Can Good Management Help Ward Off the Fiscal Cliff?

If you turn on your TV, open a newspaper or log on to any social media site you are bombarded with the impending doom surrounding the fiscal cliff. And while the dreaded cliff might still happen, there might be a way to lessen its impact. The key could be good management.

IBM has looked into the management in their new report,”How Can Good Management Help to Avoid the Fiscal Cliff?”

Dan Chenok is the Executive Director with IBM’s Center for the Business of Government. He told Chris Dorobek on the DorobekINSIDER program that right now all the fiscal cliff attention is focused on taxes and budget cuts, but it should be focused on cost savings.
“The fiscal cliff has many components. The two most talked about are the tax levels and spending levels. But there is another component that isn’t really talked about, it addresses how the government operates on a daily basis. Just like any business, the government tries to operate most efficiently and looks inward to find cost savings. Government could do the same. They could then capture that savings and could help offset the spending and tax cuts,” said Chenok.

Cut Costs

“Two years ago IBM put out a report that outlined a number of areas where large companies have looked internally at operations and in a measured way reduced the cost of those operations and then captured those savings and plowed them back into the business. The premise stands that if government went for a similar exercise and allocated savings to particular areas then things like consolidating infrastructures or streamlining supply chains could lead to reduced costs with very little change in service,” said Chenok.

Shared Services

“Any situation where you have an imperative to act, like you do now with the fiscal cliff, it’s imperative to look for solutions to solve the problem. In this case shared services is something that corporations and state and local governments have used successfully,” said Chenok.

How it works

  • Shared services is a mechanism where measurable savings can be easily achieved because the economy of scale for a shared services provider can be much stronger than if an individual agency tried to start something from scratch.
  • OMB in the last few months has been talking a greater emphasis on shared services.
  • Because technology can differentiate information more effectively than was the case 5-10 years ago the opportunity for shared services to target the elements that agencies do that is common its actually easier now because of things like big data and analytics and cloud computing.
  • Technology is the easy part of shared services. The harder part is the culture shift that has to happen in order to use shared services. That’s where effective management is really critical.

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