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.
2. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
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. CENTER FOR TECHNOLOGY IN GOVERNMENT—ADVANCING RETURN ON INVESTMENT ANALYSIS FOR GOVERNMENT IT: A PUBLIC VALUE FRAMEWORK
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
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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
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1
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
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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
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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.
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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