New report urges state and local governments to be strategic about analytics tools

Business intelligence (BI) and analytics in state / local government has been gaining over the last several months. News of immediate and huge returns on investment have stoked curiosity in the technology. But according to a report out yesterday, state and local officials still need to treat the applications as they would any IT investment – tying its use to broader strategic goals within the enterprise.

The National Association of State Chief Information Officers (NASCIO) released a continuation of its series on business analytics yesterday, urging states to invest in analytics technologies from an enterprise-wide perspective. The report says BI/BA investments have largely been “isolated, uncoordinated, disconnected and unmanaged from an enterprise perspective,” which has “led to isolated investment, point solutions and a disparity in process and tools.”

Multiple analytics solutions and different uses for those tools will result in wasted resources with multiple layers of training, says Oregon CIO Dugan Petty.

“State government cannot afford redundant and disconnected investment — even in the best of times. And right now, we’re in the worst of times,” he said in a statement.

According to the INPUT report, released earlier this year, the market for state and local BI / audit and recovery (A&R) technologies will increase at an annual growth rate of 7.6 percent, topping out at over a billion dollars in 2014. Cumulatively, INPUT believes states will invest $600 million in A&R solutions, and $225 million in BI and prevention solutions in 2010 for the five biggest federal benefits programs.

The technology can be used in multitude of ways, though many states have implemented analytics to root-out fraud in Social Services or make sense of crime data.

Alameda County, California has implemented a full suite of BI solutions to improve operations and find waste, fraud and abuse in their department of human services. Within days of the new system’s launch Alameda officials were able to identify WFA, potentially saving the state and county millions. “For Alameda, the goal was to improve the speed of their service delivery, while making sure people were getting only the kinds of benefits they’re eligible for,” Jeff Jonas, Chief Scientist for IBM’s Entity Analytics, said in an interview about the county’s system.

Technologies used in Connecticut and Texas, who are using fingerprints to prevent duplicate enrollment in welfare and geospatial mashups to see which doctors are luring patients from exuberant distances – a red flag for potential fraud. And in Memphis, Tenn. law enforcement officials are using BI to forecast criminal “hot spots” more accurately and respond more effectively to the shifting criminal landscape through a program called Blue CRUSH.

According to a report by Nuclear Research both the Alameda County and Memphis projects had immediate and huge returns on investment. The Alameda Country Social Service Agency’s Social Services Integrated Reporting System (SSIRS) had an ROI of 631% and a payback of 2 months, the firm said. And Memphis Police Department’s Blue CRUSH had an ROI of 863% and a payback of 2.7 months.

But the NASCIO report suggests that these kinds of returns are unlikely, unless the use of BI tools is consistent with enterprise-focused objectives.

“[BI] Tools are expensive and should not be purchased without a clear understanding of the outcome state government is trying to achieve with them,” Greg Wass, CIO for the state of Illinois and co-chair of the NASCIO Enterprise Architecture and Governance Committee, said.

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