US movie-goers have been discussing Startup.com, the latest offering from docu mentary film makers Jehane Noujaim and Chris Hegedus. The film tracks the story of GovWorks - a company that helped citizens to make government transactions online.

Cameras follow the founders as the $60m they raised is burnt away and workers are laid off. But what the film does not explain is that the software developed by GovWorks is still used in cities such as Boston, Memphis and New York.

GovWorks was acquired by eOne, part of First Data Corporation, an Atlanta-based payment services company. But the fact that this failed dotcom found a ready buyer is hardly surprising.

IT suppliers are pricking up their ears as the world's governments busy themselves with what is possibly their most ambitious project yet - e-government, whereby technology will enable departments to communicate with each other (G2G) and with the business community (G2B), and citizens will be able to access public services (G2C).

But while e-government really refers to electronic transactions, not just to online services, it is the internet's open standards that are driving the public sector towards the sort of transformation experienced by the private sector over the past ten years.

Changes in the private sector - bringing improved delivery of products and services - are providing part of the pressure for government to step up its own levels of service. If people can bank and shop online, they may want to pay taxes, register a marriage or apply for a parking permit in the same way.

Many governments have responded to this demand. The UK government, for example, wants to get 100 per cent of its services online by 2005. In the US, President George W. Bush has earmarked $100m to help citizens communicate with the government via the internet. And 75 per cent of Australians now file their income tax returns over the internet, according to Douglas Holmes, whose book eGOV: e-business Strategies for Government* is published this month.

Technology enabling these transactions is readily available. The internet can connect everyone and eliminate the need to produce software for individual departments, while systems facilitating e-procurement, payment and knowledge management can be bought off the shelf.

As the world's governments turn to technology to help transform what they do, suppliers of equipment and services are keen to sign up what could be their best customer yet: national governments - usually the biggest organisations in their countries, employing millions of people and spending vast sums of money.

But what is becoming clear is that the process of putting public services online is about much more than IT. It demands fundamental changes in the public sector's traditional structures and practices and in the relationship between the state and its citizens.

"Successful e-government is, at most, 20 per cent about technology, and 80 per cent about people and organisations," says Kito de Boer, director of McKinsey in Dubai. "It is a mechanism that turns governments on their heads, from being producer-led, ministerially confined, departmentally-blinkered institutions to being customer-oriented service providers."

Take online one-stop-shops. If the state wants to offer entrepreneurs an easy way of starting a business, it can create a website where, instead of running round to different departments to pay your taxes and get the necessary licences and permits, you can simply click on a button marked "my business".

But behind the visual simplicity of this device is a web of organisational complexity requiring the different departments involved to co-ordinate their efforts - something agencies and ministries have rarely done until recently.

Another potential stumbling block is the relationship be

* Nicholas Brealey Publishing www.nbrealey-books.com; price, £19.99/$29.95