Digital government teaching case study

Figure 2 Tourism overnight stay tax collection in Lower Austria (Bernhard Gerhardter, WST3,  2022) (based on [11]) 

Problem statement and potential pathways to the solution 

In 2021, the Department of Business, Sport and Tourism (WST3 [12] was invited by the nearby  University of Continuing Education Krems to participate in an EU-funded project on digital co-creation [13]. As several Austrian federal governments have begun to modernize and digitalize the process of collecting their Overnight Stay Tax, the WST3  Department carefully considered (1) whether to digitalize the tax in Lower  Austria, and (2) whether co-creation with internal and external stakeholders could lead to a valuable outcome.  

The WST3 Department had previous experience involving employees of the Federal Government of Lower Austria in the design of public services and processes [14], but not with external stakeholders. As this was the first time co-creation with external stakeholders would be implemented, the head of the Department WST3 was keen to ensure it would be a success. 

Perspectives and considerations of the public manager and stakeholders 

The head of WST3 was keen to be involved in a research project that included universities and other partners. The project would allow the department to learn about new processes, implement new ideas, and be involved with stakeholders in the community[15]. However, as the head of a department, she wanted to ensure that the expected outcomes would be achieved and to show other departments in the Federal Government of Lower Austria the value of using co-creation with external stakeholders. She considered the following issues: 

What are the benefits of using co-creation? 

Co-creation has the potential to create value for all stakeholders while producing tangible results like simplified administrative processes, reduced human resources, and other meaningful outcomes.  

First, the Overnight Stay Tax is particularly relevant for tourism destinations such as Lower Austria who welcome a high number of tourists [11]. Second, the Austrian E-government law [16] allows service users to choose between submitting data and payments digitally or by paper-based form. This means that the Lower Austrian Federal Government cannot choose to provide a digital version of the Overnight Tax Stay.

Second, as shown in Figure 1 above, in its current format, the tax requires human intervention at each step of the process and is prone to errors. Some external stakeholders, such as larger hotels and local councils, expected a paperless solution would improve the service and reduce their workload. “It would be practical if I could send my statistics always at the push of a button, from there to the next authority or municipality. Without a printout, without filling out anything and sending it away,” shared one stakeholder [17]. However, other stakeholders, such as smaller B&Bs, had no internet connection and relied on paper forms and cash payments to the local council. These competing needs were a perfect case for the use of co-creation, with both stakeholder groups able to give their input into the transformation of the service. 

Who are the stakeholders? 

In the public sector context, internal stakeholders are usually the public servants designing and delivering the public service, while external stakeholders are usually the users of that service [9]. The WST3 Department made substantial efforts to identify relevant stakeholders for the redesign of the Overnight Stay Tax. Since it was not possible to involve all accommodation providers in Lower Austria, representatives such as the relevant Chamber of Commerce members were invited to participate.  

The internal stakeholders from the Federal Government of Lower Austria were identified as employees of the WST3, the Department of Finance and the Department of IT. External stakeholders included relevant businesses (small and large hotels, B&Bs, agritourism, and other types of accommodation providers), business representatives (hotel associations,  chambers of commerce), local councils in Lower Austria, and the University of Continuing  Education Krems.

It was also  important to consider when the stakeholders were available to be involved in the co-creation process. As the Overnight Stay Tax is situated within the tourism industry, external stakeholders such as accommodation providers could only participate outside of the tourism season, while internal stakeholders such as the IT Department were very busy, and their involvement needed to be scheduled carefully in advance. 

How is co-creation with external stakeholders implemented? 

One of the greatest challenges the head of the WTS3 department faced was that not all stakeholders were familiar with the concept of co-creation and, in German, there is no direct translation of the word. The German word for participation, “Beteiligung,” is used to describe several activities, including citizen participation (Bürgerbeteiligung) as well as co-creation. This means that, when implementing a co-creation process, the public manager has to consider stakeholders’ understanding of co-creation. 

For the Overnight Stay Tax co-creation project, all participants were asked if they knew what co-creation was, had experience with it, and if so, whether their experience had been positive or negative. Since it can take a while for a co-creation project to achieve its envisaged outcome, participants were asked if they understood the different phases and iterative aspects of co-creation, as well as when they expected an outcome. They were also asked about their expectations and opinions on the possible challenges of co-creation[17].  

Based on these questions, differences between the stakeholders were noted. Internal stakeholders (employees of the Office of the Lower Austrian  Federal Government) were more familiar with co-creation and described it as “joint generation,”  “to create something together in a collaborative process,” and “bringing people from a wide variety of specialist fields together in one format to be able to meet challenges that are becoming more and more complex” [17]. They regarded co-creation as an important aspect of public sector transparency that provided an opportunity to address different matters and solve problems. 

Most of the external stakeholders, in particular the businesses (hotel owners), were not familiar with the term “co-creation.” Business respondents believed their involvement to be particularly relevant at the beginning of the process, in order to agree on the goals of the project, and also  saw their participation before, during and after the implementation of a public service as a useful way of providing feedback (e.g., via events, consultations or surveys). 

Business representatives (e.g., chambers of commerce) stated that they believed co-creation was about bringing together several organizations, universities, and institutions for collaborations and projects, although a better term for “co-creation” could be “collaboration” or “customer journeys” [17]. In their view, co-creation was particularly useful for the qualitative development of their (tourism) domain. However, they noted that their involvement in the design of public services is usually limited, as it tends to be a closed and internal process within public administrations.  

Another group of external stakeholders was the local councils. Participants from the local councils, particularly small ones where employees were responsible for multiple services, were unable to define co-creation, had limited experiences with it, and were skeptical of the co-creation process. The smaller local councils pointed out that they do not have the human resources to participate in co-creation projects and were skeptical of this one, as recent administrative reforms were seen as a way of shifting the administrative burden from the federal government to the local councils.  

How will the data be collected? 

New data collection processes were initiated during the COVID-19 pandemic, a period during which public administrations were willing to test new digital technologies [18]. Face-to-face interviews and workshops to collect stakeholders’ knowledge and expectations of co-creation, the digitalization of public services, and the Overnight Stay Tax were also held. 

The WST3 Department, in collaboration with the project’s consortium and the University of  Continuing Education Krems, agreed on the stakeholders to be contacted. All of the participants were contacted by the WST3. Department,  The University of Continuing  Education Krems was responsible for data collection and analysis[19]. Structured interviews were used so that each interview would address all areas of interest. The interviews addressed  stakeholders’ expectations about the service, e.g., “What are your experiences with this public  service?”; “Have you experienced any problems and how do you cope with these issues?”; “What  would you change to improve this public service?”; and, “How would this service ideally be  provided?” [17].  

The data was analyzed by the researchers and summarized in a report used for discussion during three workshops with stakeholders. Some of the workshop participants had been previously interviewed, but not all of them. The decision to participate in interviews and workshops was made by the participants based on their availability. 

What legal parameters have to be taken into consideration? 

The WST3 Department is responsible for the delivery of the Overnight Stay Tax, including adhering and adapting to national and federal legal requirements, making necessary changes, providing correct information, and deciding who the financial beneficiaries in the tourism sector will be. External stakeholders argued that, “If the federal government and the provinces were willing, this could all be done digitally in one programme” [17]. However, the employees of the  Federal Government of Lower Austria pointed out that the Overnight Stay Tax was very complex and meant taking into consideration laws that contribute to the complexity inherent in public services and the digitalization of public administrations. This  meant that legal experts are involved in: 

• Changes made in the design and delivery of public services 

• Digitalization of public administrations (e.g., which digital channels can be legally used for the transfer of data, when the Once-Only Principle can or must be used, the re-use of data, forms with pre-filled data, or the use of a coding system to match data and payments [20])  

• Abiding by the Austrian national E-Government law means that all public services must  be offered both digitally and face-to-face

• The involvement of internal and external stakeholders  

• The collection of data 

• All aspects of the particular public service What outcomes can be expected? 

The stakeholders involved expected two main outcomes: first, a digital Overnight Stay Tax in  Lower Austria that fulfilled and satisfied the relevant stakeholders’ needs. Second, a novel and successful use of co-creation as a way to involve users  in the design and delivery of a public service. 

Results and outcomes  

The use of co-creation for the digitalization of the Overnight Stay Tax highlights the benefits of using co-creation to achieve a valued outcome, and provides an important lesson about public administrations willing to be innovative and try something new. This case has become a leading example for other departments of the Federal Government of Lower Austria on the benefits of co-creation. 

Careful planning is important, and consideration of potential problems and barriers can help avoid them. The head of the WTS3 was careful to ensure adherence to legal frameworks, while the University of Continuing Education made sure that all ethical requirements were implemented. 

Collaboration and exchange with partners on the research project was particularly useful, so that problems would be discussed and solutions could be created. Any problems that came up were also discussed with the co-creation participants in order to establish whether proposed solutions were viable or to identify any alternative ones. 

While adherence to legal and ethical requirements slows co-creation processes down, openness about problems and failures in public administrations is welcomed by the participants. The external stakeholders, such as local councils, businesses, and their representatives, were surprised to be involved in a co-creation process. Both internal and external stakeholders saw their involvement as a way to provide feedback,  solve the difficulties with the current Overnight  Tax Stay, and contribute to the overall digitalization of the Austrian public sector. They argued that their involvement allowed them to know about potential difficulties, manage their expectations, and contribute to reducing or eliminating bad outcomes.  

With support from the University of Continuing Education Krems, the WST3 department used a co-creation process with external stakeholders to achieve its two proposed outcomes. First, a fully digital Overnight Stay Tax comprised of an online form that collects different types of information, prevents costly errors and reduces the administrative burden for all stakeholders involved. Second, to be an innovative public administration, willing to try co-creation with external stakeholders to achieve positive outcomes.  

Key learnings 

There are several key learnings from this successful case, including: 

• Co-creation has several benefits, but they may be different for the various stakeholders involved 

• Co-creation requires a range of resources, which can be legal, ethical, financial or organizational in nature 

• Mutual understanding of the problem and proposed solutions requires the involvement of all those affected, with stakeholders from within the public administration as well as outside of it

• Stakeholders’ needs for participation must be considered to ensure that they can participate and contribute their expertise and knowledge 

• Expected outcomes and the iterative process required to achieve them need to be clearly stated and managed 

• Legal frameworks have an extensive impact on co-creation and public services. (7) Co-creation in the context of public administrations’ digital transformations can also help improve services and processes that are not digital 

• Achieving co-creation, digital co-creation and the co-creation of digital services requires collaboration with IT departments 

• Ethical issues may arise, particularly in grey areas that are not explicitly covered by policy or law, so strategies must be developed to identify and address ethical challenges. (10) Public managers must aim to share their lessons learned with other public sector organizations to encourage the use of co-creation

References 

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[8] S. Jaspers and T. Steen, "The sustainability of outcomes in temporary co-production,"  International Journal of Public Sector Management, 2019. 

[9] N. Edelmann and I. Mergel, "Co-production of digital public services in Austrian public  administrations," Administrative Sciences, vol. 11, no. 1, p. 22, 2021. 

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[11] (2024). Informationen zur Nächtigungstaxe für Unterkunftgeber gemäß §§ 10 bis 23 NÖ  Tourismusgesetz 2023. [Online] Available: https://www.noe.gv.at/noe/Wirtschaft Tourismus 

Technologie/Informationen_zur_Naechtigungstaxe_fuer_Unterkunftgeber_ab_1.pdf  

[12] NOEL. "Wirtschaft, Tourismus & Technologie." https://www.noe.gv.at/noe/Wirtschaft Tourismus-Technologie/Wirtschaft-Tourismus-Technologie.html (accessed 29.05.2025. 

[13] inGOV. "Welcome to inGOV project website." https://ingov-project.eu/ (accessed 29.05.2025.  

[14] N. Edelmann, K. Steiner, and G. Misuraca, "The view from the inside: a case study on the  perceptions of digital transformation phases in public administrations," Digital  Government: Research and Practice, vol. 4, no. 2, pp. 1-18, 2023. 

[15] A. Bogedain and R. Hamm, "Strengthening local economy: An example of higher  education institutions' engagement in" co-creation for sustainability"," Region, vol. 7, no.  2, pp. 9-27, 2020.

[16] E-Government-Gesetz (E-GovG), 2004, 2024. 

[17] N. Edelmann, A. P. Rodriguez Müller, T. Steen, B. Gerhardter, and T. Holzbauer,  "Sustainable Co-Creation in the Public Sector: A Case Study in the Lower Austrian  Federal Government," in 15th International Conference on Theory and Practice of  Electronic Governance (ICEGOV 2022), Guimarães, Portugal., October 04–07, 2022  2022 ACM, pp. 111-118. 

[18] C. C. Pérez, M. P. R. Bolivar, and A. M. L. Hernández, "e‐Government process and  incentives for online public financial information," Online Information Review, 2008. 

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