State and local governments that fail to treat business intelligence and analytics like a strategic IT investment risk losing money on redundant solutions, according to the issue brief released Wednesday, Sept. 15, by the National Association of State Chief Information Officers (NASCIO).

In a continuation of its series on business analytics, the latest NASCIO report notes that the buzz of analytics technology has been building in governments, which are drawn to the idea of decision-making tools and the promise of quick and large returns on investments.

But analytics solutions must be integrated into the broader strategic goals within the enterprise architecture, according to the report, otherwise these tools lose value.

“This has led to isolated investment, point solutions and a disparity in process and tools,” the report noted. “Diversity and complexity in anything will drive up the cost.”

Given the current economic crisis, governments can’t afford redundant and disconnected investments. To avoid that, foundational principles should guide the application of business analytics as the enterprise moves toward fact-based decision making.

And according to the paper, state CIOs need to push their efforts to rationalize and optimize investments and evangelize “the value of managing analytics as an enterprisewide, shared capability.”

“We’re making the point that investment in business intelligence and business analytics must be driven by strategic intent,” Greg Wass, CIO of Illinois and co-chair of the NASCIO Enterprise Architecture and Governance Committee, said in a release. “Tools are expensive and should not be purchased without a clear understanding of the outcome state government is trying to achieve with them.”

Governments, he added, should approach an analytics investment decision with the same discipline as they do other investments: First, governments should manage analytics at an enterprise level and then establish the principles that will guide the application and investment across the enterprise.

“They need to know the desired outcomes and articulate the questions needed in order to understand how well government is performing and achieving those outcomes,” Wass said. “This then drives selection of methods, procedures and tools for conducting the necessary analysis.”

As an effective tool for decision-makers to apply and direct limited resources, analytics technology can lead to substantial outcomes — especially when the tool has direct “line of sight” traceability to the strategic intent of the enterprise, according to the paper.

As an example of linking analytics to enterprise strategic intent, the paper highlights the Florida Department of Juvenile Justice, which in June implemented IBM SPSS predictive analytics software. With these tools, the department can analyze predictors such as past offense history, demographics, gang affiliation, peer association and home life environment to find out which kids have a higher chance of recidivism.

This new brief builds on the foundational concepts of the first brief in the series. Future issue briefs in this series will provide the connection to project management, examine the “futures” for analytics, describe the architecture of the business intelligence competency center (BICC) and provide additional references to successful analytics programs.

“Without an enterprise approach to analytics, we end up with multiple solutions and approaches,” said Dugan Petty, Oregon CIO and co-chair of the committee, in a statement. “This creates redundant investment in tools and training, and creates barriers to cross line of business collaboration.”

Read the full issue brief.