OECD Peer Review of E-Government in Denmark - ePractice.eu

• Changing conditions in the public sector ICT market, where an increasing number of large
vendors are moving towards adoption of open standards, in parallel with the move to base
e-government on the Danish enterprise architecture and interoperability standards.
• Recognition that the situation where a publicly owned “IT society” had a virtual monopoly
on delivering many ICT systems and services to municipalities was unsustainable,
particularly in the face of moves (including e-government) to make the Danish ICT market
more competitive.
An important aspect of the change in ownership arrangements was the desire to move KMD away
from the real or perceived status of being a quasi or de facto authority in relation to municipal ICT
(the risk arising from its dominant market share, and unclear status and relationship with the KL
board) towards being a pure ICT supplier and service provider to municipalities and other
organisations (KMD provides systems and services to both municipalities and the private sector). As
noted in Chapter 4, governance arrangements around KMD are a potentially complicating factor for
e-government, due to potential, but apparently unrealised, conflicts of interest this creates for KL in its
dual roles as member of the Joint Board of e-Government and owner of KMD on behalf of
municipalities.
New governance arrangements have led to changes in KMD’s presence in the municipal
government ICT market. Although the changes are more of appearance than substance, people
interviewed for this review generally felt that they have helped clarify and delimit the respective roles
of KL and KMD in relation to e-government at the municipal level. Other benefits are expected to
accrue to municipalities as a result of the fact that KMD now faces a more competitive market; KMD
will likely become more responsive to customer demand for more open standards-based products, and
become freer to enter into business relationships with other ICT vendors. Although the changes to
governance of KMD have helped clarify its standing in relation to supply of ICT to municipalities,
they have seemingly had little impact on its share of the municipal government market for outsourced
ICT where, while no market share data is available, by all accounts it remains so dominant a player
that is has a virtual monopoly position in many product or service areas.
The ICT solutions provided by KMD can be described as “full suite” services, ranging from
application development to hosted operations. Some idea of the scale of KMD’s public and private
sector operations can be obtained from KMD’s own publications. For example, KMD develops and
maintains the electronic infrastructure of approximately 90,000 PC users, is involved in providing
payroll systems covering some 900,000 public sector employees, and provides Web hosting services
for several hundred private customers. KMD also provides the netborger.dk portal – a central part of
the municipal e-government infrastructure.
Again by its own account, KMD’s stated mission is to enhance the efficiency of the public sector
and improve the service it delivers. KMD’s long-term vision is to be the ICT business that takes the
lead in making Danes the foremost digital citizens in the world. Its business model is to create
products rather than run projects and, where possible, to do so using a “cookie cutter” development
approach that looks for multiple possibilities to sell the applications in develops.
While many systems KMD provides to municipalities can be described as “legacy” 1 systems that
many Danish commentators feel impose a fundamental limit on the ability of municipalities to fully
1. The Free On-Line Dictionary of Computing (FOLDOC) defines legacy systems as “A computer system or application program
which continues to be used because of the prohibitive cost of replacing or redesigning it and despite its poor competitiveness and
compatibility with modern equivalents. The implication is that the system is large, monolithic and difficult to modify.”
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