Press-conference of Leonid Reiman on results of session of RF Government of September 11.

Press-conference of RF Minister for communications and informatization Leonid Reiman on results of session of RF Government on September 11 devoted to the use of modern IT in activities of state-power structures.  

Interfax: Today, we have a press-conference with the RF Minister for communications and informatization Leonid Reiman and we will discuss the results of discussion at the today’s session of RF Government the use of modern IT in activities of state-power structures.  

Leonid Reiman: Today, at the government session we considered the question of use of modern IT by the government structures. You know that both President of Russia Vladimir Putin and Prime-minister Mikhail Kasyanov  pay much attention to development of information technologies and their application. However, it seems that this question has been presented and considered in such a way for the first time, therefore, of interest is not only the subject, but also the conclusions and some preliminary results received by us. I’d like to bring home to you some of the moments and abstracts from the report that was made today at the government session, and inform you of some of its benchmarks.

The report was prepared by the Ministry of communications of Russia together with the Ministry of trade and economic development and Russian academy of sciences.  We prepared it by means of sending out the questionnaires, collected information from the ministries and departments, later summarized this information and made some conclusions on the basis of that, which, properly speaking, were presented at the session.  As I have already said, this seems to be the first rather broad research of this question. I’m grateful to all executive power federal structures, my colleagues ministers for the accurate filling of the questionnaires, which has allowed us to collect a good body of information. On the basis of this analysis, the government has adopted today a number of decisions that are aimed at raising the effectiveness of IT use in the government structures.

In the first place, I’d like to mention some of the facts. It is well-know and I think nobody has doubts today in the IT playing a very important role and being a rather important instrument in all areas of human activity, including in the system and aspects of upgrading the state administration.  According to the research data, the search for information and coordination of documents at large institutions requires too much time from the employees, whereas each of the document when processed is copied up to 20 times. In Russia, on all state-power levels, around 400 thousand employees are involved in the information processing, and the time expenses of citizens for interaction with the state institutions are estimated at approximately 3-4 billion of man-hours. It is evident that if we try to reduce this time, for example, by 20%, then on the basis of the existing level of wages, it is possible to save 30 billion rubles a year. 

We compared the expenses for IT from the federal budget in Russia with the same expenses in other countries. The comparison was made in percent of Gross Domestic product, and if, say, these expenses account for approximately 0.19%, this is comparable with such countries as Brazil – 0.2%, India – 0.14%, Poland – 0.13%, i.e., in our group we are placed on a relatively average level (in percent terms), though in absolute figures we, of course, spend rather small money on these questions. At the same time, compared to developed countries, such as the United States and Germany, we are noticeably lagging behind, as the US spends approximately 0.42%, Germany – 0.41%. 

According to the questionnaires that have come from 48 ministries and departments, these data do not include the expenses for national security. Their IT-expenses for the period 2001-03 accounted for 22.8 billion rubles, out of them a little more than 3 billion rubles were spent for the federal target-oriented programs (approximately 14.5%). The rest of the financing us made at the expense of departmental programs’ various items, sometimes at the expense of non-budget funds.  Given such mechanism of financing, every ministry is oriented at their own information demands, develops their own information programs and uses both its own hardware and its own software means.

All this leads to the firmware and databases developed at the ministries rather frequently mismatching each other, and sometimes budget funds are spent several times on one and the same project. The analysis conducted by the Russian Federal service of geodesy and mapping may serve as a good example.  Russia’s geographic surface was digitized by various departments four times, and each time this work was paid from the federal budget. All these (four) resources are maintained and updated on a regular basis.

At that, the funds for informatization are distributed unevenly between the departments.  Thus, approximately 81% of all expenses are taken by 10 federal power structures, in result, the level of expenses for one employee is different at different departments. The average level is approximately 25 thousand rubles for the period 2001-03. At the same time, there are record-beating federal structures, who spend around 1 million rubles, and those who are behindhand – spending nothing at all.

The structure of expenses also reflects the imperfectness of technological strategy.  Over 65% of the funds are spent on the hardware, and only 35% - for the software, though it needs to be said that even 35% seem to be an exaggeration. This dependence that is antithetic to the dependence existing in the world, since in the world, the bulk of the funds is spent as a rule for software product, what I mean is for licensing of the standards product, or for dedicated software that is developed for solution of this or that problem, and less – for hardware means.  

At the government session, Prime-minister Mikhail Kasyanov paid special attention to this problem and had formulated a task that in questions of using licensed software products the government, ministries, federal executive power structures should be, figuratively speaking, the trendsetters and use only licensed products, and we should aim at that, despite all this certainly leading to a boost in expenses for informatization at large.

Not a single one of base-class IS is introduced in all ministries and departments in full amount, and the already introduced systems, as I have already said, rather frequently don’t match and cannot be used without extra-expenses. For example, over 15 various financial accounting systems are currently introduced in the federal power structures, and all these 15 systems match neither with the Treasury, nor with the Ministry of finance, therefore, the information has to be transmitted either in paper form or be somehow transformed.  

There is a number of organization and personnel problems in the informatization area. It is known that the wages are noticeable different in the federal executive power and in commercial structures, and it is rather difficult to attract qualified specialists. Therefore, it often happens that there is small department in the power structures that is formally engaged in the orders matter, and there also exists a computer center or some extra-budget unit working on the basis of extra-budget financing, which, as a matter of fact, performs a good number of works. 

There are some questions related to the state purchases, since, on the one hand, the state is a rather big purchaser and consumer both of the software and the hardware means, who at the same time doesn’t use the purchases mechanism, doesn’t receive large-amount discounts, and rather frequently buys the equipment and software products that also are in mismatch with each other.

The basic conclusions and proposals are – it is necessary to work out and approve a single conception of use of IT in operations of the federal executive-power structures, on the basis of which the department informatization programs will be built, and the interdepartmental projects and measures will be defined as should be subject for implementation, including in the framework of “Electronic Russia”.  

The principal role in this work is certainly given to the State informatization commission and the Interdepartmental commission (IDC), which, as you know, has just started functioning, and it is necessary to change the principles of financing and purchases management.  The report contains a proposal to launch at the federal executive-power structures a service of IT managers (similar to CIO in foreign companies), a well-known in the world function, sometimes even a key one, and stresses the importance of communication between these managers and of launching a certain council that would include managers of all information services of all branches for solution of the adjacent and transitional problems.

On the basis of conception that is planned to be developed this year, it is necessary to work out and formulate final versions of the proposals of modernization of FTOP “Electronic Russia”.  And in result of all this, it is necessary to formulate a single technical strategy and ensure its implementation at the expense of all structures I’ve already mentioned (I mean the State informatization commission and IDC).

In the course of discussion and also for exclusion of just mentioned negative events, it was decided to activate and use more widely the state purchases mechanisms. This will allow to receive a large-scale economizing effect.  Apart from that Prime-minister Mikhail Kasyanov has proposed in the framework of these mechanisms introduction to exclude the use of non-licensed products, of which I’ve already told. 

In result, the government has commissioned MCI together with the interested ministries and departments to present for ratification in December this year of the concept of use of IT in the federal power structures and a final redaction of FTOP “Electronic Russia”.

On the whole, the discussion was rather involved and live, it was emphasized that in several recent years, in particular, in last 2 years of functioning of FTOP “Electronic Russia”, we have achieved good results, and at the same time, there exists a good number of problems that we, probably, now understand better thanks to implementation of measures of FTOP “Electronic Russia”, and on the basis of this we are able to launch the mechanisms of overcoming the obstacles and imbalances that prevent us from effectively introducing and using ITs.   This is what I wanted to say by way of introduction, and now I’m ready to answer your questions.

Question: Which proposals were forwarded at the government session by other ministries and departments?

Leonid Reiman: Though the discussion was rather involved, a lot of people took the floor – Alexander Pochinok, Yaroslav Kuzminov (Higher school of economics), the proposals we received were basically the ones I have already mentioned. In my introductory speech I told not only about the proposals we made before the government session, but I have somewhat generalized the related discussion. It seems that the only thing I have not mentioned in my introductory speech is that all of you agreed with the necessity to activate the aspect of training and retraining of users. In actual fact, a qualified user is a rather big problem.  This question was raised additionally. And one more aspect that was discussed at the government session and hasn’t been mentioned by me, that together with the Finance ministry it was proposed to introduce the “Informatization” item from which to finance all the expenses: for launching, development, purchases and maintenance of the federal executive-power information systems in order to have a more clear idea of the volumes and directions of the expenses made for information technologies.

Question: Will such an item be introduced from the start of next year? 

Leonid Reiman: I think it will be difficult to begin in 2004, though Alexey Kudrin has supported this idea in general, but if we take into account that the budget is already in the State Duma, this is a far from simple question, and I think, we’ll begin to work with the Finance ministry, in any case, since 2005. 

Question: How do you estimate the expenses for IT now and in the future? How would you comment on the situation in Megaphone and a possible merger of Megaphone and Vympelcom?  

Leonid Reiman: This is not very easy to answer this question, as this is a question of priority tasks set before itself by the government. As of today, as I have already said, 0.19% is an average figure for a number of countries. It is evident that in relation to the administrative reform, and IT are a rather effective mechanism in conducting the administrative reform, it would be reasonable to increase this figure. There’s no need, it seems, to make it reach the American indicator (0.42%), but, nevertheless, some increase of it would reflect a certain attention, certain importance of IT introduction. certain emphasis o the part of the government. Therefore, we, of course, will propose to increase this figure, the share of financing of these technologies, but this is a rather complicated problem pertaining to the budget balancing. As for the second question, which does not fully correspond to this press-conference agenda, I think that all stockholders of one company and all stockholders of another company reveal their interest in the merger, I see no reasons why not do this. In its own time, Svyazinvest had enlargements (in the year before last, in last year), and when the stockholders voted at the assembly (95-97% of votes), the mergers took place and the coefficients were recalculated. This is mainly a question of the stockholders’ will. 

Question: You said that information resources will be somehow carried to a common denominator both in the software and in the hardware terms. Who will be preferred, what companies? Who with is the government ready to work in this field?

Leonid Reiman: This is a rather simple question, as there exists a system of state purchases, rules of giving preferences, tenders and contests. I think none of specific companies will be preferred, tenders will be announced for specific firmware complexes and purchases, and the winners will be those who will offer the best price-quality correlation. In this sense, we can boast a considerable experience gained in “Electronic Russia”, both positive and negative, I must admit, therefore, I hope that this two-year experience will allow us in the future to organize very effective tenders.

Question: There are some reports that the state will not sell Svyazinvest shares this year? What is the current situation?

Leonid Reiman: It is difficult for me to comment on the rumors that appear from time to time. As of today, as you know, the privatization program for 2003 includes selling of Svyazinvest package 25 minus 2 (shares).  As far as I know, no changes have been introduced into this plan, as of today. If such wish be, we may discuss this question later on, but the current situation is like that.

Question: Doesn’t it seem to you that the appearance of two operators in the cellular communications market may create a sort of trust agreement between this market participants, which is not very good both for competition and this communication consumers?

Leonid Reiman: The question of merger, as I have already said, is a question of stockholders’ wish – if they wish to merge, let them. The question of competition s more complicated. I believe that in today’s Russian market two mobile communication operators are not enough. It seems to me that the success we have recently witnessed in development of mobile communication market can be largely explained by the correctly organized competition between three companies. You now that today the growth process (last and this year) of the number of mobile subscribers was very active, and this is good, the more so that no it has shifted to the regions.  It was thanks to competition that we had a cut-down on tariffs and a growth in the number of clients, and in this we see our basic challenge, it is important for us to have the maximum possible number of good hgh-quality and cheap telephone lines.   Therefore, in analyzing Russian and the world experience, I think that in GSM technology of today, the optimal number of operators is three.  The experiments in Germany when they introduced the fourth operator showed that four operators in general do not survive in the market.  Two strong and two weak operators are formed, and the latter aimed at incorporation. Technology strongly influences the competition aspects, therefore if two companies merge, it seems it will be possible to think about introducing the third. I believe that MAP not only can, but must express its attitude on this question, since it touches upon the interests of 35 million Russians, since mobile communication, which used to be elite, now is a widely-spread everyday communication.    Mobile telephone is not a luxury, but a means of communication.

Question: At a yesterday’s press-conference, one of your colleagues in presidium said that 5 times less finance was allocated for “electronic Russia” than it had been planned. Do you support this estimation, and what’s your opinion of a possible appearance of a trend towards increase – not 20% of the passport figure, but somewhat more?

Leonid Reiman: Regrettably, I have to agree with this estimation, as we are analyzing it together in a certain sense. The trend, I should say, is positive, as in the first year around 14% of the planned funds were in fact allocated, in the second year – around 20%, i.e., on the one hand, the trend is positive, on the other, the event is exceptionally negative in itself, as, of course, we are trying in this way or other to compensate for the lack of financing by means of attracting extra-budget funds, more active attraction of the regional funds for these operations. And on the whole, some things are being solved, but nevertheless a 5-fold lagging behind the key parameters of the program at the moment of its adoption quite naturally affects the results, and hence we have certain deviations from the expectations we had at the program adoption.

Question: Which departments have reached success in solution of informatization problems, in particular, launching of a system of situation centers?

Leonid Reiman: I believe that one of the most success departments is the Ministry of taxes and dues, since only they have introduced the e-documents turnover in a more or less full amount and EDS, and if we recollect the declarations campaign of this year, they have adopted declarations in electronic form, i.e., not only created an internal IS, complex, but made it open for the citizens, i.e., made the interface, and this is a rather positive event. It is clear that a lot of shortcomings exist, and they have to work much, but they themselves know that and say that the more they work, the more they understand how all this should be arranged.  I believe that theirs is the most developed system. At the same time, a number of other departments exist, for example, the Ministry of natural resources has launched rather decent situation centers. But it cannot be called a universal system as in MTD. However, this is an effectively functioning system, may be even better than in MNR, it is difficult to compare. Good system was created at the State Customs Committee. Those who visited Infocom-2003 exhibition must have seen the SCC stand and the system presented there that allows for the customs declaration of cargo.  I’d like to emphasize that this system great merit is that it matches the complexes of MTD, MIA, the frontier guards, i.e., they have tackled the problem, and this is a big plus.  They are the leaders.

Question: What can you say on the question of creation of digital maps?

Leonid Reiman: If, for example, you take Moscow, quite a umber of departments need a digital map.  These are the departments engaged in city economics, these are the departments engaged in various sort underground communications. And each of the departments is engaged in its own digitization, creating a digital map, though in actual fact it would be quite enough if this map is created by a single department, who later on ensures its circulation or access to this digital map of other departments.  But since every department uses its own methods, its own software and sometimes its own companies doing this work, the departments rather often are not interested in doing the dubbing works or providing access to others. This is a negative trend. In no case I wish to offend Moscow and Yuri Mikhajlovich (Luzhkov), as in this sense he has a better situation compared to others, I’ve cited Moscow just as an example, since we are located in Moscow.

Question: There is a paragraph in the report saying that in the next few years to come we expect a boost in significance of the external financing sources in connection with a planned allocation on 4 credit lines of IBRD of over 19 billion dollars for IT introduction.  When will these credits be attracted and on which terms?

Leonid Reiman: This is true. It is rather difficult to answer this question, and on the other hand, rather simple – open “Foreign borrowings” in the budget, it contains all the terms. For example, the same Ministry of taxes and dues launches its system at the expense of EBRD credit. They had it last but one year, they had it last year, they have it this year, all in accordance with the budget. Therefore, the report contained some generalization and some aggregate figure.