Jason Gunnoe, CISO, State of Tennessee

Plato's Republic Redux

Public-sector organizations find new tools for quantifying the benefits of their IT investments

At a recent meeting of public-health officials in the United Kingdom, one savvy finance director did a remarkable thing; he discussed outcomes instead of balance sheets. Greg Partson, director of the Institute for Public Service Value, recalls, "When he said, 'We're here to reduce cardiovascular disease, to reduce diabetes, to improve mental health care,' you could see the collective jaws of the audience drop. They couldn't believe a finance guy was talking about this stuff."

Partson believes a focus on outcome is a lesson IT managers would do well to learn: "IT is an area where everyone is trying to increase effectiveness and productivity in public-service organizations, and it should be led by people who are thinking like that director."

Tying mission with money isn't just good business practice; it's becoming a regulatory necessity. In the United States, the Office of Management and Budget (OMB) requires agencies to justify IT spending and quantify the value of projects using a process delineated by OMB Circular A-11. Even IT managers unbound by OMB requirements are finding that to compete successfully against other departments for funding, it's essential to have clearly delineated benefits in business proposals for new projects.

In the public sector, measuring business value and return on investment (ROI) is difficult because profits don't exist as they do in commercial industry. Harder-to-quantify benefits, such as constituent satisfaction or staff efficiency, loom as key considerations.

To cope, public-sector IT officials are using various strategies to measure the value of IT projects. Some managers rely on best practices shared by peers in other organizations, while others turn to consultants and academia for software-based models and methodologies tailored for the public-sector analysis.

New tools

The U.S. government's General Services Administration developed the Value Measuring Methodology (VMM), which offers a framework for comparing the possible benefits, costs, and risks of IT projects. Public-sector officials who use VMM go through four value-analysis steps.