January 04, 2017
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How Investing in IT Creates Operational Savings for Governments
Contributor: Rob van der Meulen
CIOs have a role to play in delivering savings across the whole organization.
Governments continue to face increasing pressure to cut costs. Political campaigns are usually built on funding critical citizen services and reducing taxes, but the tax burden and national debt for most nations continues to grow.
Government leaders often fall into “salami-slicing” budget cuts across the board. “Their approach is to make incremental cuts to budgets areas across the board, rather than taking a more strategic cost optimization approach,” says Cathleen E. Blanton, research vice president at Gartner. “These cuts can be particularly damaging to IT, derailing digital projects and ignoring the positive impact that budget spent on IT can have in reducing costs elsewhere in the organization.”
“ Use IT as a driver of efficiency throughout the organization.”
As a result, CIOs face a challenge and an opportunity: convincing government leaders that continued IT investment can create operational savings across the entire business. This not only protects essential IT, but more importantly improves comprehensive cost optimization through digital transformation in the wider organization.
“To succeed, CIOs must work with department executives to establish a constructive dialogue around cost optimization,” adds Ms. Blanton. “At the heart of the dialogue should be a working framework that encourages financial transparency and strategic alignment on organizational goals and technology-based cost optimization opportunities.” But how should CIOs start the dialogue? They should begin by addressing the cost optimization opportunities within their direct control. Predominantly this will mean looking at areas to reduce IT operational costs, as well as ensuring IT procurement is getting the best value it can.
Joint Business and IT Cost Savings
Once CIOs have demonstrated that the IT organization is already optimizing the costs in its control, the next step is working in partnership with other department leads to use IT as a driver of efficiency throughout the organization. Opportunities at this level occur when overall business operations become more cost-effective through automation, information analytics or integration. Updating business processes and the technology solutions that support them can improve the overall cost structure of an organization, and also renovate the core in preparation for digital government.
Business Restructuring
These opportunities are more transformative in nature, and as such, they require a greater degree of trust and participation from other department executives. The collaboration, efficiencies and platforms built around the previous step of joint business and IT cost savings should now create a springboard to develop innovative solutions to government challenges. Using the previous example of an open data project, that enabled improved self-service capabilities and boosting efficiencies.
If we expand the open data project to create a government-led open data portal it completely transforms the way citizens and businesses interact with governments, and may generate revenue for governments in the process. For these opportunities to succeed, there needs to be a shared agreement between IT and organizational leaders on the urgency and scope of the cost saving effort. Second, they need to decide on a clear commitment that looks beyond individual departments towards implementing a shared vision across the entire government.
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Recommended resources for Gartner clients*:
‘Government Cost Optimization 201: Expand Savings With Teamwork’
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