The templates attempt to quantify customer satisfaction improvements and administrative cost savings derived from e-government projects by examining a series of interrelated issues.

"When you are looking at intangibles, it's critical to measure what kind of time savings they represent for the constituency. And if you're going to measure that, you need to be able to assess value to it," said O'Donnell. "The way that we assessed the value was to take the median hourly income by state, which we obtained from the U.S. Census Bureau."

So, if an online driver's license renewal system saves a citizen two hours by eliminating time spent driving and standing in line, and the median salary in that citizen's state is $20 per hour, then the savings per citizen is $40.

But that's only the beginning. Online applications also tend to outsource data-entry chores because citizens type in their own information. And citizens entering their own data often make fewer errors because they have a vested interest in making sure the information is correct, O'Donnell said.

Together, the internal and external benefits form a powerful combination. "You can grow that paltry $40 into a big number if you're a populous state. But if you think about getting at least twice that in return on the back end -- because that's really the hidden cost that people don't think about -- then it's wonderful," she said.

Bigger Picture

Measuring ROI is closely tied to determining the total cost of ownership for IT systems and equipment. Indeed, Missouri's Value Assessment Program (MoVAP) includes equal parts ROI and TCO.

"It became apparent that you can't even think about the kind of savings you're going to generate until you really understand the cost associated with programs," Wethington said. "So calculating your return on investment means that you need to think in some pretty different terms relative to total cost of ownership of programs within government."

Indeed, MoVAP's impact may send ripples of change far beyond agency IT departments.

"It affects not just information technology and the technologist, it works its way into the whole business process. It works its way into the appropriations process and the budgeting process," Wethington said. "So it's very difficult to say that I'm going to confine this to information technology."

Similarly, ROI measurement is part of a comprehensive IT strategy being developed by Wisconsin's Department of Electronic Government. That strategy, known as the enterprise portfolio management plan, is meant to make the most of new technology investments, reduce the risk of project failure and improve the overall quality of enterprise IT initiatives.

"We're taking a very broad approach. We're in the process of developing an IT enterprise plan," said Shirley-Eckes Meyer, deputy secretary of the Department of Electronic Government. "A component of the plan includes portfolio management, but it also includes factors like changing laws to support the portfolio and how we're going to reengineer business processes."

As part of that effort, Wisconsin will develop tools for assessing both hard and soft benefits generated by e-government projects.

"What we will do is ensure that everybody has perhaps a concrete measure of cost or a concrete measure of service, and maybe customer satisfaction if they are in the business of dealing with the public," said Alison Poe, head of the Department of Electronic Government's Bureau of Strategy Development.

The assessment methods haven't been finalized yet, but Wisconsin already has been gathering results from some IT initiatives for several years, Poe said. For example, it's creating baseline data to show how automated fingerprint identification technology reduces the amount of time it takes to identify criminal suspects.

The state hopes to get a tighter grip on less tangible benefits, as well. "One thing we've done a

Steve Towns, Editor Steve Towns  | 

Steve Towns is the former editor of Government Technology, and former executive editor for e.Republic Inc., publisher of GOVERNING, Government TechnologyPublic CIO and Emergency Management magazines. He has more than 20 years of writing and editing experience at newspapers and magazines, including more than 15 years of covering technology in the state and local government market. Steve now serves as the Deputy Chief Content Officer for e.Republic.