When Missouri CIO Gerry Wethington proposed a multi-year electronic government initiative last year, he knew he'd need to show results to keep dollars flowing into the project.
That requirement spawned the Missouri Value Assessment Program, a nascent effort to build a framework for measuring both total cost of ownership (TCO) and return on investment (ROI) for technology projects undertaken by the state. Missouri will flesh out details of the program this year and begin applying it to e-government projects in fiscal 2004, giving the state new insight into the costs and benefits of IT undertakings.
"It will let us begin to make assessments and decisions about funding a project or developing a new service based upon some true data," said Wethington. "That moves you from having emotional debates about projects to having factual discussions."
That's an evolution a growing number of public jurisdictions are looking to make, particularly as they pump more resources into electronic government initiatives. Lawmakers and others who foot the bills for big-ticket e-government undertakings are asking what constituents get in return for that investment. And efforts under way in states such as Missouri, Iowa and Wisconsin are designed to provide some concrete answers.
Many believe long-term support for e-government initiatives will be tied to the strength of these answers, particularly in the current weakening economy.
"[States] need to have some very hard justification in order to sell these initiatives to the legislature and have them funded not just as one-time opportunities, but also to fund the ongoing infrastructures that are needed to continue running them and expanding them as necessary," said Patricia O'Donnell, vice president of marketing for Anexsys, an e-government firm that recently published a guide to ROI measurement for public agencies.
The Right Tools
But turning ROI concepts into workable assessment tools raises some unique hurdles for public agencies, where the results of online programs and services often defy simple dollars-and-cents measures. Although some e-government initiatives -- e-procurement and online vehicle registrations, to name a few -- can deliver hard savings by lowering overhead or transaction costs, many yield intangible benefits such as quality-of-life improvements and better convenience for citizens.
That forces agencies to take an unconventional approach to measuring technology's benefits. Missouri is examining everything from gas prices, to median salaries, to population density in an effort to determine what saving citizens a trip to a government office is worth.
"You've got to look at a whole different set of demographics, and we're still trying to uncover what those demographics are," Wethington said.
He expects to use the state's average salary to put a rough value on citizens' time savings. In addition, Missouri intends to account for travel cost savings by factoring in the distance between government offices and typical users of a particular service.
Wethington acknowledged that figures generated by these techniques would be rough -- but better than nothing. "Most states don't have access to historical data; for the most part you don't have a benchmark," he said. "But in starting to do this, you're building and collecting empirical data for the first time."
The accuracy of that data will improve as governments gain experience with ROI measurement, he added. "You're going to see the benchmark begin to change and adjust and refine itself. This may be something that takes three to five to seven iterations before you finally feel comfortable with how those measures begin to flow out of this."
Anexsys followed a similar path in its guidebook, "Measuring ROI in E-Government." The company developed a series of templates -- available online -- intended to give government organizations a starting point for creating ROI measurement tools. The company teamed with Indiana University and e-government consultant Meta Group to produce the material.