May 26, 2011 – In lean times getting leaner, a new study of Federal agencies points to efficiency as a site for savings.

The March 2011 survey of 150 Federal financial, operations and performance managers highlights that a better understanding of spending could help reprioritize up to 13 percent of their budgets. The study was conducted by MeriTalk and underwritten by SAS Institute Inc.

Despite the acknowledged need, less than one-third (31 percent) of respondents say their agencies have a formal plan to identify spending inefficiencies. Even in the absence of widespread formalized programs, nearly half (47 percent) of respondents say their agency conducts data analysis on operational costs to identify opportunities for increased efficiencies.

Federal managers and professionals say that more granular project information and clear executive direction will help improve spending efficiency. Thirty-six percent of respondents report that analyzing spending data per project would most help their agencies identify opportunities to improve efficiency, and 33 percent say that prioritization of spending by senior executives would be most helpful. 

Federal practices suggest agencies can identify additional opportunities to increase efficiency, according to the study. For example, only 18 percent of respondents say they analyze their enterprise IT architecture for savings, 19 percent review asset management, 27 percent consider program overlap/duplication, and 27 percent mine acquisitions/sourcing for greater efficiency and cost reduction.

Respondents cite multiple challenges in improving efficiency and reducing costs. Forty percent of respondents cite the obstacle of knowing that their agency or department has to spend its full budget to get the funds again next year. One-third (31 percent) of respondents say that insufficient controls and insight into program performance hinder efficiency efforts, and 27 percent say that management is not making oversight a priority.

The report suggests agencies avoid compounding inefficiencies. Federal managers and professionals still rely heavily on spreadsheets and manually compiled reports as analysis tools. Nearly two-thirds of respondents (62 percent) report that they use these limited and time-consuming tools in their analysis. In addition, only 45 percent of respondents report that they share best practices across departments.

“Federal managers and professionals are eager to help their agencies improve efficiency, and their ideas are often implemented – with 43 percent of respondents saying that ideas for greater efficiency and cost cutting are always or often implemented,” said Karen Knowles, president, SAS Federal in the announcement. “To continue to build this momentum, managers need clear direction and analytical tools that enable them to effectively mine new areas – such as program overlap and duplication – to yield greater savings and efficiency.”

The “Taxing Times: The Federal Efficiency Opportunity” full study results are available here.

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