Tech could save the US public sector $1 trillion. Could it do the same for the private sector?

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If the US government can save $1 trillion through the judicious use of technology, what's to stop the private sector doing the same?
 
This month, the Technology CEO Council in the US released a report showing how the cash-constrained US government could shave over $1 trillion from its deficit in the next ten years. The council's members presented the report, called One Trillion Reasons[PDF], to the National Commission on Fiscal Responsibility and Reform.
 
Around $22 billion in savings would come from refining data center operations. The Council suggests that data center consolidation (as some of the larger IT vendors have done to great effect), and standardization through application migration, could help to streamline things.
 
In fact, standardization and simplification are both threads that run through the report. The government could save $500 billion by refining its procurement processes, says the Council.
 
$50 billion in savings could come from digitzing antiquated processes. With modernizers champing at the bit, the days of paper-based forms are numbered. As they disappear, the workflow underpinning them will be tightened up, self-service will flourish, and inefficiencies will be driven out of the system.
 
There are other no-brainers in the report. Reducing IT's energy use is one, bringing a 25% energy saving. Better project management and real-time course correction (which brings agile software development techniques to general project management) is another. These are all measures that the private sector should be leading in. But there are other, more subtle, suggestions that require attention. 
 
Significantly, the Technology CEO Council identified massive savings in the use of analytics. The US government could save $200 billion by crunching numbers to identify and stamp out fraud, the report said. And with 14,000 excess buildings and 55,000 under-used ones, it could also consolidate and monetize its assets, saving a further $150 billion by 2020. 
 
These are areas that could also bring huge benefits to many businesses. While some (financial services, for example) would benefit more from stamping out fraud than others (say, manufacturing), all businesses could recover money from the judicious use of analytics, and many could crunch numbers to help increase top-line revenues. Innovation in areas such as predictive analytics can help companies to chart future directions, plan new products and service lines, and take better advantage of the economic recovery.
 
And better monetization of existing assets is a process that not enough businesses are exploring. Technology can help here in unprecedented ways. For example, the use of telecommuting, flexible working times, and hot-desking can enable companies to dramatically reduce the amount of physical working space required. Perhaps the clearest saving on the balance sheet could be the elimination of a single floor from a rented building space, for example. The report also suggests moving some agencies to an income structure based on the fees that they collect, essentially turning them into revenue generators, rather than cost centers. This resonates with CIOs who talk about a services culture in IT, in which IT services are chargeable to the rest of the organization.
 
Finally, the use of shared services for key processes such as HR, IT, finance, and procurement could save $50 billion, suggests the report.
 
Technology CEOs are teaching government players how to make this happen. The report, in line with another from McKinsey which found the same cost-saving potential, has a lot to teach private sector companies, too.

 

Stewart Baines

I've been writing about technology for nearly 20 years, including editing industry magazines Connect and Communications International. In 2002 I co-founded Futurity Media with Anthony Plewes. My focus in Futurity Media is in emerging technologies, social media and future gazing. As a graduate of philosophy & science, I have studied futurology & foresight to the post-grad level.