Return on investment and value on investment in eGovernment business cases

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Return on investment and value on investment in
e-Government business cases
Socitm PMG Annual KPI workshop

• Peter Eckersley
• CIPFA IT-CAN

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Agenda

• Overview of CIPFA IT-CAN
• Business case project
• Anticipating costs and benefits
• Return on Investment models
• Value on Investment models

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CIPFA IT-CAN

• Organises networking events and produces guidance
  and interpretation for public sector IT managers
• Run in partnership with Socitm
• Merging with CIPFA e-Government Forum to become
  the Improvement Through Technology network

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Focus

• Responding to the Gershon Review and putting
  technology at the heart of efficiency planning
• Managing the IT/e-Government business case
• Improving governance of IT systems and structures
• Promoting e-Inclusion and take-up of online
  services
• Process management and re-engineering
• Improving IT procurement
• Supporting partnerships and supplier engagement

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Local government business case project

• Part of the ODPMs Support and Capacity Programme
• Review of best practice in business cases (both
  domestic and international)
• Local authority case studies
• Preliminary results in December 2004
• Final report February 2005

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The increasing importance of business cases
Senior management
Released resources
Released resources
Programme management office
Support and resources


Project
Project
Project
Project
Front-line services
Customers
Its no longer just about the 2005 targets
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How do we assess e-Governments costs and
benefits?

• Costs
• Up-front and ongoing
• Direct and indirect
• Often hidden
• Borne by
• Back office
• Front office
• Support

• Benefits
• Delivered over time
• Financial and non-financial
• Often unexpected
• Reaped by
• Government
• Customers
• Society

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Return on investment

• Net present value (NPV) see the Treasurys
  Green Book
• Payback period
• Cost benefit ratio
• Net cash flow
• Discounted cash flow
• Internal rate of return
• Total cost of ownership

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But these models are inadequate

• It is difficult to quantify non-financial
  benefits in cash terms
• They perpetuate the silo system by focusing on
  departmental budgets
• Government is the universal service provider it
  must ensure that all citizens are able to access
  its services, regardless of how much this may cost

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• Cost-benefit analysis can help you choose
  different routes to a goal you have agreed, but
  it cannot help you choose goals. For that we have
  politics. People disagree about priorities on a
  huge variety of legitimate grounds. When they do
  so, they are not arguing about value for money,
  but about the kind of world they want to live in.

Tom Burke, former special advisor to the
Department for the Environment
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Value on investment

• Value metrics
• Indicators of public approval and acceptance,
  such as customer satisfaction measures or level
  of take-up
• Time and/or cost savings from using the
  electronic service
• Benchmarking with other similar projects
• Impact on other departments and agencies
• Impact on employee skill levels
• Degree of employee job satisfaction
• Number of other projects that have benefited
  (e.g. by sharing infrastructure or good practice)
• Strategic alignment
• Impact on overall operational efficiency
• Political return
• Service improvements

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Approaches to value measurement
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Canada
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Gartner
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State of Iowa
Weighting

• Statutory requirements 15
• Customer service improvements 15
• Citizen impact 10
• Tangible/intangible benefits 10
• Use of IT in re-engineering 10
• Risk of inaction 10
• Continued funding requirements 10
• Collaboration with other state agencies 10
• Maximising and optimising resources 5
• Past performance on other IT projects 5

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Office of Management and Budget

• Supporting the Presidents Management Agenda
• Acquisition strategy
• Project and programme management
• Enterprise architecture
• Alternatives analysis
• Risk management
• Performance goals
• Security and privacy
• Performance-based management system
• Life-cycle costs formulation

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Office of Management and Budget
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But the key thing is

• Keep the metrics relevant to your corporate and
  e-Government objectives
• though I shouldnt need to tell that to a
  performance management group

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Any questions?
Peter.Eckersley_at_ipf.co.uk
www.cipfaitt.net
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