E-Gov’s Untapped Potential for Cutting the Public Workforce
Governments have been reluctant to use technology to boost productivity and save money. They need to be more aggressive.
Since the flourishing of the Internet in the mid-1990s, e-government advocates have promised that information technology not only would make it easier to access public services but also would significantly increase government productivity and lower costs. Compared to the private sector, however, this promise has remained largely unfulfilled, in part because of a resistance to employing technology to replace government workers.
It's not surprising, then, that state budget directors and budget committees usually look at IT as a cost rather than as a strategic investment that can produce a positive financial return for taxpayers. Until governments make a strong commitment to using IT to increase productivity -- including as a means of workforce reduction -- it will remain difficult to bring government into the 21st-century digital economy.
The benefits can be sizeable. My organization, the Information Technology and Innovation Foundation, estimates that if states focus on using IT to drive productivity, they stand to save more than $11 billion over the next five years. States can achieve these productivity gains in two primary ways:
First, they can use e-government to substitute for person-to-person interactions. For example, by moving just nine state services online -- from one-stop business registration to online vehicle-license registration -- Utah reduced the need for government employees to interact with citizens, saving an average of $13 per transaction.
And second, they can use IT to optimize performance and cut costs. In 2013, for example, Pennsylvania launched a mobile app to streamline the inspection process for roads and bridges, reducing the time it took for manual data entry. Inspectors saved about 15 minutes per survey, which added up to a savings of over $550,000 in 2013.
So if technology can cut costs, why has e-government not lived up to its original promise? One key reason is that most state governments have focused first and foremost on using IT to improve service quality and access rather than to increase productivity. In part, this is because boosting productivity involves reducing headcount, and state chief information officers and other policymakers often are unwilling to openly advocate for using technology in this way for fear that it will generate opposition from government workers and their unions. This is why replacing labor with modern IT tools has long been the third rail for the public-sector IT community.
This is not necessarily the case in some other nations that have moved to aggressively deploy IT to reduce headcount. The first goal of the Danish Agency for Digitisation's strategic plan is "a productive and efficient public sector." To get there, the agency plans to focus on automation of public administrative procedures. Denmark even introduced a rule in which all communications with government need to be done electronically, eliminating telephone receptionists at municipal offices. Likewise, the United Kingdom's e-government strategy set a goal of increasing productivity by 2.5 percent, including through headcount cuts.
Another reason e-government has not lived up to its full promise is that many state IT systems are woefully out of date, especially compared to the systems the corporate sector uses. But if CIOs and other advocates of modern digital government are going to be able to make their case effectively for resources to bring their technology into the 21st century, they will need to make a more convincing bottom-line case to appropriators. This argument should be about saving money, including through workforce reduction.
Policymakers should base this case not just on savings for government but also for the state's businesses and citizens. When Georgia implemented self-service kiosks in its drivers' services centers, average wait times for customers were cut by 39 minutes. Similarly, moving nearly 500 of Arkansas' business services online allowed the state's businesses to save time and money. State CIOs need to argue their case in these broader terms and bring in economic-development agencies as allies in their quest to improve states' business climates.
Finally, increasing government productivity is not a question of being for or against smaller government. This strategy actually should appeal to both sides of the political aisle, because states can use savings from IT investments to cut taxes or expand services, depending on their particular political values and goals. But a state's foremost goal for e-government should be to take full advantage of all the opportunities that information technologies offer, including the chance to cut costs by increasing productivity.