New Study Calls for Business Transformation in Government

WASHINGTON, D.C. -- State and local government managers say many technology initiatives provide only modest benefits for cash-strapped governments, and they call for an increasing focus on business transformation, according to a new survey of over 400 government managers at the state and local level. In the double-blind survey, conducted by the IBM Institute for Business Value in cooperation with the University of Maryland's Robert H. Smith School of Business, government managers say they must focus on removing organizational, process and technology barriers in order to achieve more significant payoffs from initiatives.

As part of the survey, respondents were asked to evaluate 11 initiatives on the basis of whether they improved operational efficiency and organizational effectiveness. Overall, the initiatives provided moderate benefits, achieving an average score of 3.3 on a scale where 1 represented limited benefits and 5 represented significant benefits. IBM also conducted follow-up interviews with decision makers representing business and technology leaders from a cross section of state and local government departments. Many of these managers said that high resistance to change, insufficient training, low acceptance of technology and weak communications were limiting factors in achieving benefits.

The managers' rating suggest that governments shouldn't abandon their initiatives, however. Instead governments should adapt their implementation approaches to resolve some of the key barriers to realizing the benefits possible from these initiatives, according to "Operational Efficiency and Organizational Effectiveness: How Do State and Local Initiatives Measure Up?" IBM managed the study, conducted the interviews and analyzed the data collected, with assistance from the University of Maryland on survey development and distribution.

Choosing the right investment means understanding process change. Many governments are investing to improve operational efficiency and organizational effectiveness and thus cope with difficult economic times, according to the report. State budget deficits are common, and for fiscal year 2003, two-thirds of states reported declining revenues. As a result governments face significant pressure to show value from the initiatives in which they invest. Choosing the right investment option depends not only on understanding what strategies and technologies are needed but also how to manage the organizational and process transformation needed to support the new systems so that the government achieves the desired return on its dollars.

According to the evaluations by survey respondents and interviewees the 11 initiatives improved information management, administration and service delivery, but had little impact on employee development and financial improvement. In addition, respondents said the primary benefits across all investments were improved information distribution and more effective or efficient customer service even when these were not the primary goals of the initiatives. Investments in information technology infrastructure and "e-Workplace" systems and intranets provided the highest benefits in operational efficiency and organizational effectiveness.

But governments can take action to overcome barriers, according to managers in the IBM survey. Common actions they recommended include establishing streamlined processes and management system that demonstrate the linkage between investments in internal initiatives and the external benefits for customers, communities and stakeholders. Increasing the focus on financial performance by developing detailed financial objectives and targeting implementations on high-cost activities while increasing the focus on employee skills development through proactive efforts to transfer knowledge throughout implementation were cited as methods to increase the potential for success.