States Can Save $11 Billion Over Five Years by Better Harnessing IT to Drive Productivity While Improving Public Services, Says ITIF

WASHINGTON—The Information Technology and Innovation Foundation (ITIF) today 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 $11 billion in savings for state governments while also saving time and cutting costs for businesses and citizens.

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 $11 billion combined over the next five years—while making the services easier to use for citizens and businesses. Individual state governments could save anywhere from $38 million in South Dakota to $1.3 billion in California.

“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 highlights exemplary programs that states have used to cut labor and material costs while enhancing the efficiency of government workers and creating value for citizens. The analysis focuses on three key areas:

1. Replacing routine government employee tasks with self-service tools on the Internet, mobile devices, and kiosks. Examples include self-service sign up for Medicaid in Ohio, a kiosk program in Georgia for driver’s licenses, a telehealth program for inmates in California, and innovative online services in Montana and Illinois.

2. Automating routine government employee tasks such as manual entry of paper forms with online applications and smart, connected devices. Examples include using a mobile app for road inspections in Pennsylvania and automating the procurement process in Virginia.

3. Optimizing agency operations with data and analytics. Examples include using sensors to improve traffic management in Oregon and weather response in Utah, saving taxpayer money and increasing public safety.

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.