Broadly speaking, studies suggest that when a company spends money on new technology, they get a decent return on that investment.
The same seldom seems to be the case when it comes to state spending on IT, with a huge number of high profile projects failing to deliver anything like the expected returns, and doing so having cost much more and come in long after the expected delivery date.
Is that the reality of all government IT projects, or merely the unfortunate few that seem to taint all others?
A recent paper set out to explore the issue in more detail, and found that the perception is rather unfair, with each dollar spent on IT projects yielding $3.50 in savings.
The study found that investments in technology are generally making government departments more productive, efficient and transparent, all of which generally reduces expenditure.
Of course, it’s traditionally rather difficult to accurately measure the impact IT has on government spending as various technological advancements could actually expand public services.
The study looked at the impact of IT on state budgets, and attempted to quantify their results using data from the CIOs of each state.
“We’re not finding the empire-building you sometimes get when an institution gets carried away with technology,” the authors say. “Overall, the IT investments pay off.”
The paper is believed to be one of the first studies to fully explore the impact IT investment has on the public sector. The aim is to better inform government investment in technology, especially given the strong urge across the world for greater state efficiency.
States themselves were studied because, unlike various branches of federal government, the states tend to spend money on similar things.
The results are comforting for government CIOs, with not only efficiency tending to improve as a result of IT spending, but transparency also increasing significantly.
“IT investments tend to increase transparency because monitoring becomes easier and there’s self-correction when everyone can easily see what you’re doing,” the authors say.
As technology has evolved, it has caused economic activity to become more sophisticated and complex. For instance, the establishment of offices to deal with cyber security and financial protection in recent years.
The paper suggests however that IT investment often makes government smaller due to the automation it supports. It also improves productivity and can help to reduce transaction costs incurred when working with the private sector.