States can save $11B over five years using IT, report says

State governments can save up to $11 billion over the next five years by using IT to increase productivity, according to a new report.

The Information Technology and Innovation Foundation, a think tank focused on the intersection of technology and public policy, released a new analysis Tuesday highlighting strategies for states to cut costs and save employees’ time. The group projects that individual savings for governments if they implement these strategies range from $1.32 billion for California to $38 million in South Dakota.

Yet ITIF President Rob Atkinson told StateScoop that he expects states to realize only a “quarter, at best” of that $11 billion figure — unless they make major changes in the coming months.

“Every state is doing some project that helps with that, but it’s a little bit like turning an ocean liner around,” Atkinson said. “It’s a little like alcoholism, you need to understand there’s a problem before you can cure it. You’ve got to understand that this is something you want to do.”

The report says IT can help improve productivity by automating government processes, reducing state employees’ workload, cutting costs by eliminating waste and fraud, replacing older equipment with lower-cost technologies and improving government service quality.

Several states have begun to implement these sorts of strategies, according to the group’s analysis. In particular, the report highlights California’s efforts to use telemedicine in its correctional facilities to save money and improve patient care, as well as Utah’s use of sensors along highways to more effectively monitor road conditions and deploy workers to address trouble spots.

However, the report also charges that the public sector’s efforts to increase productivity with IT have been “sporadic at best,” and states often have “little idea of how their productivity has changed over time.”

To combat that trend, the paper suggests that state CIOs become “productivity-focused as well as IT-focused.” While the foundation’s researchers understand the drive for CIOs to seek out IT that simply solves problems, they add that leaders should specifically look for “technologies that can improve state processes, cut costs and serve more citizens” and make efforts to track their productivity over time.

“I feel like productivity is undervalued among CIOs,” Atkinson said. “They’re thinking just about the tools, but the tools should be used for something.”

The group also recommends some farther-reaching changes for states to consider. The report urges state CIOs to seriously consider replacing employees with IT processes to cut costs, which Atkinson admits may be painful.

“It’s hard to talk about ‘let’s use technology to fire a bunch of people,’ but that’s what we’re saying here,” Atkinson said. “If not fire them, you can attrition them or use the money to have them do something completely different. I don’t care what you do with them, I just want the savings.”

It also calls on governors to give CIOs more decision-making authority. Specifically, the group feels state CIOs and other IT leaders should have the power to “oversee IT contracts, appropriate state funding for IT, make hiring and firing decisions and optimize state data center usage.”

Atkinson even suggests that new governors appoint their CIOs before any other cabinet member.

“Why don’t we have governors that say, ‘I’m going to use IT to transform my government,’” Atkinson said. “If you’re going to have that as your goal, you’re going to need a leader. The governor can’t do it. It has to be a leader who can tell the agency what they can and cannot do.”

But the report adds that states also have to examine their external partners to improve productivity.

The researchers claim that establishing public-private partnerships to fund some government services can pay dividends. They recommend projects where businesses invest money to get the program off the ground and then keep a portion of the savings, a model that Utah has followed with nine of its services to reap $15 million in savings over five years.

“States say, ‘Oh, we’re unique,’ but they’re not really all that unique on a lot of things,” Atkinson said. “There doesn’t seem to be any attempt to recognize the inherent scalability of IT.”

Collaboration with the federal government is another key area that the group recommends states evaluate. While federal funds often support state IT projects, the report says, “federal requirements are inconsistent and ambiguous,” which “often further forces state IT programs into silos.”

To solve that problem, the group calls for the Office of Management and Budget to “incorporate language into its funding that allows states to develop certain IT and software standards.”

If states can seize on some of these recommendations, the group believes that they can “fulfill the original promise of e-government” and provide better, more productive government services.

“I’m not overly hopeful that there’s going to be a big change on this in the next couple years, but I’m trying to lay the groundwork that we’ve got to look at this question and address it,” Atkinson said. “Otherwise state CIOs will end up seeing their purview be smaller and smaller.”