the application solutions available and the time/man agreed upon to develop future application solutions for NEWCO clients and support their customisation and start-up.

NEWCO markets and diffuses the application solutions and models of the City of Modena and partner public administrations, standardising and generalising them if necessary.

The City of Modena initially provides NEWCO with facilities and equipment.
Subsequently, NEWCO can turn to a wider market (also companies and private persons with innovative services) seeking synergies and collaboration on local level, first of all META, AUSL, trade associations and the Chamber of Commerce.

EWCO's scope of action (the widest possible)

• Consultancy on regulatory and procedural aspects concerning the issues of information, computer and telematic systems.
• Specified professional consultancy within spheres of interest (enhancement of professionalism, skills and experience of the CIty of Modena) for example, Territorial Information System, Corporate Unit Banking System.
• Feasibility studies and market research to assist in the choice of HW, SW and network device purchases.
• Study and design of computer and telematic solutions, security networks and systems, application servers. Development and implementation of limited specific local solutions.
• Study and design of building wiring operations.
• Study and design of general support services for the web environment for interaction and communication. Recognition systems, access systems and user profiles, mailing lists, newsgroups, forums, chats, certified and secure e-mail.
• Study and design of customised solutions of telematic services for forwarding applications in electronic format with full legal value through the use of recognition systems and digital signature systems at the current state of regulations in force and according to evolution.
• Study, development and supply of web-based solutions (sites, civic networks, portals, Intranet, publication of static and dynamic information, hypertexts, indexing and search systems)
• Exposure on the web of information contents with development of dedicated solutions or through the formula of training and assistance to the personnel of the client.
• Marketing of application solutions available at the City of Modena and its partners.
• Standardisation and diffusion of application models available at the City of Modena and its partners on different platforms, also type legacy.
• Professional data processing and supply of services exploiting and enhancing available digital information (e.g. Territorial Information System).
• Training and assistance in use of the information tools within the framework of personal computing with individual productivity tools and in the Intranet/Internet framework.

Foreseen personnel

1 manager with marketing functions
1 administrative person
2/3 technicians, consultants, designers

Summary tables for a business plan hypothesis

(*) Historical expenses incurred for the stated services by the Telematic Systems and Information Systems Department and by other City sectors, including quantification of services developed with internal resources for Telematic Projects. Activities that can be assigned to the company.

	HYPOTHESIS OF REVENUES FROM MEDIUM-SIZED CLIENT CITIES OR AGGREGATION OF CITIES	ITL	euro
Internet/Intranet site and web page production	10,000,000	5.146,57
web administration, server management and security	40,000,000	20.658,28
Consultancy for advanced telematic services, digital signature, etc.	5,000,000	2.582,28
Development of telematic services	30,000,000	15.493,71
Training	2,500,000	1.291,14
TOTAL REVENUES FROM MEDIUM-SIZED CITIES	87,500,000	45.189,98

	HYPOTHESIS OF REVENUES FROM SMALL CLIENT CITIES OR AGGREGATION OF CITIES	ITL	euro
Internet/Intranet site and web page production	3,000,000	1.549,37
web administration, server management and security	20,000,000	10.329,14
Consultancy for advanced telematic services, digital signature, etc.	2,000,000	1.0329,1
Development of telematic services	10,000,000	5.164,57
Training	1,000,000	516,46
TOTAL REVENUES FROM SMALL CITIES	36,000,000	18.592,45

NOTE:
Training was taken into consideration only for small to medium-sized Cities and not for the City of Modena, since in this hypothesis it is not compatible and sustainable with the human resources of the company, also considering that on average training for the City of Modena requires 120 person/days per year for the course and about a person/month per year for co-ordination and organisation. However, at least two sessions on specific topics may be considered per year for a group of 5-6 persons and for an amount of about L. 2,500,000 (euro 1.291,14). For the remainder a different hypothesis must be made.