INTEGRATED SYSTEMS OF LOCAL GOVERNMENT

ORGANIZATIONS AS VIRTUAL ORGANIZATIONS

Walter Castelnovo 1, Massimo Simonetta 2
1
Dipartimento di Scienze della Cultura, Politiche e dell’Informazione,
Università dell’Insubria
2
Ancitel Lombardia
walter.castelnovo@uninsubria.it, simonetta@ancitel.lombardia.it

The paper discusses the problem of back-office re-organization in

Small Local Government Organizations (SLGOs) from the point of
view of E-Government (G2G). We suggest that, especially in
contexts characterized by a large number of SLGOs, the associated
management of services represents an organizational model which
can be resorted to by SLGOs in order to improve their efficiency and
effectiveness. From the organizational point of view, the associated
management of services amounts to a form of inter-organizational
cooperation; as such, it can benefit considerably from the availability
of a cooperative environment. After introducing the cooperative
environment SPCoop defined by CNIPA in the frame of the Italian
Sistema Pubblico di Connettività, we show how inter-organizational
cooperation among SLGOs requires something more than the
applicative cooperation allowed by SPCoop. In order to implement
inter-organizational cooperation more easily, some form of
organizational integration is needed besides systems inter-
operability. To this end, the paper introduces the idea of an
Integrated System of Local Government (ISLG) as an organizational
and technological platform for inter-organizational cooperation
among SLGOs and describes some organizational roles necessary
for the setting up and the maintenance of an ISLG.

1. Introduction
According to a general definition, “E-Government is the continuous optimization
of service delivery, constituency participation and governance by transforming
internal and external relationships through technology, the Internet and new
media” ([7]). Besides adopting Information and Communication Technologies
for the implementation of on-line services, E-Government requires an in depth
process of reorganization of Public Administration ([13]) in order to improve its
efficiency and effectiveness through the use of ICTs.
The reorganization of the back office of local government organizations is
particularly crucial in contexts, such as the Italian one , characterized by a large
number of small local government organizations (most of them municipalities).
Actually, administrative fragmentation has been identified as one of the most
critical obstacles for the realization of E-Government, also due to the fact that
SLGOs often lack the resources, organizational more than technological, which
are necessary for the implementation of E-Government.
The Italian Public Administration represents a prime example of such difficulties;
by taking into consideration the Italian population registered in the year 2002,
we can see that the municipalities with less than 5000 inhabitants were 5835,
that is 72% of the 8100 Italian municipalities.
As a first possibility, the administrative fragmentation can be reduced by
transferring competencies from local institutions to institutions juridically in
charge, that constitute a single strategic and operational centre, thus achieving
scale and scope economies, as well as the availability of organizational
competencies which are required for the implementation of the services ([21]).
However, such a solution can be implemented only in contexts in which the
constitutional and the legal framework allow central authorities to force the
transferring of competencies from local institutions to institutions juridically in
charge. In Italy, for instance, it is difficult to carry out this process of vertical
centralization because of recent constitutional changes which have recognized
the principle of subsidiarity as the basis of the administration system and
because of a widespread tradition of improvement of local autonomies.
An alternative solution for the problem of administrative fragmentation amounts
to the implementation of more or less constrained forms of inter-organizational
cooperation for both production and the delivery of services. From a legal point
of view, such a solution can be implemented as an associated management of
services. The associated management of public activities is a lasting relation
between municipalities and, in some cases, other institutions, which is ratified
by voluntary agreements or compulsorily requested by regional or national laws.
In the associated management of services, the municipalities maintain their
institutional privileges and agree formally on the content, form and limits of the
association in order to perform duties or to deliver services of which they have
the title. All this is achieved by sharing rules and operational procedures fitted to
legitimately generate choices in policy and management ([11]).
From the point of view of organizational architecture, the associated
management of services constitutes an inter-organizational network ([19]),
which can take diffe rent forms, and which assures municipal institutions an
essential autonomy in the definition of the associations and in the possibility of
trade off. The associated management, by operating a reconfiguration of the
institutional and management relations of the inter-organizational workflow,
allows economies of scale and of scope as we ll as the sharing of resources.
In ([11]), on the basis of a systematic analysis on the experience of associated
management of services in the Local Government in the Italian region
Lombardy, three organizational forms have been identified and formalized: (i)
the company form, (ii) the integrating form and (iii) the coordinating form.
Both the company and the integrating forms require a process of
institutionalization that allows the strategic and operative management to take
place in a new institution created by the association process. The two forms
differ (i) in the title they have to legitimately perform administrative functions or
supply services regarding the system of Public Administration; (ii) for their
possibility to exercise authority (authorizations, licences, regulations, etc.); (iii)
for the juridical form they can take.
The coordinating form provides inter-organization agreements of local
institutions for the production and/or delivery of services to citizens and
enterprises, as well as official procedures, without the creation of a new
institution or company, since the title for supplying the final services is up to the
single local administrations aggregated in the coordinating form. In the
coordinating network we find public institutions capable of carrying out
substantial parts of the workflow for the production and the delivery of the final
services. The resources managed in the workflow belong to the single local
administrations, but their use is assigned to a centralized organizational
authority legitimated by the single administrations taking part in the coordinating
form. From this point of view, the coordinating form requires establishing a
cooperative environment and, in these terms, the associated management of
services of the coordinating form represents the organizational solution which
could obtain the major benefits from the intensive use of ICTs, as
communication and coordination technologies

2. The Italian “Sistema Pubblico di Cooperazione” (SPCoop)

As part of the Government Action Plan for the development of E-Government in
Italy, CNIPA (Centro Nazionale per l’Informatica nella Pubblica
Amministrazione, National Centre for Information Technology in Public
Administration) defined a system for advanced inter-operability and applicative
cooperation among government and non-government organizations involved in
the production and the delivery of services ([6]).
The Sistema Pubblico di Cooperazione (SPCoop) defined by CNIPA consists of
a set of technological standards and infra-structural services whose goal is to
allow systems interoperability and cooperation in the administrative processes.
SPCoop is based on a service-oriented architecture that enables systems
cooperation by means of an exchange of functionalities through interfaces
satisfying security and quality requirements. This way, SPCoop gives each
member a complete autonomy concerning the way they implement their
services and the way they shape their organizational structure. The model of
SPCoop, whose general architecture is shown in Figure 1 ([6]), requires each
subject joining the system to define a Domain of Services (the services which
the organization intends to offer to the other subjects of the network) and to
implement a Domain Port suitable to guarantee application inter-operability, in
secure conditions.

Service Domain
ORG1
Information ORG4
System
Information
Cooperation System
Domain
ORG2
Information
System

ORG3 ORG5
Information Information
System Domain Port System

Figure 1
To join SPCoop an organization must provide a Service Agreement which
contains: the description of the services each member offers to the partners; the
description of the interfaces for the exchange of messages; the description of
security policies and requirements; the description of the quality requirements of
the services.
Considering joining SPCoop as the condition for the interaction among
government and non government organizations for the production of public
value, different levels of interaction can be defined by setting out additional
conditions which the partners can share. Actually SPCoop provides for the
possibility of defining supplementary conditions which can be stated in specific
Cooperation Agreements which establish Cooperation Domains.
The Cooperation Agreements of SPCoop have the purpose of:
- defining the processes which are the object of the Cooperation Domain;
- registering (publishing and qualifying) the services delivered by the
members of the Cooperation Domain;
- specifying security and quality policies for the services which are the object
of the cooperation;
- defining possible technological measures to adopt in order to guarantee
security and quality requirements and to support the full automation of the
procedures related to the Domain itself.
A Cooperation Agreement is based on the basic services SPCoop makes
available and establishes a more constrained cooperative environment that
allows the cooperation in the production and the delivery of services.
Within the cooperative environment of SPCoop an associated management of
services can be implemented by defining a Cooperation Domain. The
Cooperation Agreement will identify the services which are the object of the
associated management and will describe the inter-organizational workflow
necessary for their production and delivery. Thus, according to the defined
workflow, the services that are object of the associated management can be
obtained as the composition of the services each member of the Cooperation
Domain declared available to the partners in the Cooperation Agreement.

3. Organizational integration
Since it is based on a service oriented approach, the cooperative environment
defined by SPCoop requires the organizations taking part in the system to make
known to the partners only the description of the services offered and the
conditions to access them. The operational methods for the production of the
services, as well as all other considerations related to the organizational
structure of each partner, are hidden. However, not all the inter-organizational
forms of cooperation among Local Government Organizations can be reduced
to the pattern of applicative cooperation. It might sometimes be necessary to
implement cooperation agreements that need some form of organizational
integration, besides systems inter-operability.
From the organizational point of view, the associated management of services
of the coordinating form entails a sharing of resources. In most cases SLGOs
resort to an associated management in order to guarantee a sharing of
resources in the medium or long term. However, a SLGO may need to resort to
short term cooperation. For instance, this can happen when an organization
temporarily lacks resources needed for the production and delivery of services
to citizens and enterprises.
In order to avoid discontinuity in the production and the delivery of services, a
possible solution is the sharing of resources, even on a temporary basis,
through the definition of short term associated management of services.
This kind of sharing of resources among SLGOs presents some characteristics
that make it analogous to the inter-organizational cooperation typical of virtual
organizations ([18], [19]).
In general terms, a virtual organization is a temporary network of independent
companies linked by information technology to share skills, costs and access to
one another’s markets. The major problem for organizations of this kind, lies in
the search for suitable partners: companies which fit together in terms of mutual
trust, organizational culture, business processes and ICT systems.
In order to manage the complexities arising in the different phases of their life
cycle, in modelling virtual organizations new specific organizational roles have
been introduced with functions relating to ([20]):
- definition and management of a cooperative environment which could make
the creation of partnerships easier for the cooperation between different
organizations (role of activator/manager of the cooperative environment);
- after identifying a new business opportunity, setting up a Virtual Enterprise
formed by some of the organizations taking part in the cooperative
environment (role of activator/manager of a virtual enterprise).
The crucial point is the definition of the cooperative environment and the
conditions characterizing it; actually, the process of activation of a new virtual
organization is greatly simplified if the potential partners share a set of
conditions that pre-qualify them. Of course, the activation process becomes
simpler as the conditions defining the cooperative environment are more
restrictive and require stricter forms of inter-organizational integration.
Afterwards we will introduce the idea of an Integrated System of Local
Government (ISLG) as a cooperative environment defining conditions for inter-
organizational integration besides conditions for systems inter-operability of the
kind enabled by SPCoop ([4], [5]). Beginning with the concept of ISLG, we
describe an associated management of services for the sharing of resources on
the short term as a virtual organization in which the partners are all pre-
qualified, being members of the ISLG.

4. Integrated System of Local Government

An Integrated System of Local Government is constituted by a collection of local
government organizations interested, on the basis of a preliminary sharing of
interests (e.g. increasing both the efficiency and effectiveness of the
administration, realization of economies of scale and of scope, management of
technological and organizational innovation), in systematic forms of cooperation
for the management (production and delivering) of services to citizens and to
enterprises in an associated way.
The ISLG is a regulatory system for regulating the conditions of participation to
the common platform and the cooperation between local institutions through:
sets of basic principles; codes; procedures; tacit or explicit knowledge ([16])
which are the basis of communication and the correlated social relations in the
network ([17]).
Part of the ISLG is a dynamic and shared catalogue of rules and operational
procedures and of knowledge management, which exist in a tacit or explicit
form. They determine the conditions for the setting up of inter-organizational
workflows in which different members of the ISLG can be involved as well as
conditions for evolving the integrated system itself.
Local government organizations sharing the rules of the regulatory system can
be part of an organization platform of virtual kind ([8], [20]), which makes
cooperation easier.
The explicit rules that define an S I LG state specific conditions for joining the
platform and define conditions for inter-organizational integration of different
kinds; the rules include:
Conditions for technological integration
- conditions concerning the sharing of infrastructures (virtual or physical) for
network communication: (possible) investments for the realization of network
infrastructures, adoption of Electronic Data Interchange systems for data
exchange on private networks, adoption of WEB standards for transactions
over the Internet;
- conditions defining the standards for communication and for systems inter-
operability, making the principle of switching (that is at the basis of virtual
organization) feasible ([14], [15]);
- conditions for the definition and the sharing of security policies for the
access to information resources and for their use ([2], [3]).
Conditions for regulatory integration
- conditions concerning the definition of a shared organization ontology and a
shared terminology, making a standardized modelling of the member
organizations possible ([9]):
- the adoption of a uniform and standardized language for process description
(such as the Resource Description Framework defined by the W3C
Consortium or the informal language used in The MIT Process Handbook
Project), making the design of inter-organization workflows possible;
- conditions for monitoring the activities of the members of the ISLG in order
to guarantee that the partners continue to satisfy the requirements on which
the integrated system was built ([8]).
Conditions for organizational integration:
- conditions concerning the standardization of the processes, making different
partners interchangeable when needed;
- conditions concerning the definition of the operational standards (of the ISO
9000 family) and the levels of service each member of the platform
undertake to respect;
- conditions for the sharing of the resources (both physical and information)
within the network: a standardized description of which resources each
partner wants to share and under which obligations.
An ISLG constitutes a cooperative environment that is much more constrained
than the one defined by SPCoop. Actually, due to the conditions characterizing
it, the membership in an ISLG requires some form of organizational integration,
besides systems inter-operability. However, as Cooperation Domains can be
defined within SPCoop, the implementation of an ISLG can be based on the
general cooperative environment of SPCoop by means of an Agreement
defining a form of organizational integration. From this point of view, we can
consider a three layered model for inter-organizational cooperation among
SLGOs, as shown in Figure 2:

Cooperative environment

Cooperation Domain
ISLG
Organizational Integration
Cooperation Agreement
Service Agreement SPCoop

Figure 2
5. Organizational roles
The setting up of an ISLG involves a regulatory activity which can take different
forms according to the following scenarios:
a) some local government organizations voluntarily and jointly define, with
more or less complex forms of negotiation, forms of joined cooperation and
the systems for their control (local regulation activities);
b) one institution, also one that is external to the ISLG, having the title defines
the rules for cooperation and, subsequently, checks their respect and
manages the evolution of the regulative system (external regulation activity).
The institution that takes the regulation role acts as the activator of the ISLG;
in this case the participation of single administrations in the ISLG can be
determined compulsorily or indirectly forced through incentives.
Unlike the case of cooperative environments involving enterprises, an ISLG has
clearly defined boundary conditions corresponding to the scope of the
regulatory authority that activates the platform. In the scenario (a) above, the
ISLG is built on a territorial basis (i.e., it comprises only municipalities that are
territorially contiguous), and the activator role is performed by an organization
whose authority depends on a voluntary agreement between the members of
the ISLG. In this case the boundary condition of the ISLG is clearly defined by
the collection of the organizations subscribing to that agreement. Disregarding
the variety of the organizational forms they can take, the described situation
occurs in most of the associated managements of services classified in ([11]).
In the scenario (b) the role of activator of the ISLG is performed by institutional
organizations that are intermediate between municipalities and the central
administration. For instance, in Italy, where such intermediate levels correspond
to provinces and regions, an ISLG defined according to the scenario (b) has a
boundary condition clearly determined by the administrative boundaries of the
Province or of the Region.
The role of the external regulatory authority can be explained referring to an
example concerning the activity of the Regional Government in Lombardy ([11],
[12]). In 1999, the Regional Government started up a project for the
implementation of Sistemi Informativi di Comunicazione Telematica degli Enti
Locali (SISCoTEL). The project, involving about 80% of Lombardy
municipalities, funds the implementation of inter-organization information
systems for municipalities, as the infrastructural condition fitted to enable the
associated management of services. The financial support for the
implementation of SISCoTEL depends on the adherence to some specifications
defined in regional announcements. These specifications require the
municipalities:
- to join the virtual private network Lombardia Integrata, which links on equal
terms all the member administrations and which allows a safe exchange of
information and services between local government organizations of
Lombardy;
- to adhere to inter-operability and communication standards;
- to structure the application portfolio on the basis of a standard articulation in
functional areas and services;
- to realize training projects related to ICT in all the local government
organizations following the programme.
The Regional Administration of Lombardy, so defining its policy of incentives for
inter-organization information systems, has taken a regulating role which is
similar to the role of the activator of an ISLG, in this case on a regional territorial
basis. The role of the Regional Government of Lombardy in supporting
SISCoTEL projects, illustrates the case in which the regulating activity is
exerted not directly on the basis of an authority defined institutionally, but
defined indirectly through the realization of selective policies of incentive.
The way we defined the role of activator (and manager) of the ISLG makes it
generally impossible, to also perform the role of the activator of a cooperation
between local government organizations within the ISLG.
When an external regulation role is exerted, the manager of the ISLG must be
an organization that in the hierarchy of authority defined on the basis of
institutional relations or of conventional and/or contractual agreements,
occupies a higher level with respect to the level occupied by the members of the
system. However, if, as is actually the case in the regulations in force in Italy,
joining an associated management is a voluntary decision, the choice of
partners for the cooperation cannot be imposed by any authority (at most, a
superior authority could decide by law that a service should be managed in an
associated way, without specifying who should be the members of the
associated management). From this point of view, the mechanism for the
activation of the cooperation within an ISLG requires a role different from the
role of the activator of the ISLG itself.
In order to make the distinction clear, we will define “enabler” as the role of
activator/manager of an ISLG, whereas we will define “catalyst” as the role of
activator/manager of an associated management within an ISLG ([1]).
Within virtual enterprises, the activation of a virtual organization is performed by
a management unit that plays an organizational role analogous to that of the
catalyst. Such a management unit activates the virtual organization after
identifying in context a new business opportunity. Obviously, this activation
mechanism cannot take place within an ISLG. In fact, local administrations carry
out a great number of activities whose motivation is not business-based. From
this point of view, the activation of an associated management of services by a
member of the ISLG taking the role of catalyst can rather be put into relation
with two circumstances which can occur.
On the one hand, the activation of an associated management of services can
be motivated by the need for designing, implementing and delivering new
services, or new methods of delivering traditional services, due to changes in
legislation or to the strengthening of the request of quality services in an
economical and social context.
On the other hand, within an ISLG an associated management can also be
started up, temporarily or also occasionally, not in order to implement new
services, but only to keep a service operating on its usual quality level. This can
happen when, as discussed above, in a local government organization the
availability of a resource necessary to maintain the level of the services
supplied temporarily fails. In this case, acting as a catalyst, the organization
which finds itself in trouble can activate, together with other members of the
ISLG a sharing of resources, even in the short term. Since they are all members
of an ISLG, the partners of the cooperation can be easily integrated without
undergoing any phase of mutual adjustment. This is what makes inter-
organizational cooperation possible also i n the short term.

6. Conclusions
Throughout the paper we have introduced the idea of an Integrated System of
Local Government as an organizational and technological platform for inter-
organizational cooperation among SLGOs. In section 5 the concept of ISLG has
been exemplified by referring to the system of SISCoTELs in the Region of
Lombardy. This example is particularly interesting since it points out a general
problem concerning the way E-Government can be supported by means of
policies adopted both at a central and at a local level. The regional
announcement for the funding of SISCoTELs requires the member
organizations to realize both technological and organizational integration.
However, the analysis of the system of SISCoTELs shows that technological
integration has been achieved in most cases, whereas organizational
integration has only been achieved in a few cases. This happens because
organizational innovation generates costs that SLGOs cannot afford, due to
their commonly scarce resources.
A sort of paradox can thus be identified: on the one hand SLGOs should resort
to inter-organizational cooperation in order to remedy the lack of resources; on
the other hand, in order to make cooperation feasible, SLGOs need to invest
resources in the creation of a cooperative environment like the one defining an
ISLG.
The only way out of such a paradox seems to be a different approach towards
the incentive policies for E-Government; much more investments are needed in
organizationa l innovation than those made up to now. Consequently, also the
incentive policies, from the EU to the local level, should be reoriented from the
funding of technological innovation to the funding of organizational innovation.
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