Big Blue Picks an E-Gov Portal Partner
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IBM and ezgov.com team up as the virtual-government business consolidates
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Consolidation continues apace in the burgeoning business of putting government services online. On June 1, IBM and ezgov.com will announce a partnership to market portals that let taxpayers do business with state and local governments online instead of in line.
Atlanta-based ezgov.com lets citizens renew business and driver's licenses, pay parking tickets, and obtain building permits via its Web site or city and state government sites. Teaming up with IBM will give the upstart company access to the computer giant's salesforce and systems integration expertise. IBM, a global leader in government sales, gets a foot in the door of a new business segment: free Web portals that generate revenues from transaction fees charged to governments or citizens.
BURNING CAPITAL. The IBM-ezgov partnership follows similar tie-ups by others in the "virtual government" business. Earlier this year, National Information Consortium Inc., an Overland Park (Kan.) provider of Internet services to states, acquired SDR Technologies of Westlake Village, Calif., a leading online processor of campaign contributions. And two-year-old govWorks.com, a New York City Web portal developer, has formed a marketing alliance with systems integrator American Management Systems Inc. and business-to-business e-commerce players Ariba Inc. and FreeMarkets Inc.
What's driving consolidation in a market that's just starting to sizzle? The newcomers, though nimble, are burning capital at a brisk clip and need deeper pockets. "There's enormous pressure for these companies to establish a brand early on so their capital requirements are tremendous," says Thomas M. Meagher, vice-president for equity research at BB&T Capital Markets. Look for more e-gov companies to pair off in the months ahead. "This will get down to a handful of players quickly," predicts Meagher.
Borrus covers government from Business Week's Washington bureau
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