European Governments will spend over $67.8 billion on technology in 2003, predicts Gartner, but must find new ways to prove value of public money invested in IT
Gartner recommends that European governments install a Public Sector CIO to oversee technology implementation and evaluation across their administration
EGHAM, United Kingdom, Oct. 15, 2003 — Gartner predicts that pressure will mount on all European governments to prove that their increasing investments in technology are returning value to society. Gartner says that governments are not accurately measuring and demonstrating the public value of IT, and are currently too focused on financial, rather than wider social, benefits. Gartner recommends that European governments install a Public Sector CIO to oversee technology implementation and evaluation across their administration. The Public Sector CIO should be supported by Domain CIOs to oversee compliance with standards, application development and data modeling across tiers of government, within each domain.
Pressure will increase on governments to justify spending
The Governments of Western Europe will spend $67.8 billion on Information Technology in 2003, an increase of 3.6 percent on 2002, according to forecasts by Gartner. It will then steadily increase this amount to $74.5 billion in 2005, when many of Europe's e-government deadlines are due. The UK spends more public money on information technology than any other government in Western Europe, and almost double that of Germany in second position with $11 billion in 2003. The average annual IT budget for all other European governments in 2003 is $1.5 billion. As time passes and scrutiny of public spending grows, pressure is increasing on the Government to prove that this is money well spent.
"$68 billion per year is a lot of money," said Andrea Di Maio, Research Vice President at Gartner. "That is a lot of hospitals, schools and trains. Technology has the ability to deliver fantastic improvements across society and is an asset equally worthy of investment, but governments must prove that it has broader benefits to the people that pay for it, or they risk public disillusionment."
Traditional ROI measurements of technology will fail in government
Gartner believes that European governments are making real progress on public service reform through strategic investment in technology. However, IT leaders in government are still focused on commercial benchmarks of Return on Investment (ROI) - such as payback period, net present value, internal rate of return and economic value - to evaluate the success of their investments. These methods do not work as well in government as the private sector because, for example, government expenditures come from taxes that, in turn, lead to lower consumption and investment. ROI overlooks technology benefits that bridge social exclusion, increase access to public services, create new markets, generate employment and investment, improve technology development and raise levels of education.
By 2007, more than 50 percent of government IT initiatives that have been cost-justified by traditional economic and financial return methods will not achieve their ROI targets, Gartner predicts.
"If governments do not accurately measure the full value of their IT investments, they risk a serious political backlash," observes Di Maio. "They will be accused of wasting billions of pounds of taxpayers' money on unnecessary technology. Governments must connect IT investments to expected and actual improvements, not only in their organisational performance, but in the state of the nation as a whole."
Accurately measuring the impact of government IT spending
Gartner said the value of public IT investments must be evaluated according to three criteria:
Constituent service - Is the service what they need? Are they using it? Does it provide greater value at a lower cost than another service?
Operational efficiency - Are online transactions reducing government costs?
Political return - Is the e-government initiative increasing consensus? Are there any positive effects on the economy and society at large?
Gartner recommends that the following metrics be used to make the business case for government spending on technology as well as in determining its success.
Stakeholder satisfaction and value, measured by surveys before and after electronic delivery commences. Stakeholders include constituents, political leaders, employees and contractors that deliver support services. The surveys should also measure stakeholder perception of privacy and security.
Measurement of the relative usage of delivery channels (e.g., walk-in, phone, website or mail). Have targets been set, and has usage met those targets?
The extent to which processes have been improved by delivering them via new channels. Have unnecessary steps been removed? Have resources been redistributed to other areas?
The ways in which government has been transformed. Has electronic service delivery resulted in multi-department or cross-jurisdiction (state, local or federal) collaboration? Have multi-department or jurisdiction data standards been created? Are shared services such as common payment processes, e-mail and authentication deployed, and are multiple departments using them?
Governments should appoint a Public Sector CIO
Gartner said a centralised management position is required to oversee the adoption of technology across the government and ensure that it delivers the greatest possible public value. Gartner therefore recommends appointing a public-sector CIO who would report to cabinet level and be directly responsible for government-wide assets and operations (including any shared services). The needs of different agencies and departments can be grouped according to domain features. The Government should then appoint "Domain CIOs" focusing on data modelling, application and architecture needs for each domain. In turn, they would report both to the ministry sharing those domain features and to the overall CIO.
"This arrangement would strike a better balance between a centralised and a decentralised approach to government management of technology," concludes Di Maio. "The Public Sector CIO should be responsible for reviewing and evaluating planned projects, establishing priorities for competing initiatives, and ensuring that the Government as a whole uses IT to deliver value to the public. Responsibility for technology adoption is currently spread too widely across government, to the point of there being little or no joint-responsibility at all. Departments pursue individual agendas without an eye on or accountability for cross-departmental prioritisation and assessment. The result is repetition of effort and wasted resources, and money being spent is not matching the Government's stated objectives. Being able to implement IT investments successfully and then prove their value will be of paramount importance to all governments in the next three years."
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