The government sees IT as pivotal to its plans to improve public
services, but the Treasury is in desperate need of benchmarks to
judge its performance. Electronic service delivery and the balanced
scorecard could be a way forward, reports Phil Cain
In the private sector, any failure of IT to keep its project
promises can lead to calls from disgruntled shareholders and
harassed board members for it to demonstrate its worth. And in the
public sphere, the government is lending its considerable weight to
this pressure. Between the 2000 and 2002 spending reviews it
approved £6bn spending on what it calls "modern technology". And in
July's spending review this year, in which the Treasury set out
departmental spending priorities for the next three years, it
reiterated its belief in IT's pivotal role in public service
improvement.
But it also placed a new focus on getting a return on its
investment, saying that so far "little emphasis [in government] has
been given to the efficiencies that could be delivered by realising
the full benefit of these investments".
Meanwhile, the Gershon Efficiency Review, a simultaneously released
study which informed the spending review, suggests these savings
could come from migrating customers to new electronic channels and
restructuring internal processes to reduce administrative
costs.
Local government, which accounts for about half the IT spending and
is responsible for more than three-quarters of government services,
is where the Treasury most eagerly wants to see its money back. The
review set a target of achieving, "efficiency savings in local
government of 2.5% a year to deliver £6.45bn of efficiencies and
productivity improvements by 2007-2008, releasing additional
resources to front-line services".
But how can this be achieved and who will know if it has been?
Although the Treasury has a keen eye on the costs, the benefits and
savings are much harder to pin down. Without knowing what these
are, who is to say if the target has been achieved or, on a smaller
scale, if a particular project should be funded or axed?
Solving this riddle will mean local government IT project and
programme managers will all face their share of Treasury heat. "The
agenda has changed to improving efficiency and the process for
measuring your efficiency," says Chris Taylor at the Improvement
and Development Agency, a government-funded local government
advisory service.
To complicate matters, the Audit Commission, the agency in charge
of measuring local government performance in England and Wales,
scrapped assessments of IT departments in 2002. Like everyone else
in local government, it is left wondering how to measure the
performance of public sector organisations. How will IT's
contribution be recognised? "The Audit Commission has not yet
sorted out how that process will work," Taylor says.
From the point of view of public sector IT management, "there is
probably the potential to get these levels of efficiency," says
John Serle, chair of the best value group at local government IT
managers' association Socitm.
But he also believes the review fails to acknowledge the political
realities of local government. Although private sector service
providers such as banks can easily derive cost savings from new,
cheaper electronic channels by shutting outlets, it is more
difficult for councils. "We are talking about schools, libraries
and police stations," Serle says. Making technology-enabled changes
does not depend so much on technology, but "having the political
will to carry it through".
Glyn Evans, chair of Socitm's information age government group,
says that part of the problem is that the review's logic is more
relevant to the few high-volume services in central government,
such as vehicle licensing. "A lot of local government services are
not like that. Social care, for example, is targeted at what an
individual needs," he says. Rather than attempt to derive a small
percentage saving per transaction, "the way to get efficiencies in
local government is to do things radically differently".
But the Office of the Deputy Prime Minister (ODPM) has, according
to Taylor, provided the beginnings of an answer to measuring
progress in its requirement that councils report progress on
e-government projects through annual "implementing electronic
government" statements. In so doing it has made the crucial step
that links funding to a funding mechanism. Beginning four years ago
as an annual requirement, the ODPM's door is now open to reporting
through an online site called Electronic Service Delivery
Tooling.
The potential for a switch to near continuous, rather than annual,
measurement may fit in with current trends in project management.
"You do not just write a big spec and say, 'There it is!' It is a
more interactive process." Project managers these days take shorter
and quicker steps, says Taylor.
Although there might be a mechanism for measurement, what should it
measure? Most traditional techniques tend to look on IT investment
in terms of financial return on an asset, based on the theory of
capital markets, which does not fit with the public sector
ethos.
"I am interested in the balanced scorecard approach," Taylor
says, referring to a management evaluation technique invented by
the Massachussets Institute of Technology's Robert Kaplan and David
Norton in the late 1980s. The balanced scorecard considers a number
of non-financial measures of success, such as learning and
growth.
Despite its holistic, non-financial elements, the balanced
scorecard, like its rivals, was developed to satisfy private sector
IT managers who found using a financial indicator alone was of
limited use. Even in a private sector organisation, Taylor says,
you need to take account of more than just how you appear to
shareholders. Staff training, internal business processes and
customer perception must also be considered. Bernard Marr, from the
Cranfield School of Management, says it is helpful for public
sector organisations to modify the terms used to fit their own
aims.
Marr makes bolder claims for the progress of the scorecard
approach. "Almost every local authority has a balanced scorecard in
place," he says. Among open adherents to the practice are the
Ministry of Defence and Newcastle City Council.
Terry Dailey, of the ODPM's e-government Capacity Building
Programme, is less certain about the inroads it has made. "Balanced
scorecards are around, but are not very prevalent. It is not
something to get people started with. It tends to be second stage,"
he says.
Only between one third and a half of councils are doing what Dailey
would call "process mapping", a management technique using a type
of flow chart where managers are encouraged to draw diagrams of the
inputs, risks and business processes to help them think of possible
improvements. But the disagreement about statistics is perhaps
because Marr prefers a fairly broad definition of the balanced
scorecard.
"It is simply a synonym for performance measurement and
management strategy," he says. The problem, according to Marr, is
that those who think they are using a balanced scorecard-influenced
performance management system are not doing it properly. "A lot of
people have read the first four publications on balanced
scorecards, but have not moved on. But over the past 15 years
scorecards have moved on."
According to Marr, those looking to use the technique need to ask
themselves what their organisation or part of the organisation
does, what resources it has to deliver, who the stakeholder is and
what their intangibles are. These intangibles, he says, can be
human capital, skills and IT capabilities.
From the point of view of an IT manager, it would be better if the
organisation had asked itself the same set of questions first. This
would allow the manager to develop a scorecard to deliver a
resource supporting the scorecard-based strategy of the
organisation as a whole.
The problem with a lot of public sector organisations is that the
measurements they make are not allied to organisational goals, says
Marr. "Instead of thinking about strategy they take the scorecard
as a measurement tool. Public sector adopters will often simply
work out which measurements they can make, often picking the easy
ones. You end up with a useless measurement tool, with too many
irrelevant measures."
A back-of-the-envelope job is not the best way to go about it,
according to Marr. "To make it work well you need a lot of people
to access it," he says. A performance management software package
is the best way to achieve this, he believes. Software companies
are scrambling for business from the 50% of local authorities which
have expressed an interest. There are between 30 and 40 products on
offer, which cost from £30,000 to £1m, depending on the size of
implementation. These can be divided into three broad categories:
those offered by enterprise resource management software companies
such as SAP, Oracle, PeopleSoft and Hyperion; ones from business
intelligence heritage such as Business Objects and Hyperion; and
customised products from PerformanceSoft and Inphase.
Among a multitude of factors affecting the choice is an
organisation's existing infrastructure. For example, Marr says, it
makes perfect sense for an organisation with a SAP system to buy a
SAP performance management system, but it may not be best for other
organisations.
Terry Dailey is more sceptical about the benefits of performance
management software earlu on. "Using Microsoft Project can, at
early stages, hinder the process. It would be better to sometimes
do things manually. If you do the simple things manually, you
understand it properly," he says. In his estimation, only 2% to 3%
of organisations are using more sophisticated project management
packages such as Artimis or Niku.
With all this change in management approaches going on in
government, one important set of stakeholders - the taxpayers -
might have to alter their expectations. "If people set their
service expectations by those set by the private sector, people
will have to accept they need to invest in IT," Taylor says. But
perhaps the most reliable way to measure whether those paying think
it is a worthwhile investment will continue to be through the
ballot box.