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Balancing Cost Containment and Innovation in Government: More or Less Centralization?

by Andrea Di Maio  |  September 8, 2010  |  Comments Off on Balancing Cost Containment and Innovation in Government: More or Less Centralization?

Browsing through the first responses to our online survey on top business and IT issues for government organizations in 2011 (by the way, please respond if you did not already), I have noticed that cost cutting, cost containment or cost optimization (more or less politically correct variations of the same topic) is still among the top rated themes for next year.

This is far from surprising of course. The economic recovery is between uncertain and fragile, government budgets keep being under scrutiny, greater public spending to further ignite recovery will further affect spending on government service delivery and operations. As I have described in research note From Modernization to Survival: Radical Cost Reduction in Government (available to Gartner clients only – a press release with some of the content is available here), government organizations are at a point where they need to think more creatively and radically to how to save costs in a sustainable way.

At the same time, there is a need to innovate to respond to evolving citizen and business needs. As people face challenges like globalization, long-life learning, shift from permanent to temporary work arrangements, immigration and emigration, governments need to transform their services and the way they work.

Therefore the emerging problem is how to balance innovation, which usually costs money, with cost reduction.

Now, what is the best way of striking that balance across one or multiple jurisdictions? Should this being achieved through greater consolidation or by empowering individual agencies?

We decided to take this as the topic of a point-counterpoint session that will be held at our upcoming US Symposium in Orlando. My colleague Jerry Mechling and I will debate it during the public sector track that complements the official Symposium agenda, with sessions taking place over breakfast and lunch.

Here is the description of our lunch session:

Balancing Cost Containment and Innovation Today: Does It  Take More or Less Centralization?

In tough economic times government organizations are called to reduce their costs while maintaining their service levels. This implies that they have to innovate service delivery models and business processes with very limited discretionary spending. The session will discuss and debate two different approaches: one based on greater centralization and consolidation of IT services to reduce recurring costs and free resources for  innovation, and the other one based on empowering individual departments and agencies to strike that balance, limiting centralization to where it is absolutely unavoidable. The audience will be asked to actively participate in the debate, where each of the analyst will support and defend one of the approaches

It would be great to collect some viewpoints from this blog’s readers about whether more or less consolidation would help find the balance.

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Category: shared-services-in-government  

Tags: cost-cutting  innovation  

Andrea Di Maio
Managing VP
19 years at Gartner
33 years IT industry

Andrea Di Maio is a managing vice president for public sector in Gartner Research, covering government and education. His personal research focus is on digital government strategies, open government, the business value of IT, smart cities, and the impact of technology on the future of government Read Full Bio




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