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Deloitte: Disruptive innovation can help cash-strapped governments deliver more for less

5 April 2012 – In the wake of the deep austerity facing most governments around the world, leaders are faced with the challenge to “do more with less.” In a recently issued paper, “Public sector, disrupted: How disruptive innovation can help government achieve more for less”, Deloitte proposes an alternative path for governments to significantly reduce costs without sacrificing the quality of services.

Intelligence is in fact one of five key areas explored by Deloitte in the paper, which argues that two developments, large volumes of open source information matched with advanced analytics, potentially enable intelligence agencies to provide critical intelligence capabilities at a lower price. Rapidly maturing analytics technologies — modern data mining, pattern matching, data visualization, and predictive modeling tools — can help make sense of the mountains of free, open source data available today, and apply them to make more informed decisions. The Deloitte report represents the first major attempt to apply the groundbreaking concept of disruptive innovation across a number of diverse areas of the public sector.

The report also assesses the framework for introducing disruptive innovation in the public sector, identified to have three principal components: focus (identifying what needs to be accomplished in the short and long term), shape (deciding how and where to start the disruption), and grow (protecting and nurturing the growth of disruptive technologies through the use of government tools and channels).

Most recently, the Arab Spring provides a useful window into the power of joining open-source information with sophisticated analytics, according to the paper. Simply aggregating and analyzing tweets provided one valuable window into subsequent developments. As a result of extensive research and analysis conducted by News Group International, it was revealed that an astounding 88 percent of Arabic conversations on social media during the first quarter of 2011 included political terms, up from a mere 35 percent in 2010.   

“Despite the scale of digital information created today, advances in analytics can help governments make sense of the mountains of data and then apply this to make more informed decisions,” said Tariq Ajmal, partner in charge of Technology Services at Deloitte in the Middle East.

Social sentiment analysis capabilities make it possible to predict to the day when a certain country might have a significant public protest or the growth of a political movement. Algorithms, for example, can help analysts use open source to track growing distrust of specific attributes of political leaders and political parties or anticipate an uprising.

In terms of which disruptive innovation can help governments to break trade-offs and reduce costs, four key areas of opportunity have been identified:

The criminal justice sector

Electronic monitoring has the potential to break the trade-off between more prisons or more crime. For example, low-level offenders, who make up more than 60 percent of the U.S. prison and jail population, could be placed under house arrest with the supervision of an electronic monitoring device. The average daily cost of incarcerating a U.S. prison inmate in 2008 was US$78.95, while the potential average cost of daily electronic monitoring was US$15, resulting in cost savings of 75 percent.
The defense sector

Unmanned Aerial Vehicles (UAVs) cost a fraction of the price of manned aircrafts and satellites and provide several key performance capabilities: persistence, flight longevity, undetected penetration, the ability to conduct remote operations with fewer combat personnel, and the ability to operate in dangerous environments without putting pilots in harm’s way.
K-12 education

Online learning—a blended learning environment of digital and traditional instruction—can potentially break the trade-off between standardized teaching and the more personalized instruction that a student might receive from a tutor. Additional cost savings would be incurred in the areas of faculty, resources, and infrastructure. Cost savings from blended learning have averaged 39 percent, with some course costs reduced by as much as 75 percent.

Higher education

Online learning offers the potential to break the trade-off between price and quality and transform higher education’s basic business model. It allows many of the services colleges now provide to be unbundled, allowing students to pay only for what they need.

“Disruptive technologies can transform whole industries and create entirely new markets and business models,” added Ajmal. “For these disruptions to take root, they must be fostered and promoted. Governments have an array of tools, such as legislative reforms, alternative funding models, and new partnerships that can be used for this purpose.”

To download the report in full, please visit www.deloitte.com/govdisrupted

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