Increased efficiency in government calls for new operating models

- Joint Nordic study by TietoEnator and Etla sought solutions to productivity problems

31 March 2006, Existing public sector structures and operating models make it difficult to raise productivity and efficiency in this sector and to develop national competitiveness since the indicators, methods and remuneration schemes in use do not meet the needs of its diverse organizations. Reaching the productivity improvement goals set for information technology requires new management, service and process innovations in local and central government functions.

These are the findings of a study conducted by TietoEnator and the Research Institute of the Finnish Economy (ETLA) entitled “Performance improvement in public organisations - How to leverage ICT investments”. The study was based on interviews with top executives and IT management in public service organizations between November 2005 and January 2006. The interviews were used to evaluate the importance of innovations and process change, along with change management and the role of information technology in the organization.

Scope for higher productivity in public administration

The Nordic countries without exception rank highest in studies that compare the competitiveness of various countries or evaluate how far they have advanced towards the digital economy. At the same time, however, the public sector has been criticized for not being able to demonstrate a sufficient degree of real productivity and efficiency improvements. Although the public sector has often played a pioneering role in adopting information technology, efficiency has not necessarily increased as hoped for.

While services are required to meet ever tougher expectations, public sector financing cannot be significantly raised any further. Hence service efficiency needs to be enhanced through new approaches and tools, yet without any appreciable weakening of service levels. The key indicators used by industrial corporations to measure profitability, growth or the volume of transactions do not directly apply when assessing public sector efficiency. The specific characteristics of these organizations, the functions they perform in society and their wide range of processes and services call for a new perspective on management and measurement. Similarly it is also necessary to take a fresh approach to promoting the creation and distribution of innovations.

The study shows public sector performance could be improved, the real customer benefit and impact of information technology investments increased, in the following ways:

Management practices should be adapted to take better account of the specific features of each public sector organization; the same management model is not suitable for all organizations.
Targets and key indicators should be defined according to the tasks of each organization and its parts, principally by segmenting organizations and service production by codification.
Incentive mechanisms and management practices should be changed to ensure they support the spread of innovations rather than each organization trying to come up with its own means for improvement.

The study also made other recommendations including the development of a public sector innovation system and renewal of management systems, proposing that these could be investigated further.

TietoEnator is among the leading architects in building a more efficient information society and one of the largest IT services providers in Europe. TietoEnator specializes in consulting, developing and hosting its customers’ business operations in the digital economy. The Group’s services are based on a combination of deep industry-specific expertise and the latest information technology. TietoEnator has over 15 000 experts in more than 25 countries.

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Ms Ritva Elonen

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TietoEnator Corporation

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