In June 2015, the UK Chancellor announced a total of £4.5bn in cost cutting measures in order to meet departmental budget targets, with some of the biggest areas of savings coming in operational efficiencies, namely:

  • The Department of Work and Pension’s £105m cuts through tightening their debt recovery practices

  • The Ministry Of Defence is looking to make £500m in efficiency savings

  • The Department for Transport is targeting over £100m in savings by reducing the budget for ‘things going wrong’

  • The new round of Treasury-requested economies for the Ministry of Justice would come from administrative efficiencies

  • And £10m of Department of Energy and Climate Change’s cuts will come from department underspend and efficiencies.

In addition, a report by Lord Carter has concluded that the Department of Health could save £5bn a year with improved staff organisation and better supply chain management.

In short, public sector organisations need to find a way of delivering services that meet policy outcomes in an age of cost reductions and increasing citizen demands – they need to deliver operational efficiency in their organisations.

How to achieve these elusive efficiencies?

What is less clear at this stage is where the rest of the savings will come from. A quick internet search on the topic will tell you that operational efficiency in the public sector is equivalent to that in the private sector, for example delivering efficiencies in service (i.e. only delivering what the customer wants), processes, HR practices etc, and to some extent, this is still true.

And since 2015, Operational Efficiency has increasingly become a part of the public sector CIO agenda. Our partner, EMC, has identified a number of drivers in their report ‘Achieving Operational Excellence in Government’:

  • Data security – an increasingly significant trade-off between the security of information and those who need access to it

  • Interoperability requirements – driving cross government networks and enterprise architectures

  • Information sharing – to support cross government initiatives and requirements

  • Cost management – driving efficiencies through big data technologies and open source products.

Analytics – a top trend for Governments

The above drivers corroborate a number of Gartner’s top 10 government technology trends in 2015, which are clearly focused on digital. They include: digital workplaces, multichannel citizen engagement, digital government platforms and  Open Data.

But, Gartner also acknowledges another interesting trend that, in the public sector, analytics is rapidly evolving from a separate and distinct business function into an important aspect of both operations and customer experiences. For Gartner, the role of analytics is increasingly important in helping to deliver the operational efficiency agenda, because analytics are:

  • Increasingly predictive in nature, making real-time assessments about what will happen or what should happen in operational practices.

  • Pervasive, in that they are embedded into business processes and applications to deliver responsive and agile organisational performance.

  • Invisible – operating continuously in the background, tracking user activity, processing sensor and environmental data, dynamically adjusting workflows to enhance the user experience, or managing activities during events as they unfold.

Application of Analytics in Operational Efficiency in the Health Sector

To understand some of the applications of analytics in driving out operational efficiencies, let’s consider some actual examples from the health sector:

  • NHS benchmarking helps commissioners and providers of NHS services in England, Wales and Scotland to understand the wide variation in demand, capacity and outcomes and to identify underperforming operations and prioritise improvement opportunities.

  • Visualisation software provider QlikView has outlined how the NHS is using a standardised approach to consolidate and analyse data from multiple financial and purchasing systems to improve its supply chain and to look for opportunities to reduce contractor spend. This has helped to drive process improvements, monitor contract compliance, and build an integrated procurement process.

The size of the prize is not to be underestimated

A recent study by the Policy Exchange on the Big Data Opportunity for the UK public sector has concluded that “there is scope to improve the overall efficiency of government operations, to accelerate efforts to reduce fraud and error, and to make further inroads into the tax gap […], estimating that achieving cutting-edge operational performance could in time save the public sector up to £16 billion to £33 billion a year – the equivalent to £250 to £500 per head of the population”.

With the public sector at the front line of the big data revolution, Analytics certainly has a significant role to play in achieving these benefits, and we believe that integrating analytics with Operational Efficiency is going to be increasingly critical over the next few years in achieving public sector targets, to drive down costs and improve quality of service.