This document presents a framework for devolution in virtual enterprises based on the Soufflé Theory of decentralization. It applies this framework to analyze devolution in e-government by assessing the political, fiscal, and administrative maturity of three local governments (A, B, C) to determine the appropriate level of decentralized powers and responsibilities for effective e-service delivery. The degree of devolution in e-governance is found to be directly proportional to devolution across political, financial, and administrative factors.

1. M Kashif Farooq
Lahore University of Management Sciences (LUMS),
Pakistan
Supervised by
Dr. Shafay Shamail, Dr. M Awais
Presented at
PRO-VE'08
9th IFIP Working Conference on Virtual Enterprises
Poznan, POLAND. 8 - 10 September 2008

2. Springer published this paper as a book
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3. Objective
This paper presents
a framework of devolution
for a Virtual Enterprise (like e-government)
Working as Collaborative Network

4. Issues
 Centralized Virtual Enterprise
 Decentralized Virtual Enterprise
 Devolution
 Top-down
 Political, administrative, fiscal

5. 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.

6. 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

7. 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.

8. The Souf flé Theor y of Decentralization
Development
Decentralization Choices System Outcomes System Results
Impact
Political  Political Accountability
 Civil Liberties
 Political Transparency
 Political Rights
 Political
 Democratic Pluralistic  Soft/hard Budget  Increased
Representation
System Constraint Incomes
Fiscal & Financial  Resource Mobilization  Moral Hazard  Increased
 Fiscal Resources  Resource Allocation Productivity
 Macroeconomic
 Fiscal Autonomy Instability  Increased
 Fiscal Capacity
Literacy
 Fiscal Decision-making  Responsive Services
 Subnational
 Decreased
 Subnational Borrowing Indebtedness  Effective Services
Mortality
Administrative  Efficient Services
 Administrative  Growth of Civil
 Administrative Structures Capacity  Sustainable Services Society etc.
and Systems
 Admin. Accountability
 Participation
 Admin. Transparency

9. Proposed Framework: (1)
Devolution in Virtual Enterprise
Based on
Soufflé Theory of Decentralization

10. 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

11. Proposed Framework (3)
Extension of Soufflé Theory of Decentralization for
Devolution in e-Governance
Decentralization System Development
System Results
Choices Outcomes Impact
e-Governance
 Shadow Enterprise  Localization
Architectures  Affordable and
 Bridging the
 Business Process Re- Secure e-  Informative
Digital Divide
engineering Services Society
 Capacity
 Change Management  Innovative  Cyber State
Building
Services
 Development  Access for all
 Cyber Laws
 Operations

12. Proposed Framework (4)
Virtual Enterprise
 E-Government is most famous social
virtual enterprise.
 So, we applied devolution in virtual
enterprise concept on e-government.

13. 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?

14. Proposed Framework (6)
Devolved powers
of local
government 1 e-Service delivery
Local government 1
Devolved powers
of local
government 2 e-Service delivery
Devolved powers Local government 2
of local
government n e-Service delivery
Local government n
Figure 1 – Vertical Portal Having Devolved Powers

15. 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)

16. 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.

17. a real scenario: Issues
11 Local governments and 11 departments launched their
independent websites (deviation from centralized effort)
Portal partners wanted
4. their own graphic design to represent their specific
cultural, geographic and professional themes,
5. multi language interface,
6. local news highlights,
7. independent URLs,
8. innovative ideas,
9. more administrative authority than just content updating
and
10. more dynamic pages, database access and interactivity

18. 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

19. The impor tance level of
decentralized choices for
political, financial and
administrative devolved powers
Devolution
EA BPR CM Cyber Laws Development Operations
Powers
Political High High Medium Medium Low Low
Financial High High Medium Medium Medium Low
Administrative High High High Medium Medium Medium
EA: Enterprise Architecture
CM: Change Management

20. Implementation
 We considered three local governments.
 We assess the political, Fiscal and Administrative maturity in
the governance of selected local governments
Local
Political Fiscal Administrative
Govt.
A High High High
B Medium Medium High
C Medium Medium Medium

21. Devolved Powers
Powers to be devolved as per political, fiscal and administrative
maturity of considered local government
Local
Powers to be devolved
Govt.
A All
B CM, Cyber Laws, Development and Operations
C Cyber Laws, Development and Operations

22. 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

23. 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.