digital government saves money

Digital Government Transformation Saves Money

As governments look to change the way they serve citizens,they are also looking to find ways that digital government transformation saves money.  There are a number of goals that pave the path to digital transformation. These include simpler processes, more openness, and a greater focus on the end user rather than government itself.

But it’s also proving true that governments can save money by transforming their service delivery. With the consistent financial pressures faced by governments everywhere, cost savings are an added incentive to digitizing government service delivery.

Advantages are Many

There are plenty of valuable reasons for governments to move to digital service delivery. Citizens want digital service from government for the same reason they want it from banks, retailers or travel sites. People are starting to expect the same kind of seamless online service from government.

But transforming service delivery and moving to seamless digital processes also benefits governments. It allows for fewer resources devoted to field offices, call centres, data entry, and other labour-intensive operations.

Digitizing government can also make it easier to do business and therefore boost the number of businesses that choose to operate in a jurisdiction. It can make tax fulfillment easier, which increases revenue and reduces the costs of finding negligent taxpayers. Simpler, efficient processes make compliance easier, which is better for governments, individuals and businesses.

Tracking Benefits

Compared to the private sector, it can be difficult to know empirically that digital government transformation saves money. With an online retailer, metrics are relatively simple: increase in sales, therefore increase in profits. With government services, it can be difficult because such traditional metrics don’t always provide a business case for transformation.

Despite some of the difficulties in tracking, it’s true that digital transformation can reduce labour costs, improve government efficiencies, and potentially reduce technology costs in the long run.

Some Examples of Cost Savings

So what are some of the cost savings that can be found with a government transformation to online service delivery? There are some recent examples.

In Australia, the government’s Digital Transformation Office was established in 2015. At that time, despite moves to online service delivery, it was estimated that 40 percent of transactions with government were still done through traditional channels, such as in person, by mail or by phone.

However, it was estimated that “if this could be reduced to 20 per cent over a 10-year period, it could deliver efficiency benefits to both citizens and government valued at $26.6 billion, achieved at a cost of around $6.1 billion. This would equate to net benefits of $20.5 billion, or around $2,000 per Australian household.” (See ZDnet.com – these values are all in Australian currency.) Those benefits include redeploying staff from traditional roles such as mail sorting or data entry.

In the United Kingdom in 2014-15,“the Cabinet Office helped government save 1.7 billion pounds through digital and technology transformation.” (See GOV.UK)

In fact, the study cites that the three-year savings beginning in 2012-13 totaled 3.56 billion pounds.

This was done in several ways:

  • by managing government’s digital and IT spending requests;
  • by transitioning websites to GOV.UK; and,
  • by transforming public services.

Final Thoughts

While it’s not always easy to find hard cost savings when taking on transformation initiatives, it is possible to find and track benefits in the long run. As governments continue to look at ways to enhance their digital services and change how they provide service to citizens, there are examples of the cost benefits possible with such initiatives.

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