By 2010, the European Union aims to be the most competitive and dynamic knowledge-based economy in the world.

After the expansion of the EU in May the 10 new states, with a total population of 75 million, will need to improve the way they interact, communicate and serve their citizens to contribute to this goal. It's a huge challenge that is at the heart of the debate on European integration.

Franz-Reinhard Habbel, a member of the German Association of Towns and Municipalities, believes that more people and companies are coming closer together, resulting in international divisions of labour.

"The exchange of goods between European countries will increase, and companies will reorganise production facilities," he predicted.

"In the course of this development, open and worldwide communication standards, legal framework conditions and e-government services will gain even greater significance in the years ahead."

Many of the new EU countries are making good use of the transformation process for technological innovation and organisational reform.

"In many areas, the new member states are leapfrogging structures that are decades old, reforming their administrations from the bottom up and adapting faster to new challenges posed by the international economy," said Habbel.

"These states are also using young, internationally trained personnel at their ministries and in administrations. New public sector employees are in some cases highly educated and competent.

"With their international language competence, they can make swifter use of technological and organisational know-how that is increasingly dominated by the English language."

The decentralisation of administration in the former Eastern Bloc necessitates networked information and communication systems. The new members have no problems with legacy mainframe systems. Internet and web services are aiding greater efficiency of administrative activity.

Driven by the EU's deregulation policy, the new states are organising their administration to be more transparent and service-oriented, with a stronger element of public-private partnerships (PPPs).

In the Czech Republic, for example, every kindergarten has to carry out cost accounting. This task is entrusted to a PPP. According to Habbel this was the only way to reach the target at short notice, because local authorities have neither the personnel nor the funds to carry out such tasks.

Piero Corsini, public sector European vice president at IBM, cited three key challenges that need to be addressed in government: reshaping citizen and business services; managing organisational effectiveness; and securing financial performance.

"This needs process transformation, resulting in cross-agency and cross-governmental processes, an integrated, open, autonomic and virtualised IT infrastructure, and above all cultural change within the organisations," said Corsini.

Edwin Lau, project leader on e-government at the Organisation for Economic Co-operation and Development (OECD), maintained that it is imperative for online services to transform the structures, processes and culture of public administration.

According to Lau, OECD countries are beginning to understand that services should be organised according to customer needs, and not the internal workings of government.

"Seamless online service delivery aims to provide users with a coherent and integrated package of government information and services," he said.

"Such services can provide more value to customers than separate services. Seamless services improve the business environment through the creation of one-stop services and administrative simplification, thereby reducing the cost of doing business.

"From the customer's point of view, government should appear as one organisation; from the government agencies' point of view, the customer should appear as a single customer."

Government organisations dealing with information society and e-government need to restructure, clearly separating concerns and responsibilities, according to Gartner analyst Andrea Di Maio.

States need to appoint a "whole-of-government" chief information officer and as many domain CIOs as necessary. It is one area where the UK is taking the lead, said Di Maio.