Andrea Di MaioIn times like these, when financial turmoil is storming the entire world and governments are called to act to defend their economies and societies, it is too easy to pull the brakes (or the plug) on innovation, focus on how to keep the lights on, squeeze efficiency out of the infrastructure, and delay, postpone or cancel technology projects.
Let’s face it: information technology has rarely proven its value in government (and failures make to the press much more easily than successes), and moves like consolidation and shared services – while sensible from a financial and management perspective – have helped create a climate where IT is seen as a commodity, or even a nuisance. With few exceptions, there will be more questioning about discretionary spending, less emphasis on innovation, more scrutiny and less enthusiasm for projects dealing with transformation and modernization.
So, where does this put web 2.0 on the map?
Some might think that web 2.0 initiatives are obvious candidates for the hatchet: still perceived by many as little more than a toolset for younger generations (both civil servants and citizens), web 2.0 is rarely associated to the ability to save money in the short term. Further, for its very nature it makes ROI and planning assumptions quite arduous.
Well, think twice. In fact:
- Web 2.0 requires little investment to start: at times where budgets are increasingly tight, any technology that allows you to do something without asking for money is welcome.
- Web 2.0 has worked well to aggregate people and information to face natural disasters like Katrina: people look both for peer support and for government when times are tough.
- Governments will have to divert significant resources to sustain industry sectors, support unemployed people, invest in infrastructure and help restart local economies. This will require new ways to collaborate across the boundaries of government organizations, but also to engage with groups outside government to maximize their impact.
- Budget cuts will take a toll on a number of different programs, from education to human services, from health care to research. Tapping into societal resources, such as voluntary groups, philanthropists, associations and social network groups will be essential to complement weaker government action in some critical areas.
This crisis may be the catalytic event needed to make a compelling case for social software in government too. I am about to write a research note on all this, and really welcome your views.
Category: social networks in government web 2.0 in government Tags: cost cutting, web 2.0
1 response so far ↓
1 Philip Allea October 13, 2008 at 8:41 am
McAfee and Brynjolfson’s HBR Article “investing in IT That Makes A Competitive Difference” (July-August 2008, see http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml;jsessionid=MLRLOFNE52N1KAKRGWCB5VQBKE0YOISW?id=R0807J&referral=2340) reveal that investment in IT is the definitive correlated indicator for making a competitive difference more so than M&A activity, globalization or R&D spending.
They note that “the internet and enterprise IT are now accelerating competition within traditional industries in the broader U.S. economy…because more processes are (becoming digital)…As a result, an innovator with a better way of doing things can scale up with unprecedented speed to dominate an industry.” In response, a rival can roll out further process innovations throughout its product lines and geographic markets to recapture market share. Winners can win big and fast, but not necessarily for very long.”
These researchers showed that “The spread in gross profit margin between the company performing at the 25th percentile in its industry and the company performing at the 75th percentile—an indication of the spread between winners and losers—has grown dramatically in high-IT industries since the mid-1990s.”
Digital business processes are invented and reinvented in intensely competitive companies. The authors noted that these “successful IT-enabled business process improvements” share specific characteristics: They cover a wide span, They produce results immediately, They are precise, They are consistent (executed the same way, everywhere, every time), They make monitoring easy, They build in enforceability.
The digitization of business processes has become the focal point of successful organizations. This enables organizations to do more with less people. For one of our clients, the CEO told me that he had moved his primary sales channel to the web, reduced sales head counts by 80% and increased revenue by 30%. More cash at hand was a strong result that he says makes all the difference with the lack of credit available today. For him, digitization of his key channel reduced costs, increased revenues and cash as well as increased customer retention and wallet share.
The need to do more with less, coupled with tight reigns on spending, means that every amount that is spent must be spent wisely. Zero based budgeting will soon dominate budget planning in private and public sector. The little that remains will be fiercely fought over. Demand and ability and expected outcomes, beyond time and money alone, must be married together to take the right decisions. Spending money wisely means that the basic questions must be answered:
1. Do we really need it?
2. What will we not do if we do this?
3. What more will we get after the project is completed?
4. What else will be effected after the project is completed?
5. What costs will be reduced?
6. What revenue stream will be increased?
7. To what degree will this meet the business goals we’ve set for ourselves?
8. To what degree will the business people be able to absorb the change?
9. What will be the impact on the customer/citizen?
10. What is the risk with the technology used to provide the solution?
For the reasons you note, coupled with the findings from McAfee and Brynjolfosn, today’s current climate will require that IT organizations extend themselves beyond time and money considerations to understand the possibilities that any investment in change brings and to consider the risk factors much more keenly.
In reality, we should be doing this ALL the time. Those organizations in good standing at the moment will be those who have always managed their portfolio properly.
Can government truly embrace the change that such technologies bring and then make the tough choices that reduce costs? To date, it appears that a lot of automation has been done to augment existing processes and staff. Will government embrace such an opportunity or will it be thrust upon them? Will they grasp at any idea that flits by or will they take a measured and considered approach, with appropriate planning and governance? It’s been a mixed bag of results so far. Perhaps today’s new situation will force a change or will it be more of the same?
It’s not just that IT has rarely proven its value in government, it’s also that government hasn’t considered its value opportunities with IT well. We’ll need some joined-up thinking about IT and the business of government to give investment opportunities like Web 2.0 a whirl.
Perhaps a tougher investment climate will get decision-makers to apply more scrutiny and consider opportunity as well. Past experience points to a different result. I’m ever hopeful and optimistic we’ll get there someday.