Running the government race: reaching the finish line with technology.

• Author: Bertolini, Phil
• Position: Cover story

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A dedicated, disciplined runner spends a tremendous amount of time planning and training for a big race, and government needs to do the same if it plans to succeed in one of the toughest economic races in history. Agencies that intend to use traditional strategies like cutting costs or increasing taxes will find themselves winded right out of the starting blocks, as these traditional tactics are not sustainable. Jurisdictions that are able to find applications for new and existing technologies and to restructure their organizations in a way that reduces the cost of providing services will emerge as winners.

Is it possible to restructure government to reduce the cost of providing services? This is the fundamental question on everyone's mind in government today. Michigan is among the states hit hardest by the recent national economic crisis. Local government budgets have been negatively affected by the state's unemployment rate, which is higher than the national average, along with falling tax revenues due to increasing job losses, home foreclosures, business closures, population redistribution, and other economic factors. Oakland County, Michigan--located just north of the City of Detroit--experienced its share of hardship related to the auto industry financial crisis. Two of the Big Three automakers reorganized and eventually emerged from Chapter 11 bankruptcy in 2009. The subsequent closure of manufacturing plants and associated automotive supplier businesses resulted in the loss of thousands of jobs and millions of dollars of tax revenue that was critical to the operation of local government. The entire county is struggling through the toughest economy in our lifetime, and citizens are living with massive reductions in jobs and salaries, to the point where many are losing their homes to foreclosure. The challenge of finding a way out of this economic morass will be with us for several years to come.

Knowing that citizens have no discretionary income to share, how will government survive? More importantly, how will the services government provides survive? There are arguments in favor of raising taxes and arguments in favor of lowering costs. Ultimately, survival will depend on how well we restructure our business, which in reality is one big service industry. The foundation for business change will be strong leadership, a strong financial process, and successful enabling technologies--in other words, a host of fundamental changes that will affect everything we do.

KEEPING IT COST EFFECTIVE

Many comparisons are made between government and the private sector, with results varying greatly. The private sector is mostly concerned with profit and answering to shareholders, while government is concerned with service delivery and the prudent use of taxpayer dollars. The private sector is driven by the consumption of their products and services. Private-sector organizations have to make tough investment decisions based on their bottom lines. If consumption levels decline, then costs have to decline accordingly, based on the reduced revenue stream. Private-sector organizations that made technological innovation a priority have a leg up on their competitors. Innovation helps businesses manage all aspects of their operations in a streamlined, efficient manner, keeping ongoing costs low--including employee costs. New products are born from operational needs. This competitive advantage is what the private sector seeks to keep its profit margin manageable.

In contrast, government is driven by providing the most efficient services to constituents. Some governments have been slow to invest in technology, which has limited their growth. Oakland County, along with many local governments across the nation, has invested millions in technology to be prepared for these tough times. Knowing that government budgets consist mostly of human resource costs, the ability to use technology dramatically affects budgets. It is not unusual to see upwards of 80 to 90 percent of government budgets directly related to employee...