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A road map to public sector reform

The smart way to cut costs, optimize performance and deliver reform in the public sector

From health and welfare to safety and security, analytics is improving society in many ways. Consider these examples from the UK:

  • The London Fire Brigade has integrated external data with its own data to apply predictive analytics and optimize performance in areas where there is a high risk of fire.

  • The Vehicle and Operator Services Agency (VOSA) has transformed its performance since investing in predictive analytics to reduce costs and risks, increasing revenues and improving customer service.

  • The Croydon Drug and Alcohol Action Team is sharing data across multiple agencies and using an insight-driven approach to improve prioritization and risk management in treatment programs.

  • National Health Service Blood and Transplant has used analytics to optimize decisions and to understand the multiple factors that influence survival rates, waiting times and donor consent.

  • A defense organization uses predictive analysis to generate scenarios and predict future logistics and supply chain requirements at macro and brigade levels.

  • A joint program between HM Revenue and Customs (HMRC), The Department for Work and Pensions (DWP) and The National Fraud Authority (NFA) is using advanced analytics to fight fraud and error by identifying existing fraud and predicting where it may occur next.

The above examples give a glimpse of how SAS Analytics can underpin a smarter, more preventative approach to reforming public services and optimizing performance, even in the face of budget cuts. Each organization is at a different stage of its journey, but they all are united by their adoption of better information management practices to improve efficiency and protect frontline services.

Drawing on its extensive experience of both good and bad practices, the National Audit Office (NAO) has compiled a guide to structured cost reduction. Central to its argument is that a lack of information and poor planning are the primary causes of waste in the public sector. This poor, ill-informed planning, it says, is the root of short-term, indiscriminate cost cutting that can lead to higher overall spending – or just move the costs elsewhere – and can leave organizations exposed and unprepared for the future. The report urges the public sector to adopt a longer-term, data-driven strategy instead. It suggests that this approach is vital to ensure that government departments have the information to perform optimally today and in the future, and recommends embedding continuous improvement and efficiency into business as usual, not just as a response to budget constraints.

The NAO acknowledges that the execution of such strategies will involve investing in technologies that improve the capability to understand and compare costs, and to conduct comprehensive risk assessments. It also recommends the use of analytical
frameworks to understand cost and value drivers, and proactively influence future demand. Finally, the report stresses the importance of adopting this approach systemwide, rather than in departmental silos.

But how can the public sector afford these essential investments and ensure buy-in across multiple departments? The examples above and others like them share some common lessons and provide some clues to success.

Quantify: The vital first step is to gain senior-level commitment to exploring the opportunities and benefits available – as well as the risks involved with retaining the status quo. A catalyst for this change is often a call to action, such as the budget crisis, combined with the recruitment of senior managers or nonexecutives with experience in the private sector who understand the benefits of improved information management. For example, leaders in the NFA committed to the change to fight fraud simply because the size of the prize had been quantified.

Demonstrate: Buy-in is often achieved through senior executive workshops, which bring the benefits of analytics to life. VOSA made its breakthrough when SAS delivered a proof of concept data challenge, in which real data was integrated and analyzed, providing some surprising insights to the board – within just one week of implementation. With SAS' support, HMRC created a Data Lab that spread best practices and promoted greater use of predictive analytics across HMRC and the wider government. It is often useful to identify the information and applications that will provide the biggest win in the short term, as part of a longer-term approach.

Benchmark: Workshops should involve learning from best practices in other industries. SAS helped the NFA set its benchmarks with information from numerous customers across banking, insurance and the public sector. Similarly, SAS runs a range of forums and events to encourage this practice as standard.

CulturaI shift: The leadership teamsthat have done the most to optimize performance in the shortest time often share a few common light-bulb moments:

  • Go the extra mile: Business intelligence was originally adopted to comply with mandatory reporting and legal requirements, but it has come a long way since then. The first step to reform is often making a virtue out of necessity by realizing the enormous potential of management information to transform the very performance that is being reported.

  • Prevention is better than the cure: The next stage is recognizing the importance of foresight and its strategic advantage over hindsight. The adoption of SAS' proactive predict-and-prevent approach has already been critical to optimizing the performance of limited resources: transforming productivity, increasing revenues and improving public safety.

Birds of a feather stick together:
Organizations spend a lot of time differentiating their products and services to gain a competitive advantage. All too often this mindset trickles over into software procurement decisions and leads to organizations investing in expensive, bespoke solutions – sometimes referred to as the "cost of being special." But the realization that the organization is not unique, and that many others in the private and public sectors have been wrestling with the same fundamental problems, is crucial. Once decision makers accept this reality and adopt commercial off-the-shelf analytics solutions and processes, they can revel in much lower implementation costs and faster ROI.

Coordinate and share: Many SAS customers are realizing the benefi ts of linking with other organizations within the same ecosystem to share experiences and explore systemwide benefi ts. For example, HMRC and DWP have agreed on a joint counterfraud strategy and are establishing a shared risk and intelligence unit. Meanwhile, others have enriched internal data with external data to provide a more holistic view and even greater predictive capacity.

Audit: Successful reform starts with understanding what information your organization has, where that information is, who holds it, its condition, and its issues and gaps. The SAS white paper Valuing Information as an Asset is a great place to begin; it outlines how to
create an information asset register and includes research into the rationale and business benefi ts of Business Analytics Competency Centers (BACCs).

Build trust: Information must be cleaned and integrated to demonstrate its value and to build confi dence throughout an organization. A large UK police force adopted a quick-win approach to demonstrate the operational benefi ts of improved data quality. In less than a year, it made amazing strides: from having one borough in 32 being rated as excellent and 14 rated as poor, to none being rated as poor and 14 as excellent.

Consolidate: Better business intelligence allows organizations to consolidate information management staff and tools – thereby reducing duplication and exposing gaps in resources. For example, vOSA's new advanced analytics software saved the agency enough money on information gathering that it practically paid for itself. The key here is adopting a long-term solve-and-evolve model, rather than a rip-and-replace approach, i.e., exploiting existing business intelligence software investments. Tools can then be gradually rationalized toward a fully integrated and agile predictive analytics system.

Partner: To reduce initial costs and overcome a skills shortage, public sector agencies should seek best-in-class private sector partners. This partnership could involve shared services or an as-needed software as a service relationship. Or agencies could follow the example of HMRC and DWP, which explored risk/ reward partnerships, based on increased revenues generated by reducing tax evasion and benefi ts fraud.

Create centers of excellence: Once businesses have accepted the importance of improved information management, many also agree on the need for a new governance and organizational model, leading to the creation of a dedicated Information Management Center of Excellence. This is a business-oriented, rather than IT-oriented, organization, whose goals are to create the information evolution road map, oversee its execution, and help the wider organization understand and exploit the information as an asset. Given the shortage of skills, tools and funds in the public sector, it is recommended that smaller to medium-sized organizations pool resources and share these centers of excellence.

This list could be regarded as an evolutionary path to performance optimization and increased efficiency. As the case studies have demonstrated, it is a journey worth making with many experienced practitioners to guide the way. It is also a journey that, increasingly, public sector organizations will have no choice but to make if they are to deliver the frontline services taxpayers deserve and expect.

Reference NAO, A Short Guide to Structured Cost Reduction 2010