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What's your IT investment worth--really?

Measuring the return on investment from government IT projects (or any IT projects for that matter) can be a tricky matter. Much of that has to do with the fact that ROI is so often linked to financial measures--lower costs, higher revenues, etc.

Fortunately for government IT shops (or not, as you'll see), they're not all about making money the way commercial companies are. They're in the business of delivering better value to citizens. Which means two things: First, traditional ROI models don't necessarily apply to government IT (good news). Second, their ROI models probably need to include touchy-feely metrics that can be a lot harder to quantify than dollars and cents (less-than-good news).

Today the Center for Technology in Government at the University of Albany released a white paper aimed at helping public sector agencies measure ROI. (The white paper is a 50-page PDF that you can download here.)

According to the report (which, in the interest of full disclosure, was funded by SAP), there are a few fundamental problems with traditional ways of measuring ROI in government, including "incomplete analysis of public value, resulting in too narrow a scope of what can be considered returns to the public."

What the CTG proposes in its report is something called a "public value framework," which takes into account "the point of view of the public, not the government, as the basis for the assessment."

By the CTG's own admission, its framework is "simple in concept, but complex in application." So the report offers up a series of case studies. They're quick and dirty (find longer versions here), and only two are based in the U.S. [NOTE: I'd originally said only one was in the U.S.--there's also a Washington State digital archives example. Still, three out of five examples have to do with ERP systems, which SAP sells.]

One U.S.-based example is Pennsylvania's Integrated Enterprise System, an expansive ERP implementation. According to the report, "The IES infrastructure provides public returns in the form of direct improvements in the efficiency and effectiveness of core administrative functions. This infrastructure also provides the basis for improvements in the back office operations of other service areas which, in turn, offer improved services to the public."

At first blush, there's not much here that's stunning. "Improvements in efficiency" are always hard to measure, but we know they exist. Fortunately the case studies are in the appendix, so you can bypass them if you wish.

Our suggestion: Download the free file and give it a read. Many agencies are already working with complex enterprise architectures aimed at justifying IT projects. But the CTG offers nice insights on what "public value" really means and how an agency might measure it.

Every bit helps.

Posted by Brad Grimes

Posted by Brad Grimes, Joab Jackson on Sep 13, 2006 at 9:39 AM


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