Knowing Beats Guessing

How Governments Are Using Analytics

to Improve Service and Efficiency
by Jeanne Harris, Accenture Institute for High Performance Business

Who’s underreporting their taxes? Who are the most promising

candidates for an audit?

In more and more tax jurisdictions worldwide,
government agencies are starting to use advanced
analytics methods to answer such questions,
improving their revenue collection systems while
presenting a more helpful face to taxpayers.
The analytics systems use advanced business-
intelligence tools and easy-to-use “dashboards”
to give agency managers the insights they need
to make better and faster decisions about tax
payment compliance, appropriate taxation rates,
resources for tax collection, and much else.
Arizona’s Department of Revenue is a case in point.
In 2003, the U.S. state was in crisis. After several
years of seeing its revenues fall short of projections,
Arizona faced more than a $1 billion shortfall
at a time when state law required a balanced
budget. Moreover, explosive population growth
of more than 3 percent per year was increasing
demand for the state’s government to serve more
people with programs ranging from education
to public safety.
State revenue officials, committed to a
“management by objectives” approach,
turned to a data-driven “Accenture
Public Service Value Model” (PSV) to help
define and measure the Department’s
performance over time. The PSV analysis
offered an evidence-based way to better
understand how different policy and
budget choices might affect overall
fulfillment of the DOR mission, and thus
its value to citizens. The analytical model
Analytics is rapidly gaining
acceptance across the public sector
in areas as diverse as postal
services, public safety, and health
and human services.
demonstrated explicitly how value to
citizens can change as a consequence
of shifts in policy and resource allocation,
and it validated the actions taken by the
Arizona tax authorities to shrink the tax
gap equitably while improving customer
service. Their actions gradually saw an
increase in tax revenues collected, along
with a decline in the agency’s costs
per taxpayer.
Data-driven insights are proving increas-
ingly valuable to the public sector well
beyond tax collection. For many public
information offices, such as the U.S.
Bureau of Labor Statistics, and for
intelligence agencies, such as Britain’s
MI5, data gathering and analysis is of
course a core function. And clearly the
intelligent use of data analysis and
fact-based decision making is literally
a life-and-death matter in wartime.
But sophisticated analytics—defined as
the extensive use of data, statistical and
quantitative analysis, predictive models,
and fact-based management to drive
decisions and actions—is rapidly gaining
acceptance in areas as diverse as postal
services, public safety, and health and
human services. In the U.K., for instance,
police analysts have learned that when
interpreted properly, the right data can
tell them which juveniles are most likely
to become adult criminals—opening up
opportunities for early intervention.
Importantly, analytics is just as applicable
in local and regional municipalities as
it is at federal and national government
levels. In New York City, for example, offi-
cials now have a comprehensive analytics
system that will give them the insights they
need to more quickly pinpoint problems
and provide higher levels of service to the
city’s notoriously demanding citizens.
It is not an exaggeration to say that change
is sweeping through the public sector.
Accenture’s ongoing research suggests
that many top government agencies can
be classed as high performers—easily on
a par with high-performance businesses
in the commercial sector, such as Procter
& Gamble and General Electric. We
have found that those high-performance
agencies share a number of key attributes
with their corporate counterparts. For
example, they are relentlessly focused on
outcomes and are not misled by
measures that are means rather than
ends. They are highly efficient, continually
rethinking their processes to improve
the delivery and maintenance of public
services. They are exceptionally aware
of changes in their environments and able
to translate insight into action quickly
and effectively. And they have a keen
understanding of the value of analytics
to their overall effectiveness.
The case for better data
Several factors are coming together
to accelerate the public sector’s use
of analytics. First, government agencies
have access to significantly more data
not only from publicly available sources
such as the Internet, but also from
their own systems and those of other
organizations. Many agencies are making
great strides in capturing clean, integrated,
timely transaction data. The data is
coming from many more sources through
a wider range of channels—from traffic
cameras and under-highway sensors
to e-mails and mobile communications
handsets. And it is proliferating at
staggering rates: According to one
recent survey, the volumes of data added
worldwide will increase more than sixfold
between 2006 and 2010.1
In tandem, organizations have more
capable software and hardware to be
able to capture, store, distribute and
interpret all this data. There is more
processing power on desktops as well as
in data centers. And real-time business
intelligence (BI) software, in which auto-
mated decisions are embedded in business
processes, is rapidly gaining ground.
At the same time, demand is soaring
for better insights and more effective
ways of gathering and interpreting data
in the service of better decision making.
Demand is coming not only from a bat-
tery of amply discussed external factors—
the spread of terrorism, a greater need
for transparency in government affairs,
higher expectations from Internet-savvy
citizens, and so on—but also from a new
generation of technology-literate and
data-literate executives who have grown
up using Excel and basing more of their
decisions on facts.
Prime-time television gives an intriguing
perspective on the widening influence of
analytics today. The popular U.S. show
“Numb3rs”—about a crime-fighting FBI
agent and his brother, a math professor—
is based on real FBI cases where the
agency has brought in mathematicians
and statisticians to help solve crimes,
fight terrorism, and so on. The show has
even led to a nationwide math education
initiative headed by Texas Instruments
and backed by CBS and the National
Council of Teachers of Mathematics.2
1
“The Expanding Digital Universe: A Forecast of Worldwide Information Growth Through 2010,” IDC white paper,
March 2007
2
http://www.weallusematheveryday.com/tools/waumed/home.htm
How New Yorkers hold their
city accountable
New York’s famously hard-to-please
citizens can now see exactly what they’re
getting for their city tax dollars: an online
performance measurement tool that
makes the workings of government
transparent. Just as important, city officials
now have advanced analytical tools
to run the Big Apple more effectively.
Dubbed “The Mother of All Accountability
Tools," the Citywide Performance Reporting
(CPR) system gives New Yorkers access
to constantly updated performance data
from city agencies. Each year, the mayor's
management report makes performance
indicators public. Now the CPR system,
launched in February 2008, is making 300
of those indicators available online, plus an
additional 200 indicators that are integral
to New Yorkers’ quality of life and that
will be updated monthly.
But New York City mayor Michael
Bloomberg also sees the CPR as a crucial
management tool. Integrating performance-
related statistics from 60 city organizations,
the system is helping Bloomberg’s city
managers make more intelligent decisions
by providing them with fast and flexible
access to information about citizens’
demands and agency performance. The
system features four dashboards from
which users can access reports designed
to address the city’s overall performance
management, customer service and
service delivery. The CPR compares
current performance to performance
during the same time last year, providing
a short-term performance trend or
"snapshot" for use in real-time decision
making. It quickly highlights performance
that is trending in a negative direction,
providing color-coded early warning
for areas that need attention.
Through New York City's Web site, the
CPR offers: graphical representation of
performance, including pie charts to make
performance trends easy to identify;
drill-downs that allow users to review
comparative trends for up to a five-year
period; and monthly, quarterly or annual
updates of each critical measure, depending
on how often the statistic is produced.
The system will be updated monthly with
the most current measurements available
for each performance indicator.
Built on Oracle business-intelligence
software, the CPR provides a standardized
reporting format across all agencies and
all data types. It aggregates data across
agencies into "city-wide themes" that
represent groups of related services such
as infrastructure, education or public safety.
The system also provides easy downloading
to help users analyze and present system
data. The CPR system is proving so effective
that many of the city’s agencies are now
looking for ways to apply the new BI tools
more broadly.
Next, New York City officials plan to
expand performance reporting capabilities
with additional city-wide, agency and
program-specific dashboards. They also
intend to integrate GIS analysis tools
to display service request information
on a map and increase the analytics
data available to the public.
The link between analytics
and high performance
Accenture has studied high-performance
businesses and governments in depth over
the last five years. While our studies have
focused largely on the commercial sector,
our research has found that government
and other public-sector organizations do
target the same benefits as other organiza-
tions do for their enterprise data systems:
namely better decision making, improved
financial management, and faster, more
accurate transactions.3 Overall, Accenture’s
High Performance Business research
demonstrates a powerful link between organ-
izations with pronounced analytical orienta-
tions and superior performance. (See Figure
1.) High performers are much more likely to
value fact-based decision making and to have
the skills and capabilities in place to effec-
tively use analytics across their organizations.
We have also found that the true high
performers—those that substantially
outperform competitors over the long term
and across economic, industry and
leadership cycles—are twice as likely to use
analytics strategically compared with the
overall sample and five times more likely
to do so than are low performers.
Executives are increasingly aware of the
power of information technology to help
make better decisions, as Accenture’s
research confirms. Twenty-eight percent
of senior government managers polled in
a 2006 study said they use their enterprise
systems for “significant or extensive
decision support or analytical capability.”
And for the third year running, BI was the
top technology priority in 2008 in a
worldwide survey of 1,500 CIOs by Gartner
Executive Programs.4
As top performers develop their analytical
capabilities, they increasingly are migrating
towards more powerful techniques such
as predictive modeling, forecasting and
optimization. (See Figure 2.)
Analytics at work today
The value of data analytics has been
understood for decades. In the 1970s,
U.S. Air Force strategist Colonel John Boyd
developed the OODA loop—for Observation,
Orientation, Decision, and Action—as a
set of principles to describe how fighter
jet pilots could make superior tactical
decisions. (The principles were quickly
interpreted by business as the Plan, Act,
Monitor sequence.) Twenty years ago,
Procter & Gamble was helping to drive the
use of analytical software and databases
to analyze sales and determine the

Figure 1: Analytical orientations of high and low performers

Low Performers

High Performers

23%
Significant
Decision Support 65%

8%
Value Analytics
36%

33%
Above Average
Analytic Capability 77%

23%
Use Analytics Across
the Organization
40%

3
Thomas H. Davenport and Jeanne G. Harris. New Growth from Enterprise Systems: Achieving High Performance through
Distinctive Capabilities, Accenture Institute for High Performance Business, 2006.
4
“Gartner Says Worldwide Business Intelligence Spending to Grow 11 Percent in 2008,” Gartner press release,
April 1, 2008, http://www.gartner.com/it/page.jsp?id=636310
 parameters of product promotions. And
governments have long understood the
power of data to understand key trends
and to better serve their constituents;
census bureaus and offices of labor
statistics testify to that.
Yet many organizations are using analytics
in only limited ways. For instance, a
manufacturer may track, interpret and
use data to improve its management of
product quality, or a marketing group
might base decisions on long-term analysis
of different customer segments.
However, there is another constituency of
organizations that can be described as true
analytical contenders—organizations that
are making systematic use of analytics
to achieve lasting advantage. They achieve
• Focusing their analytics resources
on leveraging their distinctive capabili-
ties—the sum of the integrated business
processes and capabilities that allow
them to serve their customers
in differentiated ways and that create
new formulae for business success;
• Having senior leadership teams that
are wholehearted about analytical
competition and about building their
organizations’ analytical capabilities;
• Strategically managing and applying
analytics across the entire enterprise.
Capital One is an ideal example. The
credit card company averages about 300
experiments each business day to improve
its ability to target individual customers
programs might be before it engages in
full-scale marketing. Applying such tests
to minimum balances, rollover incentives
and so on, Capital One’s savings business
increased retention by 87 percent and
lowered the cost of acquiring a new account
by 83 percent.
Some of the U.K.’s leading police forces are
using analytics in similar ways to pinpoint
individuals who may be at greater risk of
committing crimes. Interpretation of crime
statistics has revealed that half of all crimes
in Britain are committed by 5 percent of
criminals. Said Paddy Tomkins, chief constable
of the Lothian and Borders force: “We want
to exert less effort on investigating each indi-
vidual crime and more on understanding the
Business Intelligence
criminals…This will bring a disproportionate
benefit for preventing crime altogether.”
Analytics
6

large-scale results by: with credit card offers. The tests provide
a cost-effective way for the company
Access and
to judge how successful products and Reporting

Figure 2: Business intelligence technologies are contributing more to competitiveness5

Business intelligence
Business intelligence technologies use data to understand, analyze and guide
business performance.

Analytics
Optimization What’s the best that can happen?
Predictive Modeling What will happen next?
Competitive Advantage

Forecasting Extrapolation What if these trends continue?

Statistical Analysis Why is this happening?

Access and Reporting

Alerts What actions are needed?
Query/Drill Down Where exactly is the problem?

Ad Hoc Reports How many, how often, where?

Standard Reports What happened?

Sophistication of Intelligence

5
Davenport, Thomas H., and Jeanne G. Harris. Competing on Analytics: the New Science of Winning. Boston: Harvard Business School p. 8.
6
“Technology in Government: Riding the Waves of Change,” Government Executive Series, Accenture, September 2002
The problem with dirty data
It’s hard to think of an organization that
doesn’t have enough data. But it is easy
to see that many don’t have enough
clean data. Most business leaders would
be challenged to say exactly which
repositories of corporate data are
trustworthy and which contain duplicates,
outdated records, and erroneous
data entries.
In the commercial sector, an alarming
proportion of all business data is inaccurate,
according to Gartner. The research firm
claims that at least 25 percent of critical
data within Fortune 1,000 companies will
continue to be inaccurate through 2007. In
a separate study by a leading accountancy,
only a little more than a third of executives
expressed confidence in the quality of their
corporate data.7
Many organizations are turning to
data-quality software to find and identify
duplicate and inaccurate or incomplete
data. Online travel agency Travelocity is
one such user; it needs to know whether
customers requesting physical tickets
have entered valid addresses to which
FedEx can deliver. Previously, the only
way Travelocity would know an address
was flawed was when the package
bounced back. Then the travel firm
had to find the correct address and
pay FedEx again to re-ship.8
Another national tax authority underscores
the use of analytics to boost voluntary
compliance. The agency uses analytics
to select candidates and treatments
for compliance and debt recovery actions.
Analytics also enable the agency to create
risk profiles for clients to be used during
tax processing. As in Arizona’s case, the
initiative goes hand-in-hand with a focus
on customer service; by making itself
easier, cheaper and more personalized for
clients to deal with, the tax authority is
improving voluntary compliance rates.
Interestingly, its moves are very public—
again, to improve voluntary compliance.
The agency publishes information about
particular customer tax behaviors, and the
information is picked up regularly by
media and tax professionals.
Data-driven organizations also use analytics
to husband their resources. The U.S.
Department of Veterans Affairs (VA) hospitals
have applied electronic medical records along
with the analytics based on them to become
one of the most effective health care
providers in the United States. The VA
hospitals employ such analytical approaches
as predictive modeling of chronic disease,
automated decisions for treatment protocols
and drug prescriptions, and many others.
Similarly, Germany’s federal labor depart-
ment, the Bundesagentur für Arbeit (BA),
now uses a “status assistant” tool that
automatically defines and records the
placement status of the seven million
jobless people on the BA’s books. The
individuals are placed in three categories—
unemployed, actively looking for work and
seeking job counseling. Data is withdrawn
from different repositories—for instance,
information on a seeker’s work history
from one source and data on the training
offered by the BA from another source. The
tool then consolidates and analyzes the
data to update the job seeker’s status.
7
Dirty Data Blights the Bottom Line, Nov 7, 2005, Computerworld,
http://www.computerworld.com/databasetopics/data/story/0,10801,105928,00.html
8
Mopping Up Dirty Data, Dec 1, 2003, Baseline, http://www.baselinemag.com/article2/0,1540,1409301,00.asp
9
Defense Logistics Agency, http://www.dla.mil/facts.aspx
The status updates replace all the steps
that previously were conducted manually
by BA agents, and they improve the data
quality and thereby the BA’s statistical
evaluation of the job markets.
Data-intensive medical practices—so-called
“evidence-based” medicine—are also
starting to benefit public agencies and the
citizens in their care. Evidence-based medi-
cine has the potential to greatly improve
individuals’ health and well-being; teaming
with private-sector insurers, agencies such
as Medicare are using analytics to discover
the most cost-effective treatments and to
promote the best outcomes for patients.
In the logistics arena, there are examples
of analytics excellence in both the
commercial and the public sectors.
United Parcel Service is using analytics
to save fuel and cut delivery times by
mapping out routes that allow the delivery
drivers to avoid left-hand turns. It may
seem trivial, but when multiplied across
88,000 vehicles making almost 15 million
deliveries a day, the analytical insight
amounts to significant gains.
In the public domain, the U.S. Defense
Logistics Agency (DLA) has deployed new
analytics systems that allow it to more
effectively share data with partners to
serve the U.S. Department of Defense. DLA
has a monumental challenge—to provide
supplies and manage the provision of more
than five million consumable items to
America's military, including food, clothing,
construction supplies, electronics, medical
supplies, distribution, and disposal reuti-
lization services.9 As such, DLA requires
outstanding analytical capabilities to
improve its managers’ decision making
in asset location, supplier management,
demand planning and much else.
Four fundamentals for getting
started with analytics
Analytics can support almost any
operational process and, in some cases,
can be a key strategic differentiator
too. So what does it take to become
an analytical exemplar? All the evidence
points to a focus on the following
four fundamentals:
• Leaders who “get it”
Given his background as founder of
the eponymous financial news and data
company, it should not be surprising
that New York City mayor Michael
Bloomberg is the archetypal data-
driven leader. (See sidebar: “How New
Yorkers hold their city accountable.”)
He has plenty in common with Admiral
Michael McConnell, Director of National
Intelligence in the U.S. McConnell is
charged with integrating the nation’s
disparate intelligence services, improv-
ing dynamic intelligence collection and
upgrading the quality of data analysis.
Organizations aspiring to analytical
excellence need to face up to big
changes in culture, process, behavior
and skills for many employees—
changes that must be spearheaded by
senior executives who are passionate
about analytics and fact-based decision
making. The ideal primary advocate is
the agency director or commissioner. In
the commercial sector, analytics cham-
pion Gary Loveman—CEO of Harrah’s,
the entertainment company—regularly
asks employees, “Do we think, or do we
know?” Analytical leaders like Loveman
and McConnell combine their passion
for analytics with a commitment to set
the tone for the rest of the organization.
10
“Analytic Culture in the US Intelligence Community: An Ethnographic Study,” Dr. Rob Johnston, Center for the Study
of Intelligence, Central Intelligence Agency, Washington, DC, 2005
• People who love numbers
Leaders such as Bloomberg and
McConnell have an enterprise-wide
view: They want to establish a fact-
based culture across the enterprise—in
McConnell’s case, across all intelligence
agencies—and extend it to their part-
ners. So it is crucial to have employees
who are data-savvy—or who can
quickly become data-savvy. Clearly, this
calls for hiring, training and rewarding
for analytical skills—especially at man-
agement levels. It also points to the
need to understand where those skills
matter most and where they will matter
more in the future. We expect that the
growth of analytical competition will
require development of a core of
data-oriented professionals supported
by a larger group of what we call
“analytical amateurs”—staff with some
analytical background, but probably not
Ph.D. types. Implicit in this fundamental
is the need to maintain a strong pipeline
of numbers-driven talent.
• Processes that revolve around facts
Analytical competitors begin with “a
single version of the truth”—not the
conflicting views of the same metrics
that thwart other companies. In too
many organizations, leaders from dif-
ferent functions regularly clash over
perspectives supported by data devel-
oped within and suited to each func-
tion’s operations. What’s needed is an
integrated, cross-enterprise view of the
data—a state that may require business
process redesign on a broad scale.
Fortunately there are tools that enable
such redesign without excessive pain.
There can be no more compelling argu-
ment for the need to make decisions
revolving around facts than in Dr. Rob
Johnston’s incisive ethnographic analysis
of the U.S. intelligence community’s
culture.10 The foreword explains:
“Johnston finds no baseline standard
analytic method. Instead, the most
common practice is to conduct limited
brainstorming on the basis of previous
analysis, thus producing a bias toward
confirming earlier views…The process is
risk-averse, with considerable manage-
rial conservatism. There is much more
emphasis on avoiding error than on
imagining surprises. The analytic
process is driven by current intelli-
gence, especially the CIA’s crown jewel
analytic product, the President’s Daily
Brief, which might be caricatured as
‘CNN plus secrets.’ Johnston doesn’t put
it quite that way, but the intelligence
community does more reporting than
in-depth analysis.”
• Technology to capture, sort and
make sense of the data
These days there is no shortage of
processing power to support an analytics
initiative. There is wider use of dedicated
“business intelligence appliances”—
machines that are essentially super-
computers that can chew through large
databases and analyses. Much of the
necessary analytical software is also
available. “Real-time BI” is gaining
ground, where automated decisions
are embedded in operational business
processes. Concomitantly, we are
seeing the emergence of what we’ll call
“right-time” analytics. It has historically
taken time to extract data and make
sense of it through analysis. But these
days, tools exist to allow managers to
make rapid decisions. However, it is
impossible to succeed as an analytical
player if you can’t trust your data.
(See sidebar: “The problem with
dirty data.”)
Conclusion
There is good news for agency managers
who want their organizations to
outperform their citizens’ expectations:
They already have much of the data
they need. Their central challenge: They
just need to learn what to do with it.
They must also make an open-ended
commitment, because developing real
analytical expertise is a long-term
process. Accenture observes that it takes
at least 18 months of regularly working
with data to start developing a steady
stream of rich insights that can translate
into true high performance.
The leaders in the public sector are
rapidly benefiting from their moves
up the analytics experience curve. They
know they now have the means—and
the mindset—to generate many more
benefits for the societies they serve.
Copyright © 2008 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
For more information on how analytics can help your organization,
please contact Chris Paladino, at chris.d.paladino@accenture.com
or visit www.accenture.com/publicserviceanalytics.com.
About the Author About Accenture
Jeanne Harris is Executive Research Accenture is a global management
Fellow and Director of Research at the consulting, technology services and
Accenture Institute for High Performance outsourcing company. Combining
Business, where she leads research in unparalleled experience, comprehensive
the areas of information, technology capabilities across all industries and
and strategy. business functions, and extensive
research on the world’s most successful
companies, Accenture collaborates
About Accenture Information with clients to help them become
Management Services high-performance businesses and
Accenture Information Management governments. With 178,000 people
Services is a global cross-industry in 49 countries, the company generated
organization focused on bringing clients net revenues of US$19.70 billion for
solutions to better manage their business, the fiscal year ended August 31, 2007.
interact with customers and make Its home page is www.accenture.com.
strategic, financial and operational
decisions. Working across Accenture's
service lines and industry groups, this
network of 13,000 professionals (as of
August 1, 2007) specializes in information
management services including business
intelligence, portals and content
management and data management and
architecture. For more information about
Accenture Information Management
Services, visit www.accenture.com/
informationmanagement.