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An enormous opportunity to improve productivity through government transformation.
The following statistics reveal that, to achieve government transformation, the public sector must do more—and do it better—with less: United States fiscal 2012 federal deficit spending of $1.1 trillion was nearly 31 percent of the budget and 7.3 percent of GDP. States’ cumulative deficit for that period was another $107 billion—15.5 percent of total state budgets. Among individual states, Texas’ projected deficit for FY2013 is $9 billion; California’s is $15 billion and Washington’s $2.5 billion.
Accenture’s broad experience in the private sector suggests that public sector organizations can achieve the seemingly impossible task of effectively reducing costs while raising the quality of their overall performance by restructuring, refocusing and redesigning their operations. An enormous opportunity exists. According to Oxford Economics, the United States could save as much as $995 billion in annual expenditures by 2025 by increasing public-sector efficiency by just 1 percent a year to close the gap. What’s more, cash-strapped public sector administrations have a variety of ways to fund these initiatives without paying for them upfront, via programs like value-based contracting or by supplementing capabilities and services by “buying” results.
In the aftermath of the Great Recession, the public sector is faced with the seemingly impossible task of effectively reducing costs while raising the quality of their overall performance. This piece highlights three strategies to help foster government transformation moving forward:
Restructuring the organization. This entails consolidating agencies and programs that offer similar services; aggregating administrative functions into shared services; and, finally, finding better ways to collaborate across jurisdictions, which enables organizations to share services beyond traditional boundaries.
Refocusing on citizen value. This requires tough decision-making by leaders to identify the outcomes that really matter and the methods to achieve them. Accenture’s patented Public Service Value (PSV) framework can help with those decisions. Organizations can also make smarter spending and funding decisions by using analytics to help them identify improvement opportunities.
Redesigning sourcing and resource management. This strategy can help government agencies realize cost savings by streamlining and simplifying operational processes and strategically sourcing and managing resources and assets.
According to Oxford Economics, the United States could save as much as $995 billion in annual expenditures by 2025 by increasing public-sector efficiency by just 1 percent a year to close the gap. Accenture’s broad experience in the private sector suggests that public sector organizations can reduce cost while raising the quality of their overall performance by restructuring, refocusing and redesigning their operations.
The following are examples of how restructuring, refocusing and redesigning government operations have resulted in significant cost reduction while improving government productivity:
Using Accenture’s patented Public Service Value (PSV) framework, many public sector operations, such as the Massachusetts Port Authority and a Midwestern state’s Department of Revenue, have been able to quantify and drive results that links outcomes to true costs.
One state’s Department of Revenue introduced analytics to determine how different policy and budget choices might affect the overall fulfillment of its mission. It then created a plan to optimize processes and technology to improve tax collections. From 2002 to 2005, the plan increased tax collection by $120 million while reducing cost per taxpayer.
The United States Postal Service applied Lean Six Sigma techniques to identify $2 billion in cost savings in its current processes.
In Washington DC, to increase performance, accountability and capability, the city consolidated three economic development agencies into one.
With Accenture’s help, the state of Ohio shares finance, human resources and technology services statewide.
By coordinating services such as police, fire and transportation, city councils in California have significantly reduced wasteful duplication.
To provide the services citizens require in the aftermath of the Great Recession, governments need to rethink their approach to cost reduction. The three strategies described in this piece offer a proven, solid foundation for building a more cost-effective approach to serving the public:
Implementing these strategies will facilitate government transformation as the public sector can reduce costs while raising the quality of their overall performance.
March 26, 2013
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