Advancing Return on Investment
    Analysis for Government IT
                                                A Public Val...
CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
Acknowledgments
T   his paper and the project it is based on—”Public ROI: Advancing Return on Investment
    Analysis for ...
CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
Table of Contents
Executive summary         1

Introduction              4

Section I                 5 Why Assess Public ...
CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
Executive Summary
T   he range and complexity of government
    information technology (IT) investments
makes assessing th...
practice the process would seldom be linear,                       Ideological – impacts on beliefs, moral
    requiring r...
Figure 3. Mix of Direct and Indirect Links to Public Value


                                   environment
              ...
Introduction
    E    very investment decision requires a
         leap of faith—sometimes a large one—
    into an uncer ...
Section I: Why Assess Public ROI
for Government IT?
T   he scope of government investment in IT
    and the associated pro...
Section II: Research Summary of
    Public Value Case Studies
    T   his framework is based in part on the
        result...
Figure 4. Public ROI Value Propositions


                                                                                ...
Section III: A Public Value
    Framework for Government IT
    Assessment

    T   his framework is designed to assist
  ...
Figure 5 below. The public value is to be                     Analyzing those connections can, in
found by unpacking, so t...
A. The Framework                                             general, however, the sequence follows the
                  ...
B. How Does Government                                          Figure 7. Type 1: Direct Service
IT Investment Link to the...
Figure 8. Type 2: Indirect Service or Impact



                                                         old government   ...
occurred. The ability of the county auditors                        the same outputs or goals with lower
to shift responsi...
D. What is the Investment?                                   The first part of the linking takes advantage
     Linking IT...
Figure 10. Elements in the FEA Business Reference Model

                                  Services for Citizens
         ...
2. Links to Business Processes                               The list could be extended for fur ther
                     ...
stakeholders. That step is accomplished by                    a corporation’s integrity and assets on
looking to the value...
allies. The public learning about the savings                      thinking and include multiple opinions
     might also ...
Figure 11. Stakeholder Analysis Matrix12

                                                                Type of Particip...
Table 2. Stakeholder Value Matrix

                                                                                      S...
Table 3. Stakeholder Variables by Type


                                                         Stakeholder Impact Varia...
for much quantitative manipulation. To help                  requires an inference, since value does not
     guide the as...
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
Advancing Return on Investment Analysis for Government IT: A Public Value Framework
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Advancing Return on Investment Analysis for Government IT: A Public Value Framework

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Review the analysis of government IT investment, from broad levels to specific methods that document public value, which can be tailored to particular investment decisions. The scope applies to simple Web sites and government-wide information systems and architectures.

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Transcript of "Advancing Return on Investment Analysis for Government IT: A Public Value Framework"

  1. 1. Advancing Return on Investment Analysis for Government IT A Public Value Framework Anthony M. Cresswell G. Brian Burke Theresa A. Pardo Center for Technology in Government University at Albany, SUNY 187 Wolf Road, Suite 301 Albany, NY 12205 Phone: (518) 442-3892 Fax: (518) 442-3886 E-mail: info@ctg.albany.edu www.ctg.albany.edu September 2006 This material is based upon work supported by SAP Any opinions, findings, conclusions, or recommendations . expressed in this material are those of the authors and do not necessarily reflect the views of SAP. ©2006 Center for Technology in Government The Center grants permission to reprint this document provided this cover page is included.
  2. 2. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
  3. 3. Acknowledgments T his paper and the project it is based on—”Public ROI: Advancing Return on Investment Analysis for Government IT”—was made possible with funding and guidance from SAP a , provider of enterprise software for the public sector. In particular, we would like to thank Russ LeFevre and Peg Kates, who have been partners from the very beginning of this work, and special thanks to Tom Shirk, Ingo Hoffman, Rod Massey, Ian Swann, Mor Sagmon, Carsten Friedland, Alex Bratzler, and Bonnie Rothenstein. Several members of the Center for Technology in Government staff made many important contributions to this white paper and the overall project: Sharon Dawes, Jane Krumm- Schwan, Alison Heaphy, Paula Hauser, and Lucy Dadayan. Finally, this white paper and the case study reports depended on the enthusiastic participation of many government officials from the five case study sites. In particular, we would like to thank Christian Ihle from the Ministry of Finance in Austria, Adam Jansen from the Washington State Digital Archives, Ronny Jacobowitz and Yitshak Cohen from the Merkava Project in Israel, Andy McIntyre from the Integrated Enterprise System in the Commonwealth of Pennsylvania, and Darrell Fowler from Service New Brunswick in Canada. We thank them for their generous hospitality and commitment in helping us conduct our site visits and creating this resource for improving government IT investments. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
  4. 4. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
  5. 5. Table of Contents Executive summary 1 Introduction 4 Section I 5 Why Assess Public ROI for Government IT Section II 6 Research Summary of Public Value Case Studies Section III 8 A Public Value Framework for Government IT Assessment 10 A. The Framework Strategy. 11 B. How Does Government IT Investment Link to the Public? 13 C. What Kinds of Impacts Matter for Public Value. 14 D. What is the Investment? Linking IT to Goals and Business Processes. 16 E. What Kinds of Public Value are Produced? 18 F. Who Receives Value? The Stakeholder Analysis. 20 G. How to Demonstrate the Value? Identifying Variables and Methods. 26 H. What Can Interfere With or Prevent Public Returns? The Risk Analysis. 28 I. Overview of Using the Framework. 32 J. How to Summarize and Present Results? Section IV 37 Reflections on the Framework and the Value of Public Value Appendix 38 The Research Basis for the New Framework 38 A. Consultative Workshop 40 B. Case Study Summaries Endnotes 43 CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
  6. 6. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
  7. 7. Executive Summary T he range and complexity of government information technology (IT) investments makes assessing their returns a daunting Weak or absent methods for tailoring a public ROI assessment to the specific context and goals of a government IT prospect. Projects can range from investment. systemwide transformations, to improving financial transparency, to more efficient dog Existing methods also deal with risks to licensing. The returns may be large or small, government IT investment, but primarily from obvious or obscure, and can run from a few the point of view of technology development minutes saved in a routine transaction to and implementation. The risks that involve improving the trust and legitimacy of an the public beneficiaries of the investments entire government. In spite of the difficulty in merit more attention. assessment, however, knowledge about public returns can be vital to fully informed This white paper presents a public ROI and justified IT investment decisions. assessment framework that addresses these shortcomings. We call it a public value Assessing these returns remains a core framework to emphasize the point of view of problem in IT planning and decision making. the public, not the government, as the basis That problem results from shortcomings in for the assessment. The framework the available methods and models for describes how to identify and assess public assessing public returns, what we call value through the kinds of activities shown public return on investment (ROI). In looking below in Figure 1. over these existing methods and models we saw three significant shortcomings: The framework’s strategy is simple in concept, but complex in application: connect Incomplete analysis of public value, what happens in the government (on the resulting in too narrow a scope of what left) with the impacts on stakeholders in the can be considered returns to the public. public domain (to the right), then report and apply the results. The activities on the left Lack of systematic attention to how identify the potential value mechanisms and government IT investments generate outcome goals. Those are linked to results of value from the point of view of stakeholder interests, impacts, and risks to the public. the right. The curved arrows indicate that in Figure 1. Public Value Framework CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 1
  8. 8. practice the process would seldom be linear, Ideological – impacts on beliefs, moral requiring reflection and backtracking to or ethical commitments, alignment of adjust for learning and new information. The government actions or policies or social full paper presents a detailed version of this outcomes with beliefs, or moral or schematic, showing the links among these ethical positions. activities. Stewardship – impacts on the public’s The public value proposition takes center view of government officials as faithful stage. This value proposition must be stewards or guardians of the value of broadly conceived to do justice to the scope the government itself in terms of public of government and how it affects trust, integrity, and legitimacy. individuals, groups, and both public and private organizations. This framework Expanding the view of stakeholder interests presents a new and more comprehensive in this way brings into focus two distinct but way of describing public value, based on six equally impor tant types of public value: the kinds of impacts government IT can have on delivery of benefits directly to citizens and the interests of public stakeholders: enhancing the value of government itself as a public asset. An IT investment that makes Financial – impacts on current or government more transparent, more just, anticipated income, asset values, and a better steward has added public liabilities, entitlements, and other value, a non-financial but nonetheless aspects of wealth or risks to any of the important return. This framework describes above. how to include both in public value assessments. Political – impacts on personal or corporate influence on government The framework also identifies the basic actions or policy, role in political affairs, ways government IT investments link to or influence in political parties or public value. The simplest link results from prospects for current of future public an IT investment embedded directly in a office. service delivery process (Figure 2:A) in a way that enhances its value to citizens or Social – impacts on family or community officials. The total value may be a composite relationships, social mobility, status, and of several separate measures: cost savings, identity. quality, enhanced trust. An indirect link (Figure 2:B) can result from infrastructure Strategic – impacts on economic or improvements to business processes. political advantage or opportunities, goals, resources for innovation or This link may be more difficult to trace and planning. can involve more risk. Enterprise Resource Figure 2. Direct and Indirect Links to Public Value government old government old IT V1 with old IT V1 business process infrastructure Citizen/ Citizen/ Official Official V2 government V2 new government new IT with new IT business process infrastructure Return = V2 – V1 Return = V2 – V1 A - Direct B - Indirect CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 2
  9. 9. Figure 3. Mix of Direct and Indirect Links to Public Value environment Citizen/ Citizen/ government Vi Vd Official Official with new IT Return = Vd + Vi Vi = indirect value Vd = direct value Planning (ERP) software implementations in State Digital Archives case study, for our case studies are excellent examples of example, putting birth and marriage this kind of investment. Value can also result records online enabled research by from a mix of direct and indirect links (Figure local historians and genealogists. 3) when new IT changes the environment. Intrinsic enhancements – changing the Identifying these links is just part of the story. environment or circumstances of a Each link can involve several value- stakeholder in ways that are valued for generating mechanisms. The framework their own sake. For example, our Israel describes how to trace these mechanisms case showed how enhanced financial working through specific business accounting and reporting in the processes to produce different kinds of Merkava ERP system opened value. The value-generating mechanisms government financial decision making are: to greater transparency. Increases in efficiency – obtaining An IT investment project can deliver public increased outputs or goal attainment value through any or all of these with the same resources, or obtaining mechanisms. the same outputs or goals with lower resource consumption. In our Austrian The framework is deliberately presented at a and Pennsylvania case studies, for moderate level of generality to make it most example, new ERP systems helped widely useful. Every government IT project achieve substantial efficiencies in will have its own unique goals, value financial management. propositions, and stakeholders. So this framework can be used to plan and guide a Increases in effectiveness – public value assessment, in combination increasing the quality and/or quantity of with measurements, analysis tools, and the desirable thing. Our case study of repor ting techniques chosen for the specific Service New Brunswick, for example, situation. To aid in this regard, the paper repor ts how an online registry for land presents an overview of more detailed and data can contribute to improvements in highly specified assessment methods that proper ty tax administration. can be used in conjunction with this framework. This includes a more detailed Enablement – providing means or flow char t for the assessment process, a allowing otherwise infeasible or summary of several ROI models and prohibited desirable activity, or methods, and suggestions for analysis and preventing or reducing undesirable repor ting of results. events or outcomes. In our Washington CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 3
  10. 10. Introduction E very investment decision requires a leap of faith—sometimes a large one— into an uncer tain future. When much of that The approach we take to answering that question takes a point of view based on our experience, analysis, and the background uncertainty involves the value of the research for this paper. From this point of expected returns, risk increases and the view we see two sources of public returns: investment decision is all the more difficult. (1) value to the public that results from This is an even bigger problem for improving the government itself, and (2) government IT projects, which are value that results from delivering specific notoriously risky and aimed at public value benefits directly to persons or groups. We returns that are often very difficult to define also see potential value creation that goes and even harder to measure. This white far beyond the traditional financial and paper takes on one important part of that service evaluation data. Value creation can problem: the question of describing and come as much from increasing the integrity measuring public value. and transparency of government as from reducing costs through online tax payments. We chose to focus on public value because This expanded scope of value includes an it is both the most poorly understood and the often wide range of stakeholders, each with most complex par t of the overall problem. their special interests and expectations from We can divide the overall analysis of return government. This point of view dictates an on investment (ROI) in government IT expansive way of seeking public value. We expenditure into four parts: costs, internal call this a public value framework, meaning returns (agency efficiencies, cost avoidance, that it is less a specific measurement tool etc.), public returns, and risks. Of these, the and more a way of identifying and as public returns element receives the least sessing as wide a range of public value as amount of attention, though interest in this possible. This is not a small task, and topic is growing. The key question about cannot be completed in one such effor t. But public returns, of course, is what do we this approach can advance the search for a mean by public value and how can we way to effectively measure public value. observe, measure, and document its creation. The goal of this white paper is to help answer that question. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 4
  11. 11. Section I: Why Assess Public ROI for Government IT? T he scope of government investment in IT and the associated problems certainly deserve serious attention. Both the levels on the public sector: “If governments do not accurately measure the full value of their IT investments, they risk a serious political and growth rates in government IT spending backlash. They will be accused of wasting are substantial. The most recent data billions of pounds of taxpayers’ money on available shows that the level of this unnecessary technology.” This sentiment investment in both the industrialized has reached the US Congress. In July of this countries and the developing world has year the Senate Appropriations Committee grown to a ver y large scale. recommended no funding for the administration’s 2007 e-government European government IT spending is initiatives, reporting that “… the committee expected to increase from US$110 has no confidence that the amounts being billion in 2005 to US$119 billion by assessed have any relationship to the 2007, with US$26 billion in the UK benefits anticipated to be returned.” And in alone, which is about 40% above the House of Representatives, the current Germany or France. appropriations bill calls for a cost-benefit analysis of all e-government initiatives. According to Mike Hettinger, staff director at IT spending by Asia-Pacific region the House Government Reform Committee’s governments, excluding Japan, is Government Management, Finance and expected to reach US$31.7 billion by Accountability Subcommittee, “the language 2010, from US$22.7 billion in 2006. speaks for itself and reiterates what the subcommittee has been saying for the past The Chinese government expenditures year, that in order for this initiative to be of USD$5 billion in 2004 are expected successful, we need to have a better to grow 16% in the following five years. understanding of the costs and benefits and clearer guidance for the agencies to follow.” 2 India spent US$943 million on Certainly this enhanced attention to ROI for e-government in 2002, and this figure is IT must include a comprehensive and predicted to increase by 15% a year to effective way to deal with the public value US$3.3 billion by 2009. side of the problem. The U.S. federal budget for fiscal year 2007 provides $64 billion in funding for IT investments, approximately a 3% increase from the 2006 enacted level of $62 billion. Total state and local government IT spending was about $55 billion in FY2004 and is expected to grow to $62.4 billion by FY2009. Though what is included in the IT category may vary across these examples, the overall scale of expenditure remains substantial.1 This level of expenditure is receiving increasing scrutiny. The reason for this scrutiny is clear, according to Andrea DiMaio, a Gartner Vice President focusing CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 5
  12. 12. Section II: Research Summary of Public Value Case Studies T his framework is based in part on the results of five case studies that exam- ined how government IT investment projects These general understandings of public value guided the data collection and presentation of the case results. came to deliver value to the public.3 The projects were the Integrated Enterprise The case studies examined public returns to System in the Commonwealth of the overall IT investment, including returns Pennsylvania and the Washington State generated by a government IT investment Digital Archives in the US, the Merkava and the possible mechanisms to produce Project in Israel, the Austrian Federal them. We did this by considering the links Budgeting and Bookkeeping System in between goals, implemented systems, Austria, and Service New Brunswick in government performance, and public returns Canada. All five case study reports and the in terms of where they represent value in white paper are available on CTG’s Web the chain shown in Figure 4 (next page). site.2 In the case studies we examined how the IT investments were conceived and The public returns from the investment can developed, with particular attention to the flow from the internal improvements in the role of public value in the process. We took agency resulting in returns to individual the view that government IT investment citizens and the public at large (the main generates public value in two ways: flow through the center). Other returns can flow to the political system and the economic By improving the value of the environment (below the center), or through government itself from the perspective effects on other agencies (secondary of the citizens, and performance gains). This general view of public returns informed the case studies and By delivering specific benefits directly to helped summarize the results. persons, groups, or the public at large. The first is based on the idea that, assuming a benign government, the better it functions overall, the better off its citizens will be. The government is an asset to the community or nation that delivers a wide range of values. Internal improvements make it a more valuable asset to the public. The second way of generating value has three forms: financial, political, and social. Financial value results from lowering the cost or increasing the efficiency of government or delivering direct financial benefits to the citizens. Political value consists of increasing participation, fairness, transparency, legitimacy, or conferring political capital to elected officials or citizens. Social returns include increased social status, stronger relationships, or opportunities; increased safety, trust in government, and economic advantage. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 6
  13. 13. Figure 4. Public ROI Value Propositions Secondary Performance Public Gain Cost * * * Business Goal Internal Direct Public-at- IT or Problem Investment * Agency * Citizen * Large Returns Benefit Benefit Private * Cost (?) Policy/ * Vendor/ * Electoral Industry Benefit Benefit * * * Development Risk * General Economic * Benefit Risk Development Direct Benefit Flow Indirect Benefit Flow Direct Benefit Accumulation Indirect Benefit Accumulation CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 7
  14. 14. Section III: A Public Value Framework for Government IT Assessment T his framework is designed to assist government IT executives and analysts in understanding and measuring the value to In this way, the framework offers both a systematic way of thinking about public value and a way to apply that thinking to the public of government IT investments. The par ticular IT investment decisions. The main goal is to produce an assessment of drilling down process is necessary to tailor a public returns that is credible, persuasive, specific public value assessment to the and highly relevant to the investment nature of a par ticular investment decision. decisions faced by the government. We use The framework shows how to take into value here, rather than return to emphasize account how public value can change the broad scope of the framework. Most across the many interests of citizens and methods for assessing return on investment groups in interacting with governments. In focus on financial or economic metrics; this the morning, for example, an executive approach includes a much broader view of doing business with the government may how IT investments can produce results of think about how IT speeds payments on her value to citizens or to the society as a government contracts, in the evening while whole.4 This concept of value includes more helping with homework she may observe than the usual financial or economic metrics how computers improve the quality of common in ROI analysis. It is a new and schools, and while watching the news on TV expanded way of understanding the results at night she might learn how a new crime of government IT expenditures. mapping system makes the neighborhood safer. These ways of thinking about public We call this set of ideas a framework to returns include both easily measured value, indicate that it is more than a particular like improved financial flows, as well as method for public value assessment. It is highly subjective ones like public safety, broad in scope so that it can be applied to service quality, or government integrity. A virtually any government IT investment, from framework for public value assessment must simple Web sites to governmentwide provide a way to deal with these many information systems and architectures. It is perspectives and possible measures of broad in scope because this range of public value. investments requires a comparable range of assessment methods. Our framework, Not every aspect of public value is relevant therefore is a way of thinking about and for a par ticular IT investment. The organizing the analysis of a family of Washington State Digital Archives project, problems that can encompass many meth- for example, had no particular public safety ods. A spreadsheet, for example, is a related goals, but is of considerable value to framework for working on a broad class of genealogists and local historians. Our problems or analytical tasks. Any par ticular framework begins the process of narrowing spreadsheet may include specific methods, and focusing by starting with the three basic such as scenario analysis or a net present elements of analyzing public value: the value calculation. Instead of guiding the investment, the government operations assessment process in terms of calculations affected, and the stakeholders. At the in a matrix, however, this framework provides beginning of a public value assessment, an an analysis process that starts with a high analyst often knows that there are many level view of the IT investment and then connections among theses three elements, drills down through successive steps to but those connections are poorly specified identify the specific measures and methods and understood. The situation might be that will reveal and document public value. described by the overlapping parts of CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 8
  15. 15. Figure 5 below. The public value is to be Analyzing those connections can, in found by unpacking, so to speak, the area of principle, start in any part of the problem. overlap. The task of the assessment, Ultimately, of course, these three elements therefore, is to identify the connections and must be considered together in order to gather data about how the IT investment ensure that the value assessment for any produces value for the relevant par ticular investment project or system is stakeholders. tailored to the specific value context, investment situation, and the beneficiaries Close attention to all three elements is involved. In practice, however, the essential. The connections among these assessment must begin somewhere. The elements are the keys to a fully informed framework presented below describes the public value assessment. The framework logic and methods that guide the provides a way of describing these assessment process. connections to show how public value is generated and the risks involved therein. The sequence of activities shown for an Focusing on one or two elements alone assessment is not designed or intended, cannot reveal the necessary scope of however, to suggest how IT investment public values involved in an IT investment decisions should be made. or how they can be assessed. The risks of slighting one or another of these elements in an assessment can be substantial. In addition to missing significant public returns, such limited thinking can lead to stakeholder resistance, flawed technology decisions, or poor integration with or disruption of business processes. Figure 5. The Basic Elements in the Public Value Framework The Stakeholders Public Value The Technology Government Investment Programs & Operations CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 9
  16. 16. A. The Framework general, however, the sequence follows the path shown in Figure 6 below. Strategy The steps illustrate how the process of The framework describes public value value identification and measurement assessment as a series of steps to gather carries through from the goals of an IT specific data and use it to answer questions investment, through the value generating that lead to public ROI results. The results mechanisms of the business processes, can include measures and documentation connection with stakeholders, to specific of public returns, risk analysis of the threats data and reporting. These are the main to achieving those results, and suggestions components of the framework. for presenting results to decision makers. Each component of the framework deals By starting with a deliberately broad scope, with a different set of questions and then narrowing to specific questions for possible data to use in subsequent steps, each project, this approach addresses one and so for th. By working with the ideas and of the shortcomings of previous work on methods presented in the framework, the ROI for government IT, namely the narrow analysis can produce a public ROI scope of possible value questions assessment that is broad in scope, yet considered. By expanding the initial scope tailored to the par ticular investment of of analysis to include a broad view of public interest. returns, the framework can lead to a more comprehensive result. The framework thus does not replace or supersede the existing The steps are not intended to be used in a methods developed by others for assessing lock-step manner. The questions and returns to government IT investments. inquiry involved in one part of the frame- Rather the framework shows how these work may be obvious and easily answered methods can be used in assessment, what in some cases and quite complex and additional value issues should be difficult in others. It may be necessary to addressed, and how additional assessment explore later steps before preceding ones methods may be used. are finished, and then cycle back. In Figure 6. Steps in Applying the Public Value Framework CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 10
  17. 17. B. How Does Government Figure 7. Type 1: Direct Service IT Investment Link to the Impact Public? government V1 with old IT The question of how an IT investment can Citizen/ impact public value can be answered Official V2 government initially in terms of three impact with new IT mechanisms. These three, alone or in combination, describe the general ways IT Return = V2 – V1 investments can connect with the public, as revealed in our research. Identifying these linking mechanisms is an important step in the analysis process because it leads to a these investments go beyond the important more detailed examination of impact but obvious cost and time savings to include pathways than might otherwise occur. IT attention to service quality, access, equity, investment can enhance public value in and the full range of values described many ways, some of which are only below. indirectly related to the performance of a particular IT system. Attention to these 2. Indirect Service Impacts indirect and more complex mechanisms can help ensure a full picture of public value results is developed. Indirect service impacts (Figure 8) occur when back office or infrastructure invest- ments produces changes in a government 1. Direct Service Impacts business process. As in Type 1 mechanisms, the value to the public is reflected in the Direct service impacts (Figure 7) occur when changed interaction or transaction with a IT is embedded directly in a service delivery government business process. However, the process, generating service changes that process change results from an IT enhance value to the citizen or official investment at least one step removed from involved in the service process. The net interaction with the public. Because of this public value is just the difference between indirect route, it may be more difficult in the value of the new and the old. Value in Type 2 cases to trace the links from the IT this sense, and in the other mechanisms as investment clearly and unambiguously to well, is assessed from the point of view of the public. Risks to the effectiveness of the the public participant in the transaction, not investment are higher as well, due to the government. The total value may be a dependence on business process changes composite of several separate measures, that are independent of the IT itself. The IT such as lower cost to the citizen, plus investment may have potential results increased satisfaction with quality of spread over many business process and service, plus enhanced trust in government. may interact with other technologies, further The specific kinds of value involved are obscuring the impact linkages. described in more detail in a later section. The ERP system implementations in Austria, The e-government investments in our case Israel, and Pennsylvania that were studies and much of the literature on e- examined in our case studies are excellent government provide many examples of this examples of this kind of investment. The kind of investment. These include systems primary impact of these systems is on the for fee and tax payments, license application internal, back office operations of the and renewals, obtaining information, filing government. How to identify and describe forms, etc. The public value propositions for these linked back office operations is CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 11
  18. 18. Figure 8. Type 2: Indirect Service or Impact old government old IT V1 business process infrastructure Citizen/ Official V2 new government new IT business process infrastructure Return = V2 – V1 discussed in a later section of the are more complex. The direct value framework in terms of business reference mechanism shown here as Vd, is the same models (see Figure 10 on page 15). The as a Type 1 or Type 2 mechanism, impacts on these internal operations may be producing a value increment for a citizen, very positive and extensive, and still remain official, or group (shown in a simplified way). hard to trace to many kinds of value gains In this type of system, the new IT is also for individual citizens or organizations. This linked to changes in the environment and is an impor tant part of the public value relationships between the direct beneficiary problem dealt with in detail in the value and other entities (persons, groups, types discussion to follow. ERP systems also organizations) in the public arena. This contribute to public value generation indirect mechanism can result in additional through the Type 3 mechanism discussed public value flowing from interactions below. outside the government, between other persons or organizations. The changes in the environment may also produce direct 3. Mixed Service & Environmental value beyond the direct transactions. Value Impact There are many examples of this type of value mechanism in our cases and in other In this third type of impact mechanism settings. In the Washington State Digital (Figure 9 below), the links to public value Archives case at least two such impacts Figure 9. Type 3: Mixed Direct, Indirect Service & Environmental Impact environment Citizen/ Citizen/ government Vi Vd Official Official with new IT Return = Vd + Vi Vi = indirect value Vd = direct value CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 12
  19. 19. occurred. The ability of the county auditors the same outputs or goals with lower to shift responsibility for preserving digital resource consumption. In our Austria records to the state archive produced and Pennsylvania case studies, for savings in cost and workload at the county example, new ERP systems helped level (Vd). This allowed county auditors to achieve substantial efficiencies in improve services to their citizens in other financial management and other core areas (Vi). In addition, the accessibility of administrative functions of government. the government records online increases the overall environment of transparency for Increases in effectiveness – the government, benefiting all citizens. In increasing the quality and/or quantity of the Service New Brunswick case, Web the desirable thing. Our case study of access to company registrations provided Service New Brunswick, for example, direct value to citizens such as accountants, repor ts how an online registry for land lawyers, financial institutions, and the data can contribute to improvements in general public searching for such business proper ty tax administration. information (Vd). In addition, the decision by CGI to locate its Global E-Government Enablement – providing means or Headquarters in Fredericton, New Brunswick, due in large part to its strong allowing otherwise infeasible or partnership with Service New Brunswick, prohibited desirable activity, or benefits the economic development of the preventing or reducing undesirable city of Fredericton and surrounding areas in events or outcomes. In our Washington the province (Vi). In a different way, putting State Digital Archives case study, for some forms of information online, such as example, putting birth and marriage the Toxic Release Inventory in the US, records online enabled research by enable citizens to obtain benefits from other local historians and genealogists. transactions, such as lawsuits against polluters (Vi).5 Intrinsic enhancements – changing the environment or circumstances of a stakeholder in ways that are valued for C. What Kinds of Impacts their own sake. For example, our Israel Matter for Public Value? case showed how enhanced financial accounting and reporting in the Merkava ERP opened government Just identifying these operational financial decision making to greater mechanisms in general terms, however, transparency. does not tell the full value story. Each mechanism can involve more than one kind The examples above illustrate public returns of value generator. These mechanisms show that accrue in addition to, and largely how IT investments can link to increased independently of, internal efficiency gains public value, but not how that increase is that may accompany the IT investment. produced. Each mechanism has the These value generators can also operate potential to generate more than one kind of together, increasing the overall return. public value increase, depending on the Research by the local historians mentioned details of the situation. The framework above was enabled by access to previously recognizes four basic kinds of public value inaccessible records; online access to these generators, listed below, each with a records also made research much more different range of measurements and efficient compared to paper records. Access implications for assessment: to crime mapping information by citizens could also improve the efficiency of Increases in efficiency – obtaining choosing a place to live or locate a increased outputs or goal attainment business. with the same resources, or obtaining CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 13
  20. 20. D. What is the Investment? The first part of the linking takes advantage Linking IT to Goals and of the comprehensive integrated descriptions of government goals and Business Processes. processes that are found in the enterprise architecture work currently underway for US and other governments. For our purposes 1. Links to the Business of here, the most useful comprehensive Government description of government processes is in the US Federal Enterprise Architecture This analysis of public value generation (FEA) Business Reference Model (seen in requires identifying how the IT investment Figure 10).6 With some minor modifications, project links to government goals and the components in this FEA model can be activities. IT investments generate value in used to identify the business operations and relation to the policy and administrative general goals of an IT investment in most setting in which they operate. The goals and government agencies. Local governments, business processes provide links between for example, do not typically have defense how the technology operates and the and national security operations. The interactions with stakeholders that generate supporting documents that form part of the value. The analysis, therefore, includes Business Reference Model contain linking the investment to the relevant descriptions of each of the components. government goals, operations, and business These descriptions can be used to clarify processes. meaning and help identify which compo- nents are linked to a particular IT invest- This linking process is more complex than it ment. may appear, requiring a comprehensive and reasonably detailed picture of government While comprehensive, this FEA model is not goals and operations. Such a picture will the only enterprise architecture model that ensure that all the relevant links between may be used. There are a number of the technology and business processes will comparable models or business process be identified. Many government IT frameworks that could work as well, such as investments have potential links across those developed for the EU, the UK, Hong many agencies and processes. The Kong, and Malaysia.7 The National Washington State Digital Archives, for Association of State Chief Information example, collects records from hundreds of Officers (NASCIO) has an enterprise state and local agencies. The Merkava architecture model, adapted for US state project in Israel will eventually involve all governments, that may also be used. The government agencies. The Pennsylvania IES European Commission also suppor ts supports human resources management, additional framework activity through the budgeting, and other administrative Athena Project, which has published similar functions for all executive agencies in the documents.8 Commonwealth. The relevant business process setting of an IT investment, Using this model, the analysis proceedsby therefore, can be quite extensive. To deal identifying where the IT investment links to with this contingency, this part of the government business. This linking can be framework is based on just such a based on the new technology’s stated comprehensive picture. This is a useful goals, organizational location, and intended analysis strategy because it helps draw operational profile. The detailed attention to value generating aspects of the descriptions of each Business Reference investment that might be missed because Model component are useful in identifying they result from indirect effects or complex these links. If needed, those responsible for interactions across many agencies or the analysis can enlist a team of IT and processes. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 14
  21. 21. Figure 10. Elements in the FEA Business Reference Model Services for Citizens Community and social services Correctional activities Defense and national security Disaster management Economic development Education Energy Environmental management Purpose of Science and innovation Health Government Income security International affairs & commerce Law enforcement Judicial activities Natural resources Transportation Workforce management Financial management * Information& technology management * Mode of Delivery Government Service Delivery Financial Vehicles Mechanisms used to achieve Direct Services to Clients* Financial assistance Knowledge creation & Management Credit & insurance purpose Public Goods Creation Transfers to local governments Regulatory compliance & enforcement Support Service Delivery Legislative relations Public affairs Government Regulatory development Controls & oversight Operations Support Functions Planning & resource allocation * Revenue collection Internal risk management & mitigation General government Management of Government Resources Resource Management Supply chain management * Human resource management Administrative management Financial management * Functions Information& technology management * operational experts to help ensure all bidding continues until the low bid remains relevant links are identified. unchanged for a predetermined time (e.g., five minutes), closing the auction. The low To illustrate how to use the model, we price bidder wins the contract. The entire marked several of the components in Figure auction takes place in public view and is 10 with asterisks. The asterisks mark an recorded in detail. example of the business links we identified for an IT investment project in the Merkava For an illustrative example, consider the case study used for this framework: an procurement of new police radios for a law online reverse auction system for enforcement agency. Based on the nature of procurement. The agency conducting the the e-procurement system and the online auction sets the terms of a procure- component descriptions, we see it as linked ment, publishes them, and qualifies vendors to the five marked components in Figure 10: as potential bidders. At a predetermined law enforcement, financial management, time, a Web site is opened for bidding. All supply chain management, direct service to qualified vendors can then submit clients (vendors), and planning and re- authenticated price bids to a public space source allocation. on the site, visible to all other vendors. The CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 15
  22. 22. 2. Links to Business Processes The list could be extended for fur ther analysis by adding deployment of the radios, training for users (human resource Making further links to business processes management), and evaluation of the means connecting the larger goal or impacts of the new radios use in the function from the Business Reference agencies and business processes where Model to specific activities identifiable as installed. To keep this example business processes. For this step, picking manageable, however, we are limiting the the appropriate level of detail is important. analysis to the processes listed below. The Choosing too general or too fine-grained a components identified from Figure 10 are process analysis will tend to obscure linked to the business processes in the rows stakeholder interactions that are necessary of Table 1 below. to identify public value. For this step in the analysis, we recommend another enterprise Identifying the business processes leads to architecture tool: the Zachman Framework. 9 two key questions: (1) How does a business The descriptions in the first two rows of the process generate increased public value? Zachman Framework (Scope and Business and (2) For whom? A way of answering the Model) are a good guide for the most useful first question is recorded in the third column level of detail. of Table 1. Our analysis of public value generating mechanisms is shown in the This method identifies several business discussion of value impact mechanisms processes for the e-procurement example. below. They include: determining communication needs for E. What Kinds of Public the law enforcement agencies Value are Produced? budgeting for the procurement Identifying the linkages between business recruiting and qualifying vendors processes and public value generators described above carries the analysis a conducting the auction critical step farther: from how the IT changes a business process to the impact of those paying the vendors changes for a par ticular public or Table 1. Business Component, Process, and Value Mechanism Business Component Business Process Public Value Mechanism Law enforcement conduct auction citizen - type 3 Financial management budget for procurement citizen - type 3 citizen - type 3 Supply chain management qualify vendors for auction vendor - type 1 citizen - type 3 Planning & resource allocation deter mine communication needs gov't staf f - type 1 Direct ser vice to clients conduct auction vendor - type 1 Financial management pay vendors vendor - type 1 CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 16
  23. 23. stakeholders. That step is accomplished by a corporation’s integrity and assets on looking to the value of the impact in terms of behalf of stockholders, public managers the interests of one or another stakeholder. and elected officials have a parallel So the framework includes an analysis responsibility for government on behalf of scheme for taking into account interests that the public. Recent financial scandals in the can apply to the full range of stakeholders. US have demonstrated how lack of The framework employs these six basic stewardship in major corporations (e.g., kinds of interests: Enron, WorldCom) can destroy their financial value. The government officials in Financial – impacts on current or our cases expressed a similar stewardship anticipated income, asset values, responsibility in terms of, for example, using liabilities, entitlements, and other IT to increase transparency and aspects of wealth or risks to any of the accountability. Public surveys of trust in above government show that citizens have similar stewardship expectations of government.10 Political – impacts on personal or Clearly this list goes well beyond the internal corporate influence on government efficiency or service quality impacts of an IT actions or policy, role in political affairs, investment. Of course, attending to this or influence in political parties or expanded concept of value raises many prospects for current or future public problems of definition and measurement. office However, our case research and results from many other kinds of inquiry show the Social – impacts on family or community importance of this more comprehensive relationships, social mobility, status, and treatment of value and interests. Many of the identity. measurements and data implied by these interest types are found in existing ROI Strategic – impacts on economic or methods as well. However, none of the political advantage or oppor tunities, methods we reviewed for this white paper goals, and resources for innovation or cover the full range represented here. planning Working with this expanded range of value types represents one impor tant contribution of this framework. Ideological – impacts on beliefs, moral or ethical commitments, alignment of It is also clear from this way of describing government actions or policies or social public value that it supplements rather than outcomes with beliefs, or moral or replaces methods that assess the efficiency ethical positions gains or savings returns captured by government agencies internally. For ex- Stewardship – impacts on the public’s ample, it seems safe to say that a view of government officials as faithful Department of Motor Vehicle’s internal cost stewards or guardians of the value of savings from putting license renewals online the government itself in terms of public are invisible and largely irrelevant to trust, integrity, and legitimacy drivers. These savings would have no detectable impact on overall tax burdens or This last interest—stewardship—is benefits resulting from a shift of government deliberately not included in the ideology resources to some other service. The categor y, though it could logically fit there. information about the savings, however, is Setting it off separately emphasizes its another matter. If government officials make importance in the overall public value some political use of the cost savings framework. Just as corporate managers and information, that would represent strategic directors are responsible for stewardship of value to those officials or to their political CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 17
  24. 24. allies. The public learning about the savings thinking and include multiple opinions might also improve their opinion of the and information sources government’s stewardship, fairness, or other ideological value. Identifying multiple stakeholder roles, internal and external to the organization setting (e.g., internal user, customer, F. Who Receives Value? vendor, developer, manager, oversight, politician, taxpayer, analyst, advocate, The Stakeholder Analysis. etc.) Identifying stakeholder expectations, Completing the analysis of value impacts requires identifying those with an interest in influence potential, past and future the value generating process: i.e., the par ticipation possibilities, and level of stakeholders. The kind of stakeholder interest analysis required for this task has three main parts: (1) identifying the persons or In this kind of analysis, continuing reference groups (including organizations) whose to the nature of the investment and impact interests are potentially affected, mechanisms will help produce the needed (2) identifying what their specific interests focus and detail.11 may be, and (3) assessing their role and potential influence in the deliver y of public The results of a stakeholder analysis have value. The first two par ts are necessary for implications for value assessment and for the analysis of value impacts and possible understanding their potential to influence assessment strategies and so are discussed the investment project. These results can be here. The third part is more relevant to the presented in ways that show the multiple risk analysis discussed in more detail in dimensions used in the analysis. An section III.H below. example of results from a hypothetical stakeholder analysis is shown in Figure 11. Identifying stakeholders for the framework will depend on in-depth knowledge of the This figure combines data for 14 context of the investment and the agencies stakeholders’ roles (SA = Stakeholder A, involved in its development and use. etc.) and times of possible influence in a Typically, stakeholder analysis engages a project’s lifecycle. This kind of display group of participants with extensive illustrates some of the complexities of knowledge of the political and stakeholder analysis and the possibilities for organizational setting of the investment interactions among different stakeholder and, hopefully, with experience in this kind groups. A more complete analysis would of analysis. Because the analysis is so include estimates of the stakeholder’s context-dependent, there are no standard influence capabilities and specific interests processes to follow. There are in the project development and outcomes. consistencies, however, among the many These issues are discussed in more detail in versions of stakeholder analysis methods the section on risk analysis (section III.H). found in the management, planning, and assessment literature. These include: To focus on stakeholder interests, the illustration in Table 2 below shows how the Involving multiple participants with wide results of a simple stakeholder analysis can knowledge of the stakeholder be linked to the business process, value environment types, and mechanisms. Looking widely to identify all relevant The business processes identified in Table 2 stakeholders through brainstorming and on page 20 link to a partial list of related methods to stimulate divergent stakeholder types in the columns: citizens at CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 18
  25. 25. Figure 11. Stakeholder Analysis Matrix12 Type of Participation Inform Consult Partnership Control Initiation Identification SA SC SI SE SH SD Planning SK SB SJ Stage in Lifecycle SF SN Execution Implementation SM SG Controlling SL Monitoring and Evolution SO Closing SD SA Sx = Stakeholder X large, vendors, and elected officials. An assumptions about what advances the actual assessment would include a more interests of those staff members. A success- detailed list of stakeholders. The value ful procurement system would provide types most likely to map onto each stake- political value and some strategic advan- holder type are entered in the cells. The tage to elected officials, as well as enhance basis for this mapping is linking the nature their reputation as good stewards of public of the value as understood in that context resources. with detailed knowledge of the stakeholder groups. This part of the assessment can include data collection about the interests G. How to Demonstrate the and expectations of stakeholders through Value? Identifying Variables interviews, surveys, or focus groups if needed. The entries in the column for the and Methods. citizens at large, for example, are based on the assumption that their interests in Using the framework up to this point has government stewardship would be served identified many kinds of data relevant to by the e-procurement system. While a assessing public value. The next step is to reasonable assumption, this could be choose the specific variables or points of confirmed by collecting opinion data from a observation for collecting the assessment sample of citizens, or relying on previous data. This is as much a practical problem as opinion research. Similarly, the entries in the an analytical one. Many variables may be column for government IT staff are based on CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 19
  26. 26. Table 2. Stakeholder Value Matrix Stakeholders Business Value Impact Citizens at Elected Vendors Process Generator Type Large Officials Budget for intrinsic 3 stewardship procurement Deter mine intrinsic, ideology, political, 3 needs ef fectiveness stewardship strategic Qualify ef ficiency, ideology, financial, political, 1,3 vendors intrinsic stewardship strategic strategic ef ficiency, political, Conduct ideology, financial, intrinsic, 1,3 strategic, auction stewardship strategic ef fectiveness stewardship ef ficiency, financial, political, Pay vendors 1,3 stewardship intrinsic strategic stewardship relevant for each combination of ROI methods described below include many stakeholder and value type. A few variables variables and additional methods that can that would be relevant to this example are be helpful in that task. However, the more shown in Table 3. the choice of variables can be tailored to the specific public value context, the more valid This table illustrates two important aspects and persuasive the assessment is likely to of its role in the framework and assessment be. process. First, it is highly unlikely that applying the framework to any IT investment An actual public value assessment should would lead to variables in all, or even most be based, of course, on the best available of the cells of this matrix. This matrix can be information. But actual assessments take thought of as an heuristic device, prompting place in practical settings of limited questions about what might be useful and resources and access to data, plus being available variables for each row and column par t of the additional work needed for without expecting to fill them. The second is internal returns and costs. The priority that identifying a specific variable relies on setting described in the risk analysis section combining information about stakeholder can narrow the field to only the most interests, the value type, the impact important public value outcomes. The mechanisms, and the context. This is a section below describes additional complex and demanding process. This strategies for choosing the appropriate section offers additional guidance on variables and analysis methods. choosing the best public return variables for a given assessment. In addition, the other CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 20
  27. 27. Table 3. Stakeholder Variables by Type Stakeholder Impact Variables Value Type Citizens at Large Vendors Elected Officials Financial local economic increased revenue development Political suppor t from vendors positive media coverage Social enhanced reputation in agencies receiving radios Ideological increase level of market enhanced reputation competition for promoting market competition increase in citizen access to infor mation about procurement: greater transparency Strategic increased market share enhanced reputation for being moder n & progressive increased knowledge about competition Stewardship increased trust in reputation for frugality gover nment & good management 1. Variables and Analysis The scope of this framework, as applied to a particular IT project, could encompass a Methods very wide range of data types. Many kinds of quantitative data from financial sources, The choices of variables and analysis operations research, and surveys are methods for the empirical par ts of a public appropriate for statistical analysis, value assessment should be considered modeling, and simulations. Many of the together. In terms of basic measurement and social, political, and intrinsic value returns analytical methodology, what constitutes an can be expressed in normalized scales, or appropriate analysis depends, in part, on may best be revealed in qualitative terms or the types of data and variables involved. in simple dimensions that are not suitable CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 21
  28. 28. for much quantitative manipulation. To help requires an inference, since value does not guide the assessment, given the very large stalk about wearing a label. Valid inferences number of possible public return data types about value can be formed from qualitative and variables, the framework provides two as well as quantitative data, content kinds of resources. The first is a general analysis as well as statistics. Taking these scheme suggesting variable types and four principles into account, choices made sources for different value types (see Table about how a specific analysis proceeds 4). The second consists of summaries of the should be based on three criteria: 1) What approaches and variables available in a constitutes the best data? 2) What kind of range of existing ROI methods that can be analysis is appropriate to that type? 3) Who of value in completing an assessment (see will be the audience for the conclusions Table 5). reached? The best kind of data available will be specific to the operational and A wide range of possible public value data stakeholder context. The kinds of analysis can be identified by the methods presented appropriate to various data types are shown here. The framework approach is based on in summary form in Table 4.13 the assumption that virtually any kind of data can be useful in describing public Beyond these general considerations, the value creation, from the most precise choice of variables and analyses for an quantitative figures available from financial assessment can draw on a volume of or physical measurements, to material as existing work on ROI methods for guidance. diverse as the content of blogs or These methods, summarized in Table 5, vary observation of user or customer behavior. A widely in the number and type of variables conclusion about public value creation used, the scope of public value co nsidered, Table 4. Variable Type for Public Value Data Variable Type Examples Analysis Methods averages, totals, dif ferences, percents, parametric & financial data, time, age, nonparametric statistics ratio scale distance, frequency, transaction (cor relation, regression, etc.), volume simulation, time series, optimization averages (with assumptions), opinion scales, rating scales, frequencies, scale analysis, inter val scale grades, Liker t scales nonparametric statistics (x2, etc.), cluster analysis cor relation, frequencies, scaling ordinal scales rankings, rating scales analysis gender, ethnicity, location, frequencies, clustering, network nominal variables relationships, user behaviors analysis content analysis, word text/discourse data inter views, blogs, news repor ts frequency, semantic analysis user studies, field obser vation process maps, network obser vational data notes, photos, film/video analysis, behavior patter ns CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK 22

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