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Was IT Really Worth It? The ROI Report Card for Government IT Projects

One problem for IT Directors is how to judge the success and failure of their IT deployments and how to calculate return on investment (ROI) for technology. Because government does things due to law, rule and regulation, it is required to undertake some tasks and this clouds the issue for how to gauge the value of an IT investment because we struggle to place a “cost” or value on some typical government activities. Consider supporting voting at elections, firefighters saving a life or attorneys defending the state, these are difficult areas to place costs and values.

One way to face this challenge is to focus on those things that define good government. This examination has to be informed by metrics that look at core improvements to the delivery of services to the public and they need to work for the business of government. What are some examples? Reduced cost of providing services, reduced time and resources to provide service, protection or enhancement of agency or entity missions and furtherance of legal requirements or duties.

Some areas for ROI calculations are easier. Reduced cost of providing service is the most traditional way to measure the impact of an IT investment – reduced cost of physical storage – replacing physical file storage, archival storage and offsite storage with document management. Similarly, reducing the cost of supplies like printing supplies and printers – the ability to eliminate paper by moving to document management and other technologies that reduce the new for the creation of paper or paper copies are examples.A large portion of the ROI is staff cost savings – the ability to reduce or re-purpose staff time away from a process by eliminating tasks by using technology tools like document management, workflow automation, and records management solutions. Finally, will an IT investment result in cost avoidance? Can future costs for the above categories be avoided or will the agency be able to avoid cost increases for new mandates, etc. based on having document management solution or other IT solutions in place?

In the “New Normal” of government, reducing the time and resources to provide services is a meaningful measure for government. For example, does the investment “speed up” government, shortening the time for government decision by using tools like workflow automation, document management and shared repositories of government documents that foster cross-agency sharing of data and documents or using automation notifications and reminders to enforce. Will it eliminate redundant activities, using techniques like data and document sharing to allow processes to leverage previously submitted information and re-use or share it ? Or, perhaps, it could allow sharing a single set of documents through automated document routing to move between agencies that share roles and duties in a government process.

Another key consideration – does the investment allow existing staff to perform increased amounts of work without adding staff? As government moves to use technologies like workflow automation and web-based applications, the ability for an entity to process or act on more tasks with the same staff is a significant potential measure.

While cost savings and “more with less” are important, ROI measures should include projects that protect or enhance agency mission. One example, heightened security and access control to confidential or sensitive information is a critical issue for government . More broadly, improving constituent service with technologies like workflow automation, kiosks and document management can support self-service and online service options that stretch the availability of government without increasing staffing needs. The availability of government services and finding new better ways to deliver services through technology furthers the mission of government and it is a significant reason for investing in a new technology and should be considered as a metric for evaluating that investment.

Like furthering an agency mission, furtherance of legal requirements or duties has risen in importance, but has often suffered in more traditional measurements of IT ROI in government. For example, what about the calls for transparency? Technologies like document management can combine with web-based applications to meet continuing and increasing responsibilities for government transparency. Web-based technology with document management provide a way to meet FOIA and open meeting law requirements and provide a means to comply with these duties. But how do you measure the “costs” of more transparency? With reduced staffs, IT investments that enhance a legal requirement like FOIA should receive consideration alongside more traditional cost calculations and comparisons.

How could a CIO go about creating a metric to determine such value? To make the measure meaningful for government, the metrics should be a combination of hard and “soft” measures. Hard measures would consist of the cost factors above, things like reduced cost of providing service and reduced time and resources to provide service. Implicit in this is the recognition that reducing the time to process and act is a measure since significant amounts of government resources hinge on decisions taken and the speed with which they are taken. In addition to hard measures, the metric should be customized to recognize the unique missions, mandates and legal responsibilities of a governmental agency

Why would a public CIO want to augment more traditional metrics with some areas discussed above? Traditional ROI measures fail to account for some of the unique functions that government performs like public safety (what is the ROI of preventing crime?) which contain both hard and soft cost savings. The need to establish ROI metrics (probably before an investment is made) is very important for government IT staff. By using a combination of hard costs and measures that show improvement in customer service, government can better measure their ROI.

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Michael Lennon

Great post.

In the private sector, profitability is the arguably the key result for executives. However, profitability is a lagging result rather than an indicator of future profits. CUSTOMER SATISFACTION is emerging as the key indicator for future business growth and stability. Perhaps it is time to bring a similar metric into public projects and admnistration?