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

considerable strategic importance to Danish e-government, due to the large role local government
plays in government service delivery.
Although recent changes to the governance of KMD have helped clarify its standing in relation to
supply of ICT to municipalities, by all accounts it remains so dominant a player that is has a virtual
monopoly position in many product or service areas.
Many of the systems that KMD provides to municipalities can be described as “legacy” systems
that many Danish commentators feel impose a fundamental limit on the ability of municipalities to
fully embrace and deliver e-government. A wide range of often contradictory and polarised views
were expressed, including:
• KMD uses its position of market dominance to lock municipalities into use of outdated,
expensive, and non-interoperable (in terms of their alignment with the Danish enterprise
architecture) information systems. It is also seen to be unresponsive to customer demands, due
to the fact that it faces little or no competition in many areas.
• Municipalities’ heavy reliance on KMD has led them to under-invest in developing the
knowledge and skills necessary for effective and independent participation in e-government.
• The existence of KMD is a vital element of successful implementation of the Structural
Reform, as it will both provide for continuity of municipal operations while mergers take
place, and support changed administrative functions through various “Structural Reform
Packages” that many municipalities will rely upon as the basis of their ICT environment
during and beyond the reform process.
• Widespread reliance on KMD allows for more cost-effective development of municipal ICT
systems and applications, especially due to economies of scale. It also allows for more
consistent levels of front- and back-office service provision, which supports better
user-outcomes.
• KMD distorts the structure of the municipal ICT market, which reduces competition, lowers
quality, and inhibits innovation. This situation is said to be contrary to general Danish
competition policy, and also to the Government’s plans to make the ICT industry as
competitive as possible.
The bias of comment was heavily towards the negative, although commentators consistently
noted that the effect KMD has on municipal e-government is complex. On one hand, they cited the
usual downside effects of monopoly while, on the other, acknowledging benefits such as the fact that
KMD has provided the necessary ICT capacity to allow for relatively uniform implementation of
many different municipal e-government systems, applications and services. There was widespread
criticism of KMD’s ability to deliver solutions that were compatible with the common e-government
frameworks being developed in Denmark, although it is important to acknowledge that this type of
problem can arise not only from issues of market structure, but also from the simple fact of
technological evolution. There was also significant criticism of KMD focused on the obstacles it is
seen to present to adoption of open-source software in government, which independent reports have
said could save the Government several billion DKK per year.
KMD seems to be responding to these criticisms. It remains to be seen how these moves will
impact the big question of how the present structure of the market for supply of ICT to municipalities
is affecting development of e-government and/or the competitiveness of the ICT industry in Denmark.
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