SEP 26 2011

Cost Reduction and Innovation well arranged

by in E-Government, Examples Leave a comment

The current time is marked by a rapidly increasing number of economic crises.  Nevertheless numerous upcoming issues like Shared Services, Cloud Computing, Open Government or Open Data offer a huge innovation potential and thus the possibility to gain a positive position in a constantly changing world.

This innovation potential gives also organizations of the public sector a unique chance to raise their income due to locational advantages and lower costs by increase in efficiency. Also the administrative organizations have to deal with competition.

But what has a good manager in public administration to do to benefit of these potentials – preferable within the available budget limits.

A market study by the business consultants Logica in collaboration with the market researchers Audoin Consultants (PAC) mentions the following five strategies how to bring with the help of IT proximity to citizens and cost reduction in line:

  1. Automation of administrative,  backoffice and customer care processes
  2. Enhanced administrative efficiency through IT-based, centralized procurement solutions
  3. Implementation through the use of shared services and collaboration with the private sector
  4. Slimming down process flows between different administrative levels
  5. Cost reduction through introduction of new IT solutions

The first three points already deliver a very huge potential in both perspectives. An increase in efficiency within the scope of automation of administrative processes cares for the reduction of the running costs along with raising service quality and speed at the same time. It happens very often, that this increase in efficiency is mistaken for staff savings. But: The priorities should rather be set on standardization of processes and systems – also across organizational borders.

It cannot be the goal to automate every single process with disproportional high personnel and financial effort to save as much as possible personnel costs. To reduce the running costs within the field of the basic infrastructure by standardizing processes and solutions is doubtless a better approach. In addition, the reduction of the running costs gains more financial freedom for investments and subsequently – if you do it wise – innovation.

The relevant starting points for that purpose – Shared Services, Cloud Computing, Open Government and Open Data are already mentioned above.

Especially the field of standardized processes on a Shared-Service-Platform has to be seen as an important first step. But this can be very critical, because, if this step is not actually implemented successfully the next stage cannot be realized economically. Often, the temptation to deal with trends like Open Government, Open Data, a transparent administration or E-Democracy is very strong. But who has not first laid the solid foundation internally will definitely fail!

The area-wide use of a platform for document oriented data within an organization or rather already across organizational borders can be seen as an indicator for the successful increase in efficiency of administrative processes. If this internal basis is provided, the next step can take place: The communication with further partners like companies, citizens and other public organizations via online-services and the supply of data in terms of Open Data. Additionally it is possible to establish on such a platform further services, which are – because of continuous changes – used again and again.

This opening up and this flexibility accordingly gain the above mentioned competitive advantage. Innovative and expanding companies are more and more looking for locations where they can communicate efficiently and electronically with public organizations, which are featuring a clear and transparent administrative behavior.

Also from the perspective of security, which is confronted with constantly increasing harassments, this step-by-step-approach is an important practice. The safety-related monitoring of a consistent shared service platform is  easier and more cost efficient as of a plurality of connected systems.

For the management of public organizations not the “administration” is in the foreground, but creativity in matters of innovation and concurrently stagnating costs gets more and more important.

Read also:

Smart Governments Must Blend Long and Short Term Perspectives
Andrea Di Maio, VP Distinguished Analyst at Gartner

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