Here\u2019s one example that Ohio CIO Gregory Jackson likes to give to prove that government agencies need customer relationship management: "Every year, citizens have to tell the Department of Revenue what their address is," he says. "But then say we inform them that their driver\u2019s license is about to expire?that [notice] may go to an old address. People get frustrated when they have to go to court [to fight tickets that come as a result of] notices they never got."And that\u2019s what citizens are treated to merely for moving. More complicated processes, such as starting a small business, require extraordinary amounts of time, as budding entrepreneurs may need to visit a dozen agencies for licenses and permits before opening their doors. Even on the Web, agencies\u2019 sites have almostalways been siloed away from each other?not just in Ohio, but in every state. The problem? Citizens think of state governments as single entities, like a big department store, but state governments don\u2019t act that way. The highly disjointed nature of state government makes even the simplest procedure complicated, resulting in states with a dismal record for customer service. That has been true for more than 200 years, but what\u2019s different now is that information technology, specifically CRM, gives states the tools to do something about it. State CIOs say the same technology that private companies use to track your purchases and help salespeople suggest new products can be used to serve up all the forms an entrepreneur needs to start a business, inform poor citizens about benefits they can apply for, and make government call centers beacons of assistance.But the obstacles to deploying CRM in government are countless, state CIOs say. Agencies don\u2019t see the value in sharing information, and institutional hubris often makes them reluctant to learn more about the citizens they serve. State laws often prohibit agencies from sharing information with each other at all. There\u2019s never enough money. Federal regulations that govern many state services seem to promulgate the very silos CIOs would like to eliminate.Despite those hurdles, some state CIOs?prodded by governors who seek to revamp the way their states treat taxpayers?have launched CRM programs modeled on those in the private industry. Those making progress are doing so not by tearing down the barriers but by choosing projects with the fewest obstacles to success to demonstrate CRM benefits. Experts say the sheer scope of states\u2019 systems requires that approach; Larry Herman, a managing director at KPMG Consulting, calls it the only workable one. Although it remains to be seen whether these early successes will build the critical mass CIOs hope for, from these projects a body of best practices is emerging that can serve as a road map for government CIOs charged with meeting a new set of demands.Three Barriers: People, Politics and PrivacyThe government worker\u2019s mind-set?in popular culture, anyway?is 8 to 5, not 24\/7. Delight the customer? Bah. Tolerate him. If he\u2019s lucky. "If you need a permit, we\u2019re it," says Stephanie Comai, director of E-Michigan, the state\u2019s online-government initiative. "Let\u2019s face it, that can lead to a lack of focus on customer service." CIOs and analysts agree that the first, most vital step in implementing a CRM program is educating workers on the importance of great customer service. Sharon Ward, vice president of enterprise solutions at Framingham, Mass.-based Hurwitz Group, says, "CRM is not embodied in software but in attitude. The desire to please [the customer] has to be inherent in people first."Private companies, too, have to sell employees on the value of CRM. But it can be an especially daunting task to retrain government workers, many of whom?because of strong unions?have no real fear of losing their jobs if they don\u2019t change.Meanwhile, like their private sector counterparts, government CIOs face budgets that are hardly bottomless. But state CIOs\u2019 plans are vulnerable to the shifting winds of politics. Most states with aggressive CRM plans enjoy the support of governors who have declared that their state must be more responsive to its citizen-customers. However, it\u2019s easy to "reinvent government" in a press conference. What happens when state coffers shrink, as they have in the present economic downturn? Or when a CRM champion loses a reelection campaign? Rick Zelznak, Arizona\u2019s CIO, says the faltering economy, along with the need to shift funds to respond to the Sept. 11 terrorist attacks on New York City and Washington, D.C., will push CRM to the back burner. Before the attacks, budget constraints forced his department to table several promising CRM programs in favor of those with more immediate payback, including a thorough revamp of the state\u2019s tax-collecting system, which will boost revenues almost immediately. "Our governor\u2019s office was asking agencies for 4 percent budget reductions prior to Sept. 11," he says, adding that he anticipates a request for deeper cuts in the wake of the attacks.But Ohio\u2019s Jackson says that\u2019s not necessarily the case in his state. There, CRM initiatives usually spring from individual agencies whose revenue sources and security preparedness vary wildly. "It\u2019s unlikely that these agencies will be faced with choosing between CRM funding and security funding," Jackson says.Zelznak and Jackson agree that while it\u2019s appropriate that security dominate their IT landscape right now, CRM programs remain vital and will eventually reclaim mind-share. Zelznak believes Arizona legislators grasp the potential benefits of CRM.State CIOs hoping to use federal funds to help launch CRM programs often run into a catch-22. Almost by definition, a CRM project seeks to cut across agency lines. But federal aid, which may provide a big chunk of state agencies\u2019 IS budgets, is usually targeted at a specific department, and efforts to divert the money elsewhere?regardless of the potential benefit to targeted citizens?are rebuffed by the feds. When Ohio announced it wanted to build an online portal to make its services more easily accessible to citizens?a common first step among states implementing CRM?Jackson thought the state had a good idea for funding the portal; it planned to get each agency involved in paying a portion of its fiscal 2002 budget for development. So in April, Ohio sent a letter to the U.S. Department of Health and Human Services?which partially funds numerous Ohio agencies seeking permission to use federal money for the project. The feds said no because according to the letter Jackson got back from the department, the portal would benefit all citizens\u2019 access to government, not just those citizens the federal agency is focused on, and thus must be paid for with state funds. Now the portal is progressing at a slower pace until Jackson can come up with another plan.Finally, one of the most sensitive IT issues for public sector IT executives is data privacy. In the private sector, companies have the freedom to combine databases so that customer service reps can access a 360-degree view of a customer, including past sales history, demographic data and so on. State CIOs can only envy such liberties. For them, the appeal of the unified database is just as strong as for their corporate counterparts, but they\u2019re stymied by strict boundaries. Even in cases where data sharing makes sense, it is often prohibited. To keep from stepping on a privacy land mine, it\u2019s critical that state CIOs develop ironclad policies on which data may and may not be shared by which agencies, communicate those policies to all vendors and consultants involved in a CRM project, and frequently follow up to make sure the policies are being followed, says New Jersey\u2019s CIO Wendy Rayner.Find Early Adopters Despite the formidable challenges, states are deploying CRM. As in the private sector, it makes sense to start small, rather than try to impose CRM on all state agencies in one fell swoop. Successful CIOs identify groups that are ripe for CRM and outline the potential benefits for the heads of those agencies. Once the agency heads buy in, a pilot program can be launched on a manageable scale.The key, state CIOs say, is to seek departments that are eager to modernize. In Kentucky, until 1999, the Department of Employment Services, which tracks whether employers have paid their unemployment insurance taxes from Kentucky employers, ran parallel with the state\u2019s Revenue Cabinet, according to Larry Moore, the employment agency\u2019s project manager for the electronic workplace. "We replicated all the [Revenue Cabinet\u2019s] functions," he says, which meant employers had to file the same information with both agencies. When the Revenue Cabinet installed a new tax-collection system, Employment Services did away with its duplicate system, outsourcing its tax and remittance processing to the Revenue Cabinet as part of a CRM project that included the installation of Siebel Systems software. "Ninety-thousand employer reports went away," Moore says. The project saves his agency at least $1 million a year in implementation costs.Prove CRM with Portals Until this summer, the Florida Department of Business and Professional Regulation, which issues about 1 million licenses to everyone from barbers to accountants, ran a witches\u2019 brew of 17 different licensing systems. Applicants faced an average review time of 45 days under a paper-intensive process. A single mistake on a form meant many days lost as that form was mailed back to the applicant, corrected and returned. And most applicants make mistakes. On July 1, Florida, with help from Accenture, inaugurated a Versa CRM system intended to streamline the licensing process. The 17 databases were merged into a single Web portal and linked to new call center software from Siebel. Now professionals and business owners can get questions answered quickly at the call center via e-mail, telephone or online chat and, most important, find out immediately whether they\u2019ve made a mistake in their online application. Early reviews of the licensing system are promising. Average wait time for an online approval for a renewal, according to a state official who worked on the project, is now less than five minutes. In 2002, Florida plans to expand the program to other types of licensing, including those done through the Department of Health, says the official, who refused to be identified for this article. (Former Florida CIO Roy Cales, who was interviewed for this story, resigned in August after he was charged with allegedly forging a client\u2019s signature to obtain a 1996 loan for his now-defunct software company. Cales denies the charges, says his lawyer, Stephen S. Dobson, and has cooperated with investigators. At press time, the case was in the pretrial discovery stage.) Portals like Florida\u2019s are good first steps for states to take toward CRM because the information needed to create them already exists; it\u2019s scattered all over state websites. For Florida, building the licensing portal was made easier by the fact that one agency owned all the data. Securing cooperation when multiple agencies are involved is a major hurdle for state CIOs. New Jersey\u2019s Rayner says that agencies fear sharing data with each other because they have traditionally operated as separate fiefdoms. Rayner coaxes agencies into sharing data over the course of several meetings?helping them overcome their institutional tendency to jealously guard their information. Often, Rayner and other state CIOs say, the key persuader for agencies is the reduction in call center traffic?and associated expenses?that CRM software can bring. Last year, Rayner created a CRM unit composed of six customer relationship managers, who serve as liaisons to state agencies. She credits the unit with building support for the state\u2019s initial CRM projects, including a portal for small businesses. Previously, Rayner says, business owners had to visit 10 or 12 agencies to secure all necessary permits and licenses.Get Citizen FeedbackCalifornia is using CRM to speed up the enrollment of children from low-income families in a state-sponsored health-insurance program. One key to success in this case was the small pilot project the state did to ensure citizens would use the system. "We\u2019re rolling out systems that are small in scope but scalable," says Arun Baheti, the state\u2019s director of e-government. "We did it this way to check the systems and make sure the customers wanted it."The application form for the Healthy Families program once ran more than 20 pages. Between mailing in the form and then correcting any errors they made, families could wait more than two months before their enrollment was finalized, according to Baheti. Now applicants can go to a local state government office, apply online with assistance from a case worker and find out within minutes if their application is accepted. If it is, their information is entered into a database that caseworkers can access before they have their first meeting with their clients.The system, which uses CRM software from EDS and Deloitte and Touche was tested on a small scale in San Diego County this spring. When it was clear Healthy Families applicants liked the speedier access to benefits, Gov. Gray Davis approved a statewide rollout of the system. Healthy Families\u2019 deployment strategy reflects a broader effort to involve citizens in projects to improve government service delivery. "[Davis] said he wanted [state government] more customer-centric," Baheti says. "That\u2019s the driver for us. Downstream, CRM may result in cost savings?but that\u2019s not the primary driver for California." Last year, the state formed the Governor\u2019s Web Council, composed of representatives from the public and private sectors. The council is seeking citizen feedback as agencies roll out new CRM initiatives, using focus groups to gauge interest in proposed programs as well as their privacy concerns.The Outlook It\u2019s one thing, however, to launch a pilot program with a strong, public push from the governor; it\u2019s another to sustain the momentum amid economic downturns, political leaders\u2019 changing priorities and entrenched bureaucrats. Nevertheless, state CIOs think CRM is close to gaining critical mass. Citizens accustomed to seamless service in the private sector won\u2019t stand for less in the public sector. And if there\u2019s one thing a politician can figure out, it\u2019s what taxpayers are clamoring for.