“Today, the Federal Government is about 25 percent of GDP. The last time the budget was balanced, it was about 21 percent of GDP. So whether the government is a fourth or a fifth of GDP, it still plays an enormous role in the overall competitive posture of the nation. That is, the higher government performs, the more competitive the nation will be.”
For Charles Prow, General Manager of IBM’s Global Business Services’ Public Sector business, this is the impetus of his new book, Governing to Win: Enhancing National Competitiveness Through New Policy and Operating Approaches. Prow posits that government needs to develop new value-driven business and operating models throughout departments and agencies, in a vision he describes in his book as “Enterprise USA.”
In his interview with Chris Dorobek of the DorobekINSIDER, Prow clarifies, “Running the government is not like running a business, however, you can apply commercial capabilities to government. […] The federal government does have the imperative around mission and mission orientation, and what the book tries to do is to align a very simple proposition around how do you measure value in terms of mission effectiveness.”
He points out that we need to be more systemic in the way we apply both commercial and government best practices to drive down the cost of government. Cost savings should not be the sole focus of the conversation – we should also strive to improve the effectiveness of the missions that government supports. While discussing several commercial best practices, Prow expanded more fully on the strategic use of business analytics and rethinking government purchasing and supply chain management.
In regard to utilizing business analytics, he explained that, “Analytics as a tool is fundamental in improving operations, improving mission effectiveness. Predictive analytics, that is applying analytics to understand data and processes in such a way that it informs what we do in the future, is paramount to improved effectiveness.”
He cites the occurrence of fraud as an example where predictive analytics could be effectively applied to generate cost savings. In being more strategic with the use of business analytics, government could move beyond simply determining where fraud has occurred in processes to stopping payments or process the claims that are fraudulent.
Speaking of purchasing and supply chain management, Prow pointed out that, “The Federal government procures more than a trillion dollars of goods and services a year. We continue to have a high level of focus on incrementally driving down the cost to procure.” He notes that more strategic thinking, “occurring in some areas of the federal government and through most commercial enterprises, is a much more end to end, much more systemic approach to the supply chain in general.”
Prow states some of the more strategic thinking about supply chain management is revolving around the questions of, “How can we provide the necessary levels of supply chain visibility, through systems, through analytics, through shared services, in such a way that you can fundamentally change the effectiveness of supply chains that support the Federal Government?”
Regarding procurement, Prow points that it is one component of the larger supply chain. “When you [think strategically about the supply chain], you will also address the procurement or the purchasing aspects of the supply chain. Looking at purchasing and procurement alone, while it’s important, is not ultimately sufficient to really bend the cost curve associated with operating government supply chains.”
He concludes the conversation by remarking, “The one thing I hope people take away is a different framework in terms of how we think about the problem. The problem is not all about cost reduction. […] We need to frame the conversation not on cost reduction, but on competitiveness, and how can we operate government in such a manner that we will make the nation more competitive.”
To listen to Charles Prow’s full interview you can catch the entire radio show at GovLoop Insights.