Previous literatures have found that many e-government initiatives in developing countries failed to achieve its objectives. In order to deeply understand what factors contributed to the failure of early e-government initiaves in developing countries, this study chooses such municipality e-government project of South Sulawesi in Indonesia that failed to fulfill its promise. Using ITPOSMO approach this study reveals actual gaps that responsible to the failure. In addition, several key performance indicators for better e-government implementation are also addressed for further e-government development. Finally, the study ends up with recommendations for policy makers for shaping the future of e-government in the local municipality government.