Report: Virginia can save $217 million using IT to improve productivity

virginia-newThe Information Technology and Innovation Foundation, America’s top science and technology think tank, released a new analysis of why and how states should better harness information technology to drive public-sector productivity and generate savings for governments, businesses, and citizens.

ITIF proposed a series of state and federal policy initiatives that would encourage and optimize IT-enabled productivity in government to capture $217 million in savings for Virginia while also saving time and cutting costs for businesses and citizens. The report also cites Virginia’s automated procurement process as a prime example of using IT to boost government productivity and create savings.

The new report, “Driving the Next Wave of IT-Enabled State Government Productivity,” found that if state governments made it a top priority to boost productivity with IT, then they could significantly lower the cost of providing public services—by as much as $217 million in Virginia over the next five years—while making the services easier to use for citizens and businesses.

“In the same way that technology has driven productivity growth in the private sector, there is a great opportunity for savings by state governments,” said Dr. Robert D. Atkinson, founder and president of ITIF and a co-author of the report. “But to achieve this promise of e-government, leaders will need to clearly articulate the goal of replacing labor with technology. They will need to take on entrenched political opposition and overcome an array of administrative challenges, including an unwillingness to increase IT investments that would generate significant returns.”

The report holds up Virginia’s automated procurement process as an exemplary IT program. Before 2001, firms looking to do business with Virginia’s state government faced many challenges that could be fixed with automation. For example, firms had to visit each agency they wanted to do business with to distribute paper catalogs as part of their bidding process. In 2001, Virginia implemented a virtual procurement system that connected all agencies, local governments, and businesses through a single portal. This portal has saved the state an estimated $30 million annually by reducing transaction costs from $125 for manual purchases to $10 or $15 for automatically processed ones. Furthermore, suppliers now receive all orders in a standard format, which reduces the number of errors and shortens turnaround time. This increased efficiency gives businesses a way to increase their productivity by not wasting the resources that would have been tied up in the old system.

While there are examples in every state of the government using IT to increase its productivity, the report argues that no state has made IT-led productivity a top priority. ITIF recommends a series of reforms to do this in every state, including giving state chief information officers more decision-making authority, embracing public-private partnerships, and better incentivizing IT-enabled productivity.

“Imagine a leaner state government that needs fewer workers and materials to get the same or better results,” said Atkinson. “By fully integrating technology into agency operations, governments can cut the time citizens waste standing in line or filling out forms, reduce the burden on taxpayers, and make everyday services more efficient and effective. This not only cuts costs, but also makes everyone more productive—which is essential for state economic growth.”

Read the report here.


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