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How To Measure ROI of Public Value Initiatives

In accordance with the government's "best value" approach to buying, the Center for Technology in Government, in collaboration with SAP, has released a framework for assessing public return on investment (ROI) for IT initiatives.

The framework, detailed in a white paper released in September, defines the two sources of public returns as value to the public that results from improving the government itself, and value that results from delivering specific benefits directly to persons or groups. Conceptual in nature, the framework essentially identifies the public's point of view as the basis for assessing the return for IT investments, rather than technology development and implementation. Public stakeholders include citizens, as well as businesses and community organizations.

"We refer to the [concept] as 'line of sight,'" said Tony Cresswell, deputy director of the Center for Technology in Government during a press and analyst briefing Tuesday. "It's about being able to see from idea through to public value, including the linkages to get there."

In that sense, the framework acts as a valuable tool for assessing IT initiatives that carry benefits not easily translated into a fiscal return; building a public park, for example, won't necessarily pad the budget of a state or city government, but carries value to the community just the same. In terms of IT, a Web portal that provides agency information to citizens may seem limited in its payback or cost savings, but can do wonders for approval ratings and efficiency. So, if a state chief information officer has 20 IT projects on the table, but budget for only five, the framework provides a means of assessing that kind of public value for proper consideration.

Washington is one success story highlighted in the white paper. The state informally used this type of process to green light a digital archiving system for government records, emphasizing not the technology for digitizing documents, but rather the need to preserve and provide access to records of enduring legal and historical significance.

"What we did wasn't about money; we had to go in and explain why this is important and why the public would benefit," says Adam Jansen, digital archivist at the Washington State Digital Archives. "It's about education early on. How do you sell it?"

Similarly for the channel, the framework acts as a sales tool for demonstrating to the government customer potential benefits of an enterprise solution that might not cut costs, but could improve efficiency and satisfaction of constituents.

Acknowledgement of "public value" of IT initiatives by vendors, solution providers and government customers themselves is the first step; next, the Center for Technology in Government and SAP hope government will execute the framework when evaluating possible IT programs and, in turn, drive change in how procurements are structured. The challenge, however, is overcoming the tendency for requests for proposals (RFPs) to not consider any bigger picture -- focusing squarely on cost savings derived by specific IT solutions.

"We lack good standards and practices about how to specify this kind of ROI in the procurements," Cresswell said. "That's the missing piece of the puzzle."

Rand Blazer, SAP's president of public services, agrees.

"There needs to be linkage, because until you can quantify the softer areas [of ROI], you will run into problems with procurement," he says. "Part of the problem is they define these [IT initiatives] as projects rather than transformations."

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