Seven ways government can run like a tech-savvy business - and save a trillion

Leading tech executives urge adoption of commercial best practices -- from cloud computing to energy efficiency and streamlined supply chains -- by the federal government.

For years, pundits have railed that the government needs to run more like a business. But with a mission other than profits, how does it go about running like a business?  A group of leading tech executives came together and came up with some basic steps government can take, learning from successes seen in the private sector.

The Technology CEO Council, in its latest report titled One Trillion Reasons: How Commercial Best Practices to Maximize Productivity Can Save Taxpayer Money and Enhance Government Services, says there are abundance of best practices seen in the private sector --"from automation to analytics -- that can and should be applied to government operations. By adopting commercially proven best practices to maximize operational productivity, government can save over $1 trillion by 2020," the Council states in the report.

The paper offers seven specific initiatives where technology-enabled productivity solutions can make a material difference:

1) Consolidate information technology infrastructure: "The Federal government currently spends approximately $76 billion to support its widely-dispersed IT assets," the report notes. "We estimate that at least 20-30% of that spending could be eliminated by reducing IT overhead, consolidating data centers, eliminating redundant networks, and standardizing applications.... One often-cited opportunity for cost savings through emerging technology comes from cloud computing.  Government agencies that have moved to cloud computing have generally achieved between 25 and 50 percent in savings associated with information technology operations."

2) Streamline government supply chains: "The Federal government buys approximately $550 billion worth of goods and services each year. These goods and services are procured largely within agencies and departments with independent procurement processes." The anticipated benefits of the OMB's Federal Strategic Sourcing Initiative have not been realized, "primarily because budget and procurement processes have not been reformed. The effort also focused too intensively on commodity purchasing and not enough on supplier management.... If the Federal government could achieve improvements in supply chain performance, it could save more than $500 billion over the next ten years."

3) Reduce energy use: "The federal government operated more than 1,100 data centers as of fall 2009 (up from 432 in 1998), covering more than 7.9 million square feet and consuming more than 10 billion kilowatt-hours of energy each year. More broadly, the federal government uses 3.1 billion square feet of total office space. The implementation of new building management technologies can reduce its energy consumption. Advanced fleet management systems can reduce the size of the PC fleet and also reduce federal energy consumption by 10-20%. The aggressive adoption of voice, video, document sharing and collaboration tools can reduce travel-related expenses by 10-20%. Overall, the combination of these  initiatives could generate $20 billion in savings over 10 years."

4) Move to shared services for mission-support activities: "Why should every agency have its own IT, finance, legal, human resources or procurement operations? When the Federal government consolidated 26 payroll systems to four, the Environmental Protection Agency reduced payroll costs from $270 to $90 per employee, saving $3.2 million a year, and the Department of Health and Human Services reduced costs from  $259 to $90 per employee, saving $11 million a year. Likewise, when the government consolidated travel  systems, the Department of Labor reduced its costs from $60 to $20 per travel voucher and reduced processing time from about 7 to about 3 days."

5) Apply advanced business analytics to reduce improper payments: "The Federal government issues nearly $3 trillion annually in payments in one form or another (e.g., Federal grants, food stamps, Medicare payments, tax refunds). GAO estimates that $72 billion was lost to improper payments in fiscal year 2008 alone. OMB estimates the number was $98 billion in 2009 ($54B in Medicaid and Medicare).... Industry regularly conducts recovery audits of large-scale transactions; this could be fraud or mistakes, or an unanticipated shift in demand. New analytical techniques can increase the identification rate to 40%, which would double the current anticipated savings rate and generate an incremental $200 billion over 10 years."

6) Reduce field operations footprint and move to electronic self-service: "There are more than 10,000 federal government forms in 173 different agencies that could be automated to allow citizens and businesses to conduct their business with government online. Reducing the citizen-related field operations of the Federal government and automating the government’s form processing can generate $50 billion in savings over ten years... The Federal government saved $30 million a day by teleworking during the February 2010 snow storms. The Telework Exchange estimates that, economy-wide, $441 billion in potential U.S. employer teleworker savings can be realized from reduced absenteeism, recruiting costs, and increased productivity."

7) Monetize the government’s assets: "The government has a large inventory of assets that could generate revenue. 'Mining' the balance sheet through concessions agreements and other opportunities may generate significant revenues. This could include selling surplus facilities and selling and leasing back others.... The Federal government has other assets – such as rights-of-way for energy transmission – that could be auctioned off. The Federal government also has an array of fee-generating programs that do not recover their costs.... By mining the balance sheet aggressively and corporatizing certain Federal operations, the Federal government could save $150 billion over 10 years."

(Photo credit: Joe McKendrick)

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