PPPs in Practice Key Success Factors

1. PPPs in PracticeKey Success Factors ICT Sector Week Chris Neff Vice President of Marketing March 28, 2011 www.nicusa.com

2. Overview • NIC’s PPP approach • Solutions provided • Business models • Governance & organization structures • Risk management • Supporting PPP growth 2

3. NIC’s PPP Approach • About NIC • Manage eGovernment services in 24 states • Serve +3,000 federal, state & local government agencies • 19 years of delivery through flexible PPP models • Pilot-to-enterprise • Start small & grow • Expand through voluntary success vs. mandates • Key fundamentals • Government retains all controls – process, data, financial management • Self-sustaining model supported by transaction fees • Reinvestment focus • Partnership – all sides need to benefit 3

4. PPP Partners 4

5. Scope of Solutions • G2C / G2B / G2G • Official government websites • Digital government services • Secure payment processing • Emphasis on self-service solutions • Constituent-facing services • Adding value to existing solutions & adding new ones • Generating wins for government partners • +7,500 installed services • Aligned by vertical / agency • Mobile • Point-of-purchase 5

6. Scope of Solutions • Technology and process neutral • Interface with hundreds of legacy backend systems • Align with existing processes • Focus on creating efficiencies and updating processes as a result of streamlined operations • End-to-end life cycle • Hosting & infrastructure • Application development • Marketing & promotion • Customer service • Security • Billing & payment processing • Enhancements & upgrades 6

7. Business Model • Self-sustaining model (“self-funded”) • Used by the federal government, 24 states, and several hundred cities & counties • Modest per-transaction fees applied to a select number of services • Emphasis on business-facing services and commercially valuable datasets • High volume business services create core revenue stream to support enterprise services • Vast majority of services (+80%) are offered to constituents at no cost 7 7 7

8. Business Model • Self-sustaining model (“self-funded”) • Key services that support self-sustaining eGovernment: • - corporations filings - professional licensing • - trucking/transportation - court case filings • - vehicle titles & plates - driver history records • - payment processing • Industries value fast access to government and digital adoption does not suffer • Fees set by government based on market research • $0.50 - $3.00 typical range • All agencies benefit – eliminates the have/have not problem 8 8 8

9. Business Model • Self-sustaining model (“self-funded”) • Zero cost solution for government • Supports long-term growth by eliminating reliance on the appropriations process • Minimal risk when partnering with an experienced private sector provider • Best practices for decentralized organizations: • Focus on key industry verticals • Remember that a small fee applied to a high volume transaction is far better than the reverse • Fixed Cost • Time & Materials • Hybrid 9 9 9

10. Governance & Organization Structures • Range of governance models to oversee PPPs • Governing board • Public sector / key agency participation • Some states include private sector representation from key industries • Direct report to agency – usually IT or budget / administration office • Direct report to individual – usually CIO or appointed agency leader • Key success factors: • Buy-in from the highest possible levels • Governance empowered to make decisions • Voluntary agency participation vs. mandates • Some states have one person whose part-time role is eGovernment oversight 10

11. Contracts & Operations • Contracting basics • Umbrella / enterprise contract outlines deliverables • Based on voluntary agency participation (defined by separate service level agreements for individual projects) • Flexible design for all agencies (including locals) • Key elements customized to each government: flow of funds, reporting requirements, legal specifics • Operating structure • Local subsidiaries established in each market • 100% dedicated to single government’s operations • Cloud-based solutions provide enterprise support (payment processing, hosting, CMS) • Emphasis on local hiring to support economic development 11

12. Risk Management • Insurance & indemnity standard – specifics customized to each government • Financial components also customized • IP held in escrow and available to government after breakeven is reached (usually 1-2 years) • Rigid security protocols • Sarbanes-Oxley and PCI DSS compliant operations • Third party validation (Verizon Business Security Management Program) includes annual on-site assessments 12

13. Supporting PPP Growth • Build awareness of alternative approaches • Procurement training is essential • Benchmark successful engagements • Pilot project-driven protocol • Provide long-term support during engagements • Take the time to understand the challenges & opportunities • Get broad internal buy-in and executive-level support before issuing a tender • Recognize that PPPs are evolutionary and being first is not easy 13

14. Chris Neff • Vice President of Marketing • chris@nicusa.com • 435-655-3614 14