state governments can save big money through IT-enabled productivity

11.2 billion reasons to focus on productivity

Among the many jobs for state IT shops is to streamline existing systems and boost government productivity.   A new report from the Information Technology and Innovation Foundation, however, suggests that state CIOs should make productivity their foremost concern because IT-driven improvements could save states more than $2 billion per year.

The five-year projected savings for states range from $1.3 billion for California to $38.4 million for South Dakota.  Nationwide, the five-year total could reach $11.2 billion.

"Governments are supposed to harness IT to increase efficiencies, cut costs and improve the quality of public services," the report, titled "Driving the Next Wave of IT-Enabled State Government Productivity, states.  "All too often, however, governments focus primarily on improving services, not on increasing productivity."

One reason for this, the report authors noted, is that "increasing quality and convenience for citizens is politically uncontroversial, while cutting costs -- particularly labor costs -- can be."  And labor savings are where most of that $11.2 billion is found.

ITIF President Robert Atkinson, however, also identified another stumbling block.

Speaking at an Oct. 13 panel at the National Association of State CIOs Annual Conference, he noted that most states don't accurately measure the return on investment for IT projects that power productivity-driven cost savings -- and so miss out on the opportunity to justify further IT investments.  

"One of the things states need to do differently on ROI," Atkinson said, is remember that government IT serves both the government enterprise and the people in the state.  With too many states, he argued,  "the ROI analysis is only done internally" -- a new Department of Motor Vehicles licensing system, for example, is justified only by the dollars it saves the DMV.  

"Imagine if you could go to the state legislature," Atkinson said, and add in all the time that people saved -- because time is money -- that makes this ROI maybe three times higher. ... That is real money, that you have now saved the entire state."

Many of the report's recommendations are targeted at policymakers, including the suggestion that governors should explicitly change the CIO job description "to have their CIOs focus on improving productivity in all agencies and services through the use of IT."   But the central prescription would directly affect every state IT shop:  Move as many business transactions as possible online and set firm deadlines by which state agencies will no longer accept non-digital transactions.

"At some point... you've simply got to mandate it for businesses," Atkinson said at the NASCIO event.  "You can't really do that for residents, but we can incent them."

Arkansas CTO Mark Myers, who also took part in the NASCIO panel, acknowledged that it was difficult to get different parts of his state's government to consider such process improvements, even when they would save both time and money.

Arkansas has implemented a single electronic payment system statewide, which can now be used for everything from taxes to license fees to judicial payments.

The project was complicated by the fact that it involved the judicial branch as well as executive agencies, Myers said.  The courts were not inclined to change just because the state CIO said there were savings to be had.  "You have to have a discussion that's really about business process," Myers said.

The benefits, however, have been clear.  Myers cited the example of how Arkansas now handles a traffic violation.  "A state police officer goes and issues a ticket," he explained.  "If the citizen doesn't show up for the court date, we automatically suspend that license.  Then if you pay your fine in the court system or through the online service, it automatically reinstates you. No longer does someone have to physically go in and reinstate you."  The integrated system, he said, saves time and paperwork for the citizen and state agencies alike.

The ITIF report includes a range of other case studies showing that improvements are possible.  Pennsylvania, for example, is saving roughly $550,000 annually thanks to a mobile application that streamlines road and bridge inspections. Montana realized five-year savings of $3.4 million by automating just four service transactions.  And Utah has deployed highway sensors to improve its response to snow and ice hazards -- the optimization of such efforts has saved the state $2.2 million to date and contributed to a 39 percent reduction in car crashes.

Unfortunately, the report notes, most states are reluctant to invest in new IT infrastructure that would make such improvements possible -- choosing instead to spend mostly on maintaining existing systems.  While private-sector IT investments have grown by more than 15 percent since 2009, state and local IT spending has generally remained steady -- and even declined on a per-employee basis from 2013 to 2014.

"IT is powering productivity in virtually every sector of the economy," the report concludes.  "Now is the time to fulfill the original promise of e-government: not only to provide better and more convenient services but to drive productivity in state government and state economies."

About the Author

Troy K. Schneider is the Editor-in-Chief of both FCW and GCN, two of the oldest and most influential publications in public-sector IT. Both publications (originally known as Federal Computer Week and Government Computer News, respectively) are owned by GovExec. Mr. Schneider also serves GovExec's General Manager for Government Technology Brands.

Mr. Schneider previously served as New America Foundation’s Director of Media & Technology, and before that was Managing Director for Electronic Publishing at the Atlantic Media Company, where he oversaw the online operations of The Atlantic Monthly, National Journal, The Hotline and The Almanac of American Politics, among other publications. The founding editor of, Mr. Schneider also helped launch the political site in the mid-1990s, and worked on the earliest online efforts of the Los Angeles Times and Newsday. He began his career in print journalism, and has written for a wide range of publications, including The New York Times,, Slate, Politico, Governing, and many of the other titles listed above.

Mr. Schneider is a graduate of Indiana University, where his emphases were journalism, business and religious studies.


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