Advice and Information for Finance Professionals

5 Steps for Public Sector Organizations to Improve Efficiency

Deirdre Houchen
Senior Marketing Director, ERP/EPM, Oracle

It’s not easy being a government servant these days. As populations either soar or shift, and tax-funded budgets to provide vital services shrink, public sector organizations are finding it increasingly difficult to satisfy the needs of their constituents.

The pressure will only grow as populations of older people, who typically pay fewer taxes while requiring more services, increase. According to the World Health Organization, it’s expected that there will be more than two billion people age 60 years or older by 2050. In the United Kingdom, where core funding for local governments was expected to drop by 40% by 2015, the number of people over 85 is projected to double in the next 20 years.

Not surprising, more public sector organizations are beginning to evaluate new technology—in particular, the cloud—to effectively and affordably provide the services their citizens need. In the UK, the "Digital by Default" strategy estimates that moving services to digital channels will save £1.7 to £1.8 billion per year. Australia estimates that by 2020, 4 out of 5 citizens will choose to engage with the government through the Internet or other types of online services.

These countries are far from alone; other governments that have already defined a cloud strategy include Canada, Japan, and South Korea.

In the United States, IDC reports that federal cloud spending will reach $6.7 billion in 2016, or 8.5% of all IT purchases, and estimated that cloud spending will eventually grow to about half of all U.S. government IT spending—perhaps as early as 2018. 

In 2009, the U.S. General Services Administration established the Federal Cloud Computing Program Management Office, asserting that the technology can effectively and efficiently meet the performance and mission needs of the government. For any agencies that didn’t get the memo, the U.S. CIO at the time, Vivek Kundra, took a firmer stance. In 2011, the government announced a “cloud first” policy, mandating that agencies take full advantage of cloud computing to maximize capacity utilization, improve IT flexibility and responsiveness, and minimize cost.

In the policy document, Kundra reported that the federal government’s IT environment was characterized by inefficiencies that negatively impact its ability to serve the public. These included:

  • Low asset utilizations
  • Fragmented demand for resources
  • Duplicative systems
  • Long procurement times

“Cloud computing has the potential to play a major part in addressing these inefficiencies and improving government service delivery,” the report stated. “The cloud computing model can significantly help agencies grappling with the need to provide highly reliable, innovative services quickly despite resource constraints.”

States Well-Clouded

While investment in the cloud by U.S. federal agencies is climbing, state governments are making substantial commitments of their own. In its 2015 State CIO Survey conducted by the National Association of State Chief Information Officers (NASCIO), 73% of states reported having some applications in the cloud and are considering others. One-fifth of the responding states said they are “highly invested” in cloud services, compared to just 6% in 2013.

Like other public-sector organizations and businesses, states are migrating toward private and commercial cloud services to cut IT costs, modernize systems and accelerate development of new applications and services.

For example, the Kansas City Board of Public Utilities implemented Oracle Hyperion Public Sector Planning and Budgeting for financial analytics on premises, and configured it to pull data from the cloud. “We needed a financial system to take us into the next century,” said Paul Pauesick, director of IT, at an Oracle Open World panel discussion in 2015.

The utility board had been running PeopleSoft Financials on premises. By upgrading to the Oracle ERP Cloud solution, Pauesick was able to implement 21 modules in seven months.

And Let's Not Forget...

The growing list of benefits of providing services in the cloud are reflected in the different metrics agencies are using to measure success. Of course, cost effectiveness is paramount. We’re seeing a boost in citizen portals that provide engaging self-service tools that reduce the number of people needed to address queries.

But the benefits are not only financial. Agencies are seeing improvements in the quality of service being delivered to the community, as well as environmental benefits.

Indeed, the U.S. Congressional Research Service report re-emphasized the energy efficiency of migrating to the cloud. It pointed out that government agencies can boost their green initiatives by relying on the cloud vendor’s data centers, which are typically designed for maximum efficiency in power usage and cooling.

Other benefits listed in the report include:

  • Availability – Cloud computing can improve availability by using Internet connectivity to provide mobile computing services, and its flexible capacity and scalability can reduce the risk of downtime.
  • Agility – Cloud computing can permit faster and more efficient implementation of upgrades and other technological advances. Innovators benefit from a broader and more affordable range of scalable tools for research, development and testing.
  • Security – Cloud providers—especially established vendors with deep pockets—are able to invest much more in security than a local government agency with a limited budget.
  • Reliability – Cloud services may be distributed among several different data centers, so that if one node fails, the workload can be distributed elsewhere. This provides greater reliability than the use of a single data center.
  • Privacy – The greater direct control that private clouds give to users over hardware and software may provide more control over management of privacy.

How to Get Started

Like any game-changing process, successfully migrating to the cloud requires a series of thoughtful and calculated steps. Here’s what we recommend:

  1. Define the business objectives. Look at the as-is environment and determine how to cut cost, deliver better services and be positioned to grow and expand.
  2. Define the cloud strategy. Evaluate the transaction, program and policy services that align well with the business objectives. Decide which organizations will be target customers.
  3. Create the roadmap. Look at current initiatives underway to potentially pick up more support and resources. Eliminate confusion if there are competing programs. Identify activities that should be aligned to the shared services vision.
  4. Deploy cloud services. The beauty of cloud services is that they can be rolled out in increments, over time. Since the cloud is scalable and pay-as-you-go, agencies can start with one set of capabilities (e.g. online billing) and add new functionality (e.g. self-service procurement) as the project moves forward.
  5. Achieve new operational efficiencies. Start leveraging new business capabilities to drive process improvement and help users do their jobs more efficiently.

If you’re looking at moving to the cloud, but are concerned about the potential complexity of a migration project, I invite you to read our CFO Guidebook, Best Practices for ERP Cloud Migrations.

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