Though private companies have benefitted from data warehousing for several years now, the public sector has just recently begun to aggressively embrace these strategic solutions.
In this month's column, I will discuss some of the challenges faced in the public sector and will identify several data warehousing solutions that can be leveraged from the private sector to more rapidly deploy successful solutions.
In recent years, radical changes have created new challenges and opportunities for the public sector:
Accountability Federal, state and local agencies are under increased scrutiny and pressure from taxpayers, lobbyists, politicians and the media to explain what, how and why money is being spent. In response, legislatures have established higher accountability standards for spending, performance, customer service and productivity. Some examples in the United States federal government include The Government Performance and Results Act, The Clinger-Cohen Act, The CFO Act, The National Performance Review and The Information Man-agement Technology Reform Act.
Competition Competition in the public sector, which was once unheard of, is now a reality. The pressure to reduce costs has forced government agencies to compete with the private sector as well as each other for scarce financial and human resources. Many agencies sell goods and services to other agencies. For instance, the Government Services Administration sells telecommunications, real estate, vendor products and contractor services, while the U.S. Department of Veterans Affairs leverages its infrastructure to outsource technology services. Others, such as the U.S. Mint or the military's Post Exchange (PX) system, rely on retail sales to help finance their budget.
Enterprise-Wide View Federal, state and local governments in the U.S. are increasingly taking an enterprise-wide view of their business processes and information systems. They are replacing stovepipe systems with enterprise resource planning (ERP) systems (such as SAP, PeopleSoft and Oracle) and developing integrated enterprise-wide reporting systems.
While the size, complexity and nature of public sector entities may be different from the private sector, they both face similar challenges and opportunities. As such, the public sector can and should leverage the experience of private companies to develop more cost-effective solutions.
Learning from the Private Sector
Private companies have used data warehousing to measure performance, reduce costs, improve customer service, provide enterprise- wide views of the business and gain competitive advantage. These data warehousing solutions and related value are very relevant and directly applicable to the public sector:
Integrated Performance Management (IPM) In the private sector, data warehouses draw information from multiple source systems to provide an integrated view of financial results as well as the employee, customer, competitive products/services information that enables users to analyze data across various dimensions of the business. Many firms refer to this as a balanced scorecard, as it may contain both quantitative and qualitative data. Similarly, the public sector can use qualitative IPM data warehouses to manage budgets, track costs and monitor performance for public sector programs. Additionally, government agencies are leveraging the private sector's experience using data warehouses for balanced scorecards to help satisfy the requirements of the Government Performance and Results Act.
Human Resources Management (HRM) During the past two years, we have seen tremendous activity in the private sector to develop HRM data warehouses. These warehouses are being used to analyze attrition, performance, compensation, demographics, skills development, training, career management and retention. The need for this capability in the public sector is even more pronounced. In fact, the public sector is better positioned than the private sector to implement HRM solutions because public sector career models, policies and procedures are far more homogeneous than those of the private sector.
Supply Chain Management (SCM) The private sector develops SCM applications to track the costs and performance of their suppliers, reduce purchasing costs and complexity, and more efficiently manage their manufacturing, inventory and distribution processes. Although only a few public sector agencies actually maintain manufacturing facilities, many have substantial purchasing, inventory and distribution operations. In addition, the private sector's logistical challenges for meeting promotional peak demand pale in comparison to those faced by many government agencies (e.g., the annual and ten-year peaks experienced by the Internal Revenue Service and the Census Bureau, respectively)
Customer Relationship Management (CRM) The private sector uses customer-centric data warehouses to improve its understanding of individual customers/households and channels in order to enhance customer service and to design and implement more effective marketing programs. Public sector agencies have similar needs. Most deal with the public through the Internet, call centers, in-person offices and the mail, requiring a data warehouse to provide a corporate memory of customer interactions. In addition, agencies must design and implement better CRM strategies to achieve the service levels required to meet and exceed their goals.
Leveraging Lessons Learned
Many government agencies are already using data warehouses, and many more are in the process of building them. Financial data warehouses, in particular, are becoming more commonplace. In general, however, the government is approximately three years behind the private sector in successfully deploying and using data warehousing and decision support solutions. Fortunately, many private sector experiences and best practices are directly applicable to the public sector. By leveraging these solutions and lessons learned, the public sector is poised for rapid data warehousing success.
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