Combining the digital age with the current climate of financial austerity is a challenge for government leaders who want to drive continuous transformation. Like many organizations, IBM has been aggressively transforming its business model, structure, technology and culture for the unyielding dynamism of the 21st century global economy.
We’ve made our share of mistakes, but this journey has unveiled a few proven principles that are core to the success of any modern transformation effort. These commercial best practices have helped reduce our costs and improve performance, resulting in annual savings between $3 and $5 billion.
In the private sector, back-office costs have been reduced to as little as one percent of annual expenditures, simply by eliminating duplicate operations and converting them to a single, global model across departments. Governments are taking similar paths. The U.S. government consolidated 26 payroll systems to four, saving the Department of Health and Human Services $11 million per year and helping the Environmental Protection Agency reduce its payroll costs from $270 to $90 per employee.
Likewise, streamlining procurement and supply chain management to a single enterprise-wide model helps generate operating cost savings driven by process improvement, standardization and simplification. Procurement teams can shift from transaction processing to higher value activities such as market intelligence, strategic sourcing and supplier management. Creating a more flexible cost structure increases operating leverage and cash management efficiencies. This model can respond more quickly to shifts in economic conditions and government priorities. IBM eliminated $25 billion in costs and significantly improved supplier performance through this approach.
Move to mobile
Smarter, sustainable and cost-effective workplaces in the 21st century go beyond “bricks and mortar” frameworks to leverage opportunities stemming from mobility and virtual collaboration tools. A mobile workplace promotes growth within an existing real estate footprint by permitting employees to work from any location. The associated compression and reduction of work spaces helps generate significant real estate savings.
New technologies such as location-independent voice and network services save millions of dollars annually for private sector organizations. Advanced office automation and collaboration tools such as Web meetings, instant messaging and social analytics software, combined with application support for mobile devices including laptops, tablets and smart phones help make this transition more seamless for managers and employees. Achieving and measuring the outputs (results) of work instead of tracking the inputs (hours spent sitting at a desk) is the goal.
New private sector approaches to application and development management can help government departments develop and maintain complex application portfolios. Collaboration and social media techniques can effectively extend the working day by leveraging multiple resources located across time zones. This community-based collaboration environment lets larger numbers of professionals exchange ideas and solve problems more quickly when supported by open-source frameworks that place a premium on intellectual capital, expertise, trust, efficiency and results to help increase productivity and capacity.
Consolidating data centres, networks and email systems across departments is a best practice that can provide more than a 30 percent reduction to operations budgets, or in our case, nearly $1 billion annually. It also results in significant energy savings and reduced floor space.
New service delivery models such as cloud computing can be adopted to help build internal expertise and increase efficiencies by providing more self-service access to IT resources, standardized technology and improved system performance. For example, an analytics cloud can integrate disparate systems and present relevant information that matters across hundreds of thousands of people. Clouds quickly capture Internet-scale data by the petabyte – equal to 300 billion ATM transactions – and make it directly available to employees. Big data analysis that used to take weeks or months is now conducted in hours or minutes.
Analyze for efficiency
Studies show that data-driven organizations outperform their competitors. Many government departments worldwide are using analytic techniques to identify potential fraud and error, streamline key business processes and provide more efficient service delivery.
The Alameda County, CA, Social Services Agency optimized its IT system by creating a single view of its citizen clients and applying analytics to its benefits payment operations. It now saves almost $25 million annually by reducing benefit overpayments.
Leading this kind of change is hard. To succeed during times of financial austerity, governments will require creativity, analytical prowess and a radical simplification of processes. Optimized systems can be easily tuned to specific tasks and provide quick and easy access to Internet-scale data across departments. Our experiences prove that smart approaches to 21st century transformation are well within government’s grasp so they can continue to work in concert with each other on a global scale to meet the growing demands of those they serve.
Ralph Chapman is the vice president, Public Sector, for IBM Canada.