Business Analytics: Four Rules for Success in Government

Effective government agencies use performance measurement tools to make fact-based decisions.

by / September 5, 2008

Few CIOs are as openly accountable as Paul Cosgrave. As the IT chief of New York City, Cosgrave is in charge of an online performance measurement tool that allows the Big Apple's citizens to see just what they're getting for their city tax dollars.

Launched in February, the Citywide Performance Reporting (CPR) system gives New Yorkers access to constantly updated performance data from city agencies. Extending the reach of Mayor Michael Bloomberg's annual management report to the public, the CPR makes 300 performance indicators available online. The indicators are represented graphically with pie charts, which make performance trends easy to identify and comparable for up to a five-year period.

The system Cosgrave runs also gives city officials advanced analytical tools to run the city more effectively. The CPR integrates performance-related statistics from 60 city organizations, helping Bloomberg's managers make smarter decisions by giving them fast access to information about the public's demands and agency performance.

Dubbed "the mother of all accountability tools," the system is proving very effective. Using CPR, New York's environmental services managers can anticipate emerging issues and respond more quickly to problems, such as noise complaints. The CPR system's initial success is encouraging many New York City offices to plan additional applications. Already there are plans to adapt the CPR dashboard tools to track performance on other agency programs. City managers intend to integrate data-visualization tools to display service request information on a map and expand the analytics data offered to the public.

Innovative CIOs, like Cosgrave, are turning to analytics - defined as the extensive use of data, statistical and quantitative analysis, predictive models and fact-based management to drive decisions and actions - to improve the delivery and performance of public services. Sophisticated analytics are rapidly finding applications in areas such as tax revenue collection, postal services, fraud detection, public safety, and health and human services. Local and regional municipalities, as well as the federal and government, are increasingly adopting analytics. They are as constructive in public service as they are in the commercial sector, where companies, such as Procter & Gamble, have long used analytics as a competitive weapon.

Recasting the CIO's Role
In effect, analytics can recast the role of many public-sector CIOs, shifting their focus from maintaining and upgrading IT systems to driving wholesale change for the constituencies they serve. By linking analytical tools to the organization's mission and values, CIOs can transform their agencies' effectiveness.

For many public information offices, like the U.S. Bureau of Labor Statistics, and for intelligence agencies, such as Britain's MI5, data gathering and analysis is a core function. But analytics is now sweeping through more public-sector activities. Accenture's ongoing research suggests many leading government agencies can be classed as high performers - on par with high-performance businesses operating in the commercial sector.  

What's propelling such change? First, government agencies can access substantially more data, not only from publicly available sources, such as the Internet, but also from their own systems and those of other organizations. Many agencies are now more capable of capturing clean, integrated and timely transaction data. The data comes from more sources through a wider range of channels - from traffic cameras and under-highway sensors to e-mails and mobile communications handsets. And it's proliferating at staggering rates: According to a white paper by IDC and EMC, the volume of data added worldwide will increase more than sixfold between 2006 and 2010.

Organizations also have software and hardware can better capture, store, distribute and interpret data. There is more processing power on desktops and in data centers. And real-time business intelligence (BI) software, in which automated decision-making systems are embedded in business processes, is rapidly gaining ground.

There's also more demand for sharper insights and better ways of gathering and interpreting data to inform decision-making. A generation of technology-literate and data-savvy managers is one reason for that demand, which also stems from external factors, like the war on terrorism. There can be no more compelling argument for making decisions based on facts than in a study by the CIA's Center for the Study of Intelligence about the U.S. intelligence community's culture following the 9/11 attacks. The study highlighted serious deficiencies in the intelligence community's analytical processes. The foreword's author concluded: "[The author] finds no baseline standard analytic method. ... The intelligence community does more reporting than in-depth analysis." 


Link Between Analytics and High Performance
Accenture has studied high-performance organizations in depth over the last six years. An Accenture research report found government and other public-sector organizations, much like their commercial counterparts, are looking for bigger benefits from their enterprise systems. That research also uncovered a powerful link between organizations with pronounced analytical orientations and superior performance. High performers - those that substantially outperform competitors over the long term and across economic, industry and leadership cycles - are more likely to value fact-based decision-making and to have the skills and capabilities to effectively use analytics. They are twice as likely to use analytics strategically compared with the overall sample and five times more likely to do so than low performers.

Executives are increasingly aware of IT's power to aid decision-making. In a 2006 Accenture study, 28 percent of senior government managers polled said they use their enterprise systems for "significant or extensive decision support or analytical capability." And for the third year running, according to a worldwide survey Gartner conducted of 1,500 CIOs, BI was the top technology priority in 2008. As top performers develop analytical capabilities, they're migrating toward more powerful techniques, such as predictive modeling, forecasting and optimization.

Analytics at Work
Although many organizations use analytics in only limited ways, some can be described as true analytical leaders - organizations that make systematic use of analytics to achieve lasting advantage. They achieve large-scale results by:

  • Focusing their analytics resources on making the most of their distinctive capabilities -defined as the sum of the integrated business processes and capabilities that allow them to serve their customers in differentiated ways and create new formulas for business success;
  • Having senior leadership teams that are committed to analytical competition and to building their organizations' analytical capabilities;
  • Strategically managing and applying analytics enterprisewide.

Some of the UK's leading police forces fit that description. They use analytics to identify individuals who are likelier to commit crimes. Interpretation of crime statistics has revealed half of all crimes in Britain are committed by 5 percent of criminals. "We want to exert less effort on investigating each individual crime and more on understanding the criminals. ... This will bring a disproportionate benefit for preventing crime altogether," said Paddy Tomkins, chief constable of the Lothian and Borders Police, in an Accenture study.

A large national tax authority in another country employs analytics to boost voluntary taxpayer compliance. The initiative goes hand-in-hand with a customer service focus. By publicizing its moves and making it easier, cheaper and more personalized for clients to deal with the tax authority, it's improving voluntary compliance rates.

Data-intensive medical practices are also beginning to generate benefits. So-called "evidence-based medicine" has the potential to greatly improve individuals' health and well-being. Partnering with private-sector insurers, agencies such as Medicare are using analytics to discover the most cost-effective treatments and promote the best patient outcomes. The U.S. Department of Veterans Affairs has been recognized as one of the most effective health-care providers in the United States by employing analytical approaches, such as predictive modeling of chronic disease and the use of automated decisions for treatment protocols and drug prescriptions.

Similarly Germany's federal labor department, the Bundesagentur für Arbeit (BA), now uses a "status assistant" tool that automatically defines and records the job placement status of the 7 million unemployed people on the BA's books. The individuals are placed in three categories: unemployed, actively looking for work and seeking job counseling. Data is collected from repositories: For instance, information on a person's work history is pulled from one source and data on the training offered by the BA from another source. The tool consolidates and analyzes the data to update the job seeker's status. This process replaces all the steps that previously were conducted manually by BA agents, and it improves the data quality and thereby the BA's statistical evaluation of the job markets.

In the United States, the federal Court Services and Offender Supervision Agency for the District of Columbia must allocate its scarce resources to protect Washington, D.C.'s citizens and help offenders reintegrate into society. Calvin Johnson, director of the Office of Research and Evaluation, recognized risk assessment and management are as central to the agency's mission as they are to an insurance company's business model.

"We share many of the same pains as business," said Johnson. "We may articulate them differently, but we still need to show the best possible return on our investment." Adopting a corporate approach, Johnson's office developed a predictive model that creates a risk assessment profile for probationers and offenders on post-prison community supervision. The model also generates a prescriptive supervision plan designed to improve the chances of successful rehabilitation. Officers use the risk assessment score and prescribed supervision plans to develop a program tailored for each offender that statistically has the best chance of success.

Analytics Excellence Fundamentals
To be clear, CIOs face plenty of barriers before they can design and implement an effective analytics initiative. Dirty data is a persistent and universal headache. In the commercial sector, an alarming proportion of business data is inaccurate, and there's every reason to believe it's the same in government agencies. CIOs face a battery of security concerns and privacy issues, especially in a world made more porous by portable and removable data devices. Agencies whose work is especially sensitive must balance security controls designed to limit information to those who "need to know" with the obligation to share data. For example, when national intelligence agencies use different encrypted e-mail systems, interagency communications are hardly seamless. Public CIOs also must decide whether and how to incorporate data from nongovernmental sources.

What then does it take to become an analytical exemplar? Accenture has observed four fundamentals at work:

· Leaders who "get it" -
Organizations aspiring to analytical excellence must confront big changes in culture, process, behavior and skills for many employees. These changes must be spearheaded by senior executives, such as the agency director or commissioner, who are passionate about analytics and fact-based decision-making. Given his background as founder of the eponymous financial news and data company, it's no surprise New York City's Bloomberg is the archetypal data-driven leader. He has plenty in common with Adm. Michael McConnell, U.S. director of National Intelligence. McConnell is tasked with integrating the nation's intelligence services, improving dynamic intelligence collection and upgrading data analysis quality. They both share much with Gary Loveman, CEO of Harrah's Entertainment, who regularly asks employees, "Do we think, or do we know?"

Such leaders take the long view, as Bloomberg did when launching New York's CPR system. "Our hope is that CPR will continue to empower the people to hold government accountable long after our administration has left office," he said.

· Staff who love numbers -
Leaders such as Bloomberg and McConnell have an enterprisewide view; they want to establish a fact-based culture across the organizations they lead and extend it to their partners. It's the job of their CIOs to "industrialize" an analytical approach by deploying easy-to-use tools organizationwide. It's the job of all agency managers to ensure their employees are data savvy or can quickly become so. Clearly this calls for hiring, training and rewarding for analytical skills, especially at management levels. It also highlights the need to understand where those skills matter most and where they will matter more in the future. We expect the growth of analytical competition to require a core of data-oriented professionals supported by a larger group of "analytical amateurs."

· Processes that revolve around facts -
Analytical CIOs begin with a single version of the truth. In too many organizations, leaders from different functions regularly clash over perspectives supported by data developed within, and suited to, each function's operations. What's needed is an integrated, cross-enterprise data view - a state that may require business process redesign on a broad scale. Fortunately there are tools that enable redesign without excessive pain.

· Technology to capture, clean, sort and make sense of data -
It's impossible to succeed as an analytical player if you can't trust your data. In many organizations, managers would be hard-pressed to tell which corporate data repositories are trustworthy and which contain duplicates, outdated records and erroneous data entries. Analytical leaders practice zero tolerance with dirty data, using data-quality software to pinpoint and deal with duplicate files, inconsistencies and inaccuracies. Then they apply their organizations' abundant processing power to support their analytics initiatives. Accenture sees wider use of dedicated "BI appliances" - de facto supercomputers that handle large databases and analyses. Much of the necessary analytical software is also available. Real-time BI is also gaining ground; we are also observing the emergence of right-time analytics. It has historically taken time to extract and analyze data, but today's powerful analytics tools let managers react rapidly to new inputs.

The good news for public-sector CIOs is they already have much of the necessary data. They just need to harness it in ways that help them arrive at better decisions more quickly. Analytics exemplars, such as Cosgrave and Johnson, are showing how.

Jeanne Harris Accenture Institute for High Performance Business