Whilst the early stages of e-government focused on e-enabling customer-facing services, the latter stages of e-government is focused towards transformational change in public sector agencies. However, public sector agencies are struggling to successfully achieve the transformational stage of e-government due to various strategic, organisational and technical challenges. To realise the transformational stage of e-government, local authorities will need radical changes in core processes across organisational boundaries, in a manner that has not been seen before in the public sector. In particular, the bitter lessons that were learnt by many private sector organisations during the business process reengineering (BPR) era should provide a stern reminder of the challenging and complex nature of transformational change efforts. This paper seeks to explore the key strategic, organisational and technology challenges that local government will face when implementing the transformational stage of e-government in UK local councils and contributes a conceptual frame of reference for transformational stage e-government.