Technology and the Productivity Promise

IT is the most important tool for improving government output. Budget directors need to be ready to answer some important questions.
by | January 11, 2012

In the "new normal," with governments buried under show-stopping financial and political pressure, we don't want our budget directors to simply hunker down with across-the-board spending cuts. Lockstep cuts will miss the opportunity to increase productivity. We can't afford that. Productivity is the "seed corn" for our future—and perhaps for the next election.

Any serious focus on productivity will draw attention to information technology, today's single most important tool for improving output in government as well as society at large. As a former budget director who has focused for years on the impact of technology on government, let me offer you some issues to discuss with your own budget director.

What are our productivity priorities? Few budget directors are asked to discuss their productivity analysis. What will be the productivity impacts of this budget on future budgets and service levels? What will be the return to the jurisdiction's economy (not just the government budget)? How will this budget's productivity portfolio compare to previous years and comparable jurisdictions?

What are our priorities for IT-based economies of scale? Networks and software benefit from huge economies of scale—as the user population grows, the benefits per user grow dramatically. The Internet and modern computer operating systems support global user populations, but governments have been relatively slow to take advantage of these developments. Now is the time to harvest the scale productivity of IT. Your budget director should be able to explain expected budget savings not only through IT standardization and consolidation at the jurisdictional level (internally managed shared services) but also at larger levels (going to cloud-scale offerings and/or consumer technologies designed for global users rather than for a single government program).

What are our priorities for IT-based transparency and collaboration? Government productivity often suffers because citizens exert less productivity pressure on governments than customers do on business. But digital tools are now available for the feedback and collaboration needed to make government more transparent, trustworthy and productive. Your budget director should be able to explain how the budget will improve productivity through transparency and problem-solving that is supplied voluntarily by the public and other stakeholders. For example, mistakes and corruption can be reduced when contractor timesheets are released to the public and available for review by many eyes.

What are our priorities for IT-based self-service? Services are a dance between producers and consumers. Recently, however, technology has created self-service opportunities at any time and at any place the network can be reached. Banks took advantage of this long ago via ATM machines. More recently, governments have begun to be successful with e-government offerings. As networks expand with broadband and wireless capabilities, self-service will become even more important. Such applications are being deployed in areas ranging from public safety (digitally enhanced neighborhood-watch collaboration) to education (distance education) to health care (electronic tools giving both doctors and patients critical information). Your budget director should be able to explain your self-service priorities and the impacts that could be expected.

Budgeting for productivity will not require huge investments and will more than pay for itself. Scale economies for information services, for example, typically return 20 percent of the roughly 5 percent of the operating budget devoted to IT services, for an annually repeating savings of roughly 1 percent of the entire budget. IT-based self-service could be worth as much as another 5 percent. Transparency and collaboration investments are newer and more difficult to quantify, but will be well worth it for reform-oriented jurisdictions.

While these savings of a few percentage points won't cover the full gaps that many governments must close over the next few years, they could be enormously important in helping your jurisdiction keep pace in the global race for jobs and better lifestyles.

Because "new normal" budgets need to be more productive as well as smaller, we need to utilize IT's capabilities for productivity. Be sure to talk pragmatically with your budget director about getting the right priorities in place.

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