Digital technology undoubtedly has huge potential to contribute to the functions of government and public administration, but so far the building of information portals and putting transactions on government web sites have not realised the great expectations for it in terms of “transforming government”. This Working Paper explores why the ambitions for transformational e-government (however it has been labelled) over the last 20 years have not been realised. It provides a critical analysis to offer a diagnosis of the problem and its causes. In the hope of a better future, it develops a structured frame of reference for making sense of how information and communications technologies (ICT), in all their forms, really fit within the world of government and public administration. To actually achieve a transformation of government through the use of digital technologies, governments will require a complete reversal of the current way of looking at the challenge. Instead of viewing the problem from the point of view of the internet, they must start with the political process of policy design. In particular, they must look at how technology can change the range and characteristics of policy instruments — the tools that governments choose from to intervene in the economy, society and environment to make change, such as taxes, benefits, licences, information campaigns and more tangible things like public services and infrastructure. These are the practical results of government, and only when technology changes those can we say it has transformed government.