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Category Archives: finance

Delib helps organizations to leverage web2.0 tools to involve more people into the policy making process. It released a 15 minute video about “OpenGov” to give a nice overview about the topic.

Personally I want to stress an aspect Beth Noveck (deputy chief technology officer of Obama’s administration) highlighted. OpenGov is not about new technology in the first place. It is a tool to achieve strategic goals and support processes. Define these two aspects first and than choose the tools.

OpenGov initiatives only will be a success if people use it. Hence meaningful data has to be  available. However, I have some trouble to agree with Jake Brewer’s idea to make data available on a realtime basis. He actually compares it with real-time data as they are available from stock markets. However, he misses the point. Political decision makers should have a long term perspective like institutional investors do. Like pension funds develop long term investment strategies politicians should develop lont-term strategies as well. As scholars in the field of behavioural finance pinpoint the aspect that a repeated evaluation of investments increases adjustments resulting in a lower net-return than if you would have stayed relaxed. I am afraid that realtime political data wouldn’t be beneficial to develop long-term strategies. Instead media interested in a new scoop would pick a certain number regardless whether it is relevant to develop a long-term strategy or not.

Don’t get me wrong I do like the idea of OpenGov and the potential it has to increase citizens involvement and to leverage their analytical capacity. However, OpenGov itself is not a silver-bullet to develop a long term strategy especially not in the current economic environment. Right now the question is which unpopular decisions to make to get back on track.

John Moore names 2010 the year of the Social Anti-Guru calling to deliver real value rather than continuing the social media hype. So how does this relate to the public sector? The social media hype also reached the public sector, but it is slow to adopt. While public agencies in the US already started to offer open APIs Germany like many other European countries are still far behind to embrace traditional IT to deliver real value for citizens. But how to cut down the buzz about eGovernement and Gov 2.0 to deliver services that really matter? I wondered whether a traditional balance scorecard can be useful to decide wether public IT initiatives will make sense or not. As the traditional balance scorecard addresses four perspectives (1) customer, 2) finance, 3) internal business processes and 4) learning and growth) I discuss whether these are sufficient to evaluate governmental IT initiatives and which questions to consider.

Financial Perspective

  1. Is the service a legal requirement?
  2. Who will benefit financially?
  3. How much to charge?
A state delivers services to it’s citizens such as security, justice, education and at least a certain level of social security. Each service costs money and has to be financed somehow. There are mainly two ways to finance these services either (1) indirectly by paying taxes which are not bound to a certain service or (2) directly meaning you pay for a service when you need it. Based on these two different ways it has to be considered who will pay for a service.

Legal requirement?

Whenever a service is a legal obligation (e.g. owning an ID-card in Germany) this service should be free of charge. Hence such services should become more efficient overtime and not more expensive when using IT.
However, if one loses his ID-card before it expired the full costs for issuing a new ID-card can be charged.

Who will benefit financially?

Redesigning current processes with help of IT public agencies as well as citizens and corporations should benefit finacially. However, if only companies will benefit they can be charged for the service.
How much is a new service allowed to cost?
The total costs of a new process has to be below the current costs public agencies and external parties have to comply with the current processes. Additionaly neither side is allowed to face higher costs.

Internal Business Perspective

  1. Can the public do the job?
  2. How detailed do we have to provide the information?
  3. Do we have to reinvent the wheel?

Can the Public do it?

The idea of open APIs can have a huge impact on whether a certain service has to be delivered by public agencies or not. Last february Newsweek made a call to open people’s data to people. It’s a great article discussing the benefits of open APIs. Additionaly San Francisco’s innovative mayor (at least from a German perspective) Gavin Newsom wrote: “the public will create innovative applications when given access to the information they need“. Hence the first question from an internal business perspective is: Is it likely that the public can do a better (and even faster) job? I assume that this is true for almost all kind of information providing services once the data is available.

How detailed do we have to provide the information?

For instance shall we publish the area or also the streetname when giving access to a database containing information about crime, accidence, firearlarms and so on.
Hence open APIs can enable public sector to deal with issues that really matter. Free the police and let them do real police work. Let internal revenue service member handle your income statements rather than providing statistics, which can be created by applications using an open API.

Do we have to reinvent the wheel?

When I attended a conference on the interoperability of databases of the European Comission one Danish representative stated that every municipality develops it’s own database structure as local officials have the mindset that smth. developed with local taxpayers money is not allowed to deliver benefits to another municipality. Does anyone really believe that citizens care who came up with an idea? If it works and saves money officials can be assured of public support (despite the limition of rational voter theorem). And if the inventing municipality charges money for the use of “their structure”  they would be still better of. Let’s be reasonable.

Customer Perspective

  1. Who is the customer?
  2. Does the customer benefit?

Who is the customer?

Public sector involves politicians who are supposed to act in the interest of their citizens as they not also govern their voters but all citizens. Unfortunately these interests might be contradictive from time to time. Hence, who is the customer? The politicians who want the citizens to be more transparent or the other way around? I prefer a transparent government. Thus citizens are the customers not the politician.

Does customer really benefit?

Benefits have to be measurable and well defined. Otherwise these benefits might be sold as benefits but are just well created pie charts.

Learning and Growth Perspective

  1. Flexible for future changes?
  2. Flexible for what price?

Flexible for future changes?

Is a new IT initiatives flexible to adopt to future changes is crucial. While private business always has the same goal (earning money) governmental goals might change over time (assuming politicians pursue different goals). Thus IT initiatives shouldn’t limit the latitude of future governments.

Flexible for what price?

Flexibility can come with a price, thus it is important to consider later changes upfront. Personally I like the idea of adopting open source like the French public administration or the city of Munich. Scaling down on proprietary software and process landscapes will freeup financial resources and will enable flexibility. Unfortunately the idea of flexibility is not necessarily appealing to officials in office nowadays as they might have an ideological agenda which they want to last as long as possible (the principal-agent dilemma again).

NEW: Law perspective

I would add a fifth perspective to the traditional balance scorecard, eventhough I tipped upon it sligthly when I discussed the financial perpective: The perspective of current legislation.
  1. Will the new processes be in line with current legislation?
  2. Is changing law a realistic option or a workaround to comply with current law not too pricy?

Will the new processes be in line with current legislation?

For instance is a written signature really needed or does law just ask for a unique identification? Once I talked to a public official who stated that their national law doesn’t require a signature but a way to identify someone. Hence a digital signature is sufficient as well. It is this way of thinking that will enable government using IT in a citizen friendly manner.

Is changing law possible?

But if legislation might require a traditional signature, why not lobbying to change the law? Consider whether it makes more sense to lobby for a change of identification requirements or to build a work around. In general I would prefer changing the law. Especially as the eGovernment initiatives provide a great chance to review current legislation and consolidate bureaucracy where appropriate. It might be the last chance before bureaucracy is implented into IT processes. Use the momentum of change to change government for real and not just a process!

Conlusion

Summing it all up, the classical approach of a balance scorecard can provide a guideline to evaluate governmental IT projects upfront but also on the way to check whether expectations and the latest developments are in line. However, I think the four classical dimensions are not fully sufficient, hence I added a fifth perspective: Law