EVEN IN THE MIDST of dot-com carnage, traditional institutions continue a cautious creep onto the Web. Chances are, your state government has already started doing serious business online, and the U.S. federal government certainly has.

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"Initially governments saw the Web as a way to generate political capital, allowing people to pay parking tickets online, for example. But now they are looking at much more substantial projects," says Jeremy Sharrard, associate analyst at Forrester Research, in Cambridge, Mass.

A few years ago, the California Board of Equalization began plans to build a Web site that businesses could use when filing sales taxes. But when Y2K got in the way, the Sacramento, Calif.-based board teamed up with Nationtax Online, a Birmingham, Ala., company specializing in online business tax filing systems, says John Hamlin, e-filing technical project manager at the board. Nationtax created the Web interface, but Hamlin and his team had plenty to do before the site --which serves approximately 700,000 taxpayers --went live in January.

Governments are stereotyped as the last place to look for technical innovation, but Sharrard says the Internet gives them a chance to be perceived differently; California's Board took the innovative step of adopting an XML database. Hamlin says the board uses Software AG's Tamino, "a native XML database so that storage is efficient and we don't have to deal with all the issues of translating XML into a relational format. ... Electronic filing for our taxpayers naturally led us to XML," Hamlin adds. "It was clearly the best way to handle data and tax forms over the Internet."

Embracing e-government can require some fancy technological footwork, because products built for e-business often need alterations to meet the government's more unique business requirements. John Adler, procurement administrator for the State of Arizona, in Phoenix, encountered this last spring when he began moving on a project he had been thinking about for more than two years.

"We wanted to build an automated Web-based system that could handle the processes associated with most state contracts," says Adler. However, Adler discovered that many off-the-shelf procurement systems were geared toward commodity purchases for the manufacturing industry.

"Like most governments, we are turning more to outsourcing things that are not part of our core competency," Adler explains. "This means the contracts we negotiate can be very complex -- these aren't commodity purchases."

Adler found the help to design and build a new system in Apex Software, a Phoenix-based consulting firm.

"[The system] automates the procurement process from the RFP [request for proposal] phase to the negotiation of a contract," says Adler, who adds that most of the technology is now in place, with a launch planned for December. "It is all based on open standards, and the system itself is open, so that anyone can see a contract that we award."

Adler notes that this openness on the Web helps make the process of doing business with the government transparent to the public and to vendors.

The federal government is also embracing e-government, especially when it comes to gathering payments. A lot of Uncle Sam's money comes from sources other than income tax: fees, fines, sales, loan payments, and tariffs to name a few.

These collections flow through one office, the financial management services department of the U.S. Treasury. To streamline the process, Gary Grippo, the department's chief architect of electronic commerce, is readying Pay.gov, an Internet collection site for all non-IRS sources of income.

"We tested the prototype in September; the Bureau of Alcohol, Tobacco, and Firearms used it to collect excise taxes from a tobacco company," Grippo says. "Pay.gov will process collections along with the standard government forms that must accompany most payments and deliver the forms and associated data to the agencies receiving payment."

Federal agencies are not required to use the system, built with Java 2 Enterprise Edition (J2EE) standards, but if things go well, Grippo anticipates Pay.gov will bring in nearly $125 billion in two years to three years. "Agencies can build their own portals on top of Pay.gov," he explains. "We can provide fast forms processing and easy reporting, while they get to keep their own Web presence with specialized functions."

"[Pay.gov] is a prime example of governments taking a more function-based approach to providing e-services for constituents, businesses, and citizens," says Forrester's Sharrard. "Most of what I see so far is not about governments amassing data on citizens; it is, rather, governments making more information available to citizens, and this is where I think the real impact [of e-government] will be."