Doug Hadden, VP Products
We’ve been tweeting from 27th. Annual International Consortium on Governmental Financial Management (ICGFM) conference in Miami. You’ll find the chronological “storified” version of these tweets from each presentation posted on our storify site We’ve also summarized some of the themes from the conference.
Doug Hadden, VP Products
Government open data advocates are shooting themselves in their collective feet. Skeptics suggest that there is little value in some, many or all open data initiatives. These pragmatists and curmudgeons demand to see the Return on Investment (ROI) calculation.
What do they get from open data advocates?
Anecdotes. Often the same anecdotes.
I had intended to review a recent study on open data. But, it’s just a bunch of attractive pictures with anecdotes. Some anecdotes stretch to an entire page and are presented as “case studies”.
A page does not a case study make.
I also got the impression that the information was stretched out to fill the page. Of course, with just enough information to determine that the conclusions are dubious.
What are the dimensions of open data return? This is important because we need a theoretical basis for testing ROI recognizing that the calculations of the past are built on some measures that may be obsolete. I’ve proposed a framework for calculating this primarily for external to government value. My friend Dennis McDonald has proposed a framework more focused on internal government value . And, FreeBalance has created a structure that links back-office and front-office government initiatives to governance value .
I think that it’s time to take these frameworks for a spin. Let’s see what the numbers say. Let’s question and learn. Let’s help early adopters to measure risk and return.
Don’t get me wrong, open data anecdotes are not useless. They provide patterns. The patterns could demonstrate where early market effectiveness is highest by comparing:
Doug Hadden, VP Products
Should it be surprising that governments in developing countries are adopting transparency measures? Many are surprised that developing country governments adopt transparency portals and open data mechanisms. Yet, we see great interest in leapfrog transparency among our customers. It has been a major theme for discussion in the last 5 FreeBalance International Steering Committee (FISC) conferences. There are important incentives. We hope to document some of these over the next few weeks, first by reaching out to experts on Twitter. Then through discussions with Public Financial Management (PFM) professionals attending FISC in Ottawa.
We’ll be collecting comments here. And, we’ve “storified” the tweet stream on the subject
Doug Hadden, VP Products
We were asked last week about how FreeBalance software contributes to reduced corruption in developing countries. There can be a significant effect on reducing corruption.
GRP has a significant effect on financial institution and investor corruption and is enabler for reducing corruption by executives. Based on the World Bank study in 2000 , GRP has a possible positive effect on more than half of attributable corruption in developing countries.
There are numerous corruption PFM vulnerabilities throughout the government budget cycle including:
GRP systems are used to detect corrupt activity through:
Internal controls within institutions are considered the most effective for GRP anti-corruption:
Countries with low perceived corruption enjoy higher human development
Although there has been a strong narrative about corruption in developing countries, it should be noted that under much more propitious conditions, the rampant corruption in the United States that spanned from the late nineteenth century through the early twentieth century was presided over by the industrial robber barons and Tammany Hall leaders and took decades to overcome and some PFM reforms in these countries have taken up to two centuries to evolve.
The ability of the public to review the full performance and financial statements of government entities leads to confidence and trust in the public sector and roots out corruption. PFM transparency should be considered a major force to animate civil society engagement and protest by turning on the capacity of the society to interact with data:
Country GRP systems can reduce aid fungibility when the whole of the state’s revenues should be accounted for in its official budget.
Many corruption indicators are based on public perception surveys. There is growing concern among anti-corruption agencies that perception-based indexes are not accurate measures. There is also some evidence that there can be gaps between informal procedures and technical PFM reforms leaving room for discretion and corrupt practices. Good corruption and transparency indices include:
|
Conclusions
|
Doug Hadden, VP Products
I’ve been “noodling” on this presentation from Nigel Cameron, the President of the Center for Policy and Emerging Technologies at the Gov 2.0 LA conference. Cameron coined the term “exopolitics” in the context of political activity outside the traditional political avenues. (Not the politics of keeping extraterestial information hidden.) Cameron defines it:
Briefly, exo means outside; exopolitics therefore, for our purpose, politics outside politics. Because politics outside politics is emerging as the core phenomenon of American culture. And on the scale at which we are experiencing it it is novel.
Phenomena like the tea party and occupy movement are exopolitics symptoms. Social media, open data and Government 2.0 enables exopolitcs, according to Cameron.
Nigel Cameron at Gov 2.0 L.A. 2012 on “Exopolitics and Changing Dynamics of a System” from Gov20LA on Vimeo.
Observers like Evgeny Morozov see technology more as tools of repression than any kind of democratic enablement. And, Morozov questions any concept of technology determinism. Cameron is among the current thinkers like Jeff Jarvis and Clay Shirky who have a broader understanding of the effects of technology on society. (Of course, Harold Innis, Marshall McLuhan and Friedrich Kittler provide a much better perspective on technology and change covering centuries.)
Technology provides opportunities for organization outside traditional organizations. It’s no surprise that the traditional opposition in Egypt was a surprised as the regime with the Arab Spring. This technology doesn’t immediately have effects. It takes some time for the medium to become the message. So, traditional methods of political interaction will remain dominant while pressure for transparency mounts to a tipping point.
Here’s where I differ with Cameron. Cameron suggests that representative democracy should remain the primary vehicle for change. He points to how direct democracy has failed such as the ballot system in California that limits fiscal options or the way in which Napoleon manipulated plebiscites. This is a pretty thin argument in my opinion. Why? There is always the tendency to think that traditional methods will be used in new eras.
It’s true that various methods of “Government 2.0″ outreach have resulted in support for marijuana legalization. We can’t expect traditional thinking to immediately change thanks to new technology. Look how long it has taken for the obsolete medium known as newspapers to finally see subscription reductions.
My view is that Government 2.0 will open up new “exopolitics” avenues – not so-called “direct democracy” but richer citizen to government interaction because:
This will take some time. Governments will continue to struggle open data and culture change. Traditional media will continue to polarize citizens. And, representative democracy will be the main avenue for political change. But, these time are achangin’.
Doug Hadden, VP Products
The American television network, NBC, has exclusive broadcast rights to the 2012 London games. Broadcast coverage by NBC has generated the twitter hash tag of #NBCfail. The use of social media, including twitter has generated an undercurrent of satire and ridicule for:
Commentator Jeff Jarvis suggests:
The problem for NBC as for other media is that it is trying to preserve old business models in a new reality. To experiment with alternatives when billions are at stake is risky. But so is not experimenting and not learning when millions of your viewers can complain about you on Twitter.
What’s changed from, say 1996? There was tape delays during the 1996 Atlanta games, in the United States, for events like the Men’s 100 Meter Dash [see below].
Broadcast electronic media enables control. Control of the message. Control of the advertising revenue. But, there is limited control in cyber space which is always on. Where people in stadiums and those watching in other countries can post results.
NBC executives seem to think that American citizens need the context presented. As if Americans are not bright enough to understand what is going on (or find out through a search on the Internet.) This is an patronizing attitude by elites is described in full by John Ralston Saul.
I watched the event on CBC. There was a lot of tension given the strong field. After watching the stress of false starts and the eventual win by Donovan Bailey, I flipped to the American channel (we can do that in Canada, although there doesn’t seem to be much reciprocity) to find that the network was setting up the event. Providing context. Here’s British commentary from the event. Wasn’t this enough tension? Isn’t it better than reality television?
These are pictures taken from July 9 through 13th. Presentation content is available at: www.data.gov/communities/conference
Doug Hadden, VP Products
I was reminded of the open data “caution narrative” during the International Open Government Data Conference earlier this. This narrative is “curb your open data enthusiasm” because:
Gartner Vice President and Distinguished Analyst, Andrea di Maio sums it up:
“The downside is a deluge of data. People can easily drawn in raw open data that is either too much or simply meaningless unless some processing takes place.” He sees open data opening a wider digital divide “between those who have skills and resources to interpret open data and those who don’t” and that open data is “already showing sustainability problems.”
Di Maio has been critical of enthusiasm in light of poor open data business cases of high costs with unproven returns.
I have to report that Di Maio was proven right at the Open Government Data Conference. Enthusiasm was high and open data business cases were primarily anecdotal. (I’ve curated tweets below on these subjects.) My sense based on the conference is that most of the four issues, with the exception of proven return, were addressed effectively:
I moderated an “unconference” discussion about the open data business case for financial data. My thinking was that it’s best to narrow down the domain in order to get more concrete ideas. Some progress was made. We identified areas for financial open data (budget, procurement, revenue, human resources, audit, aid, grants and performance).
We developed a framework to describe direct effects such as open procurement leading to increased competition and reduced costs and indirect effects such as increased trust through open budgets that leads to more investment to build more economic activity that generates tax revenue. There really wasn’t enough time to build out a full framework – but that’s what we need to do. Then we can validate this framework through real cases and provide effective business cases.
Technology disrupts how organizations operate. The business case for previous technology is often inadequate to effectively measure long term costs or returns that were not available in the previous technology. An open data business case will address potential new effects such as:
In particular: we need to be able to prove these suppositions.
1.1 Digital divide is being overcome
1.2 Intermediaries like the press help bridge digital divide
2.1 Linked Web, Semantic Web brings meaning to complex data
2.2 User Interface Design
2.3 Provide the right information to target
3.1 Visualization helps overcome information overload
4.1 Ways to calculate open data value
4.2 Examples of open data return: direct returns
4.3 Examples of open data return on investment: indirect returns
4.4 Open Data used internally by governments
4.5 Recognition that there are not good practices in determining open data return:
4.6 Techniques for making open data sustainable
4.7 Recognizing the key internal government issues to make open data sustainable
4.8 Difficulty Calculating full economic impact of open data
4.9 Network effect
Doug Hadden, VP Products
Don Tapscott claims that the transparency “toothpaste is out of the tube” and we can’t squeeze it back in a recent Ted talk and interview in Brunswick Review.
According to the Brunswick Review, a transparency implication for government is:
“Citizen empowerment: New ways of communicating are shifting power from the ruling elites towards networks of organized citizens. The role of social media, mobile and Al Jazeera during the Arab Spring shows the power of media in the hands of those hungry for change.”
Tapscott sees the transparency push coming via the web fueled by demographic changes, the financial crisis and a social tsunami “perfect storm”. He observes that the printing press led to the end of the feudal system towards the industrial age. The Internet enables anyone to be a producer. Tapscott points out that this is not the “information age”, it’s the age of networked intelligence. The result:
Tapscott connects transparency and trust in business. This idea applies more in government where there is a trust deficit – some want smaller government, others want more accountability, many think that politicians are corrupt.
“I’ll give it to you in a sentence. Trust in business is the expectation that the other party will have integrity and transparency. The expression, “What are they hiding?” shows the relationship between transparency and trust.”
Governments can innovate to cut costs and improve productivity through transparency. And, in the global economy, countries cannot fall behind in the transparency arms race. Businesses have choices. As I’ve pointed out before:
Transparency is fundamental in many governance valuations used by the World Bank World Governance indicators (WGI) and the Millennium Challenge Corporation (MCC). Transparency indicators used to demonstrate reduced business risk and help generate donor funds in developing countries include Open Budget Index for open budgets and Revenue Watch Index for revenue transparency from extractive industries. International transparency standards include the Extractive Industries Transparency Initiative (EITI) and the International Aid Transparency Initiative (IATI). Public Expenditure and Financial Accountability (PEFA) assessments are gaining widespread use by donors in making funding decisions. Transparency is a key element for 6 measurements in the PEFA Performance Measurement Framework.
Doug Hadden, VP Products
This is Part 6 of 6 parts detailing the content in my Financial Management Institute of Canada lunch presentation What can we learn about Sustainability from Developing Nation Governments?
Developing countries are adopting processes and technology designed to increase citizen trust while leveraging citizen and civil society cognitive surplus to improve public policy. If the Arab Spring, Tea Party and the Occupy movement has taught governments anything it’s crowdsource to improve public policy – or be crowdsourced.
Many define “democracy” as representative democracy rather than participatory democracy. Indian MP Ruhal Gandhi suggested that the Anna Hazare hunger strike undermined democracy in India. Yet, it is clear that representative democracy is a thin form because citizens exercise the franchise only during elections.
Transparent and open government data enables developing nations to harness the power of citizens for audit. As I described recently in citizen audit use cases for Public Financial Management (PFM), there are compliance, fraud and performance citizen audit dimensions. Citizen audit is enabled through open data (proactive disclosure of public financial management information on the Internet) and social media collaboration (Internet enabled feedback and discussion.) I further suggested that it is the duty of citizens to leverage open government.
Auditing is expensive. Very expensive in developing countries. That’s why citizens, civil society and businesses are encouraged to help governments. For example, there is nothing better to uncover procurement fraud or poor procurement decisions than competitors.
We have world class external audit in Canada and improving internal audit, as I described in a previous post. David M. Walker, the former U.S. Comptroller General has pointed out that the US Government Accountability Office has a proven return on investment though trapping fraud, improving controls, proposing performance improvements etc. Yet, even audit agencies with proven returns are being cut back.
As I’ve pointed out before, performance management in the public sector is more complex than in the private sector. Private sector organizations have a bottom line: profit. There are established measurements like market share, and return on assets. Output measurements like the number of customer complaints handled, and outcome measurements like customer satisfaction survey ratings are factors that influence financials – profitability. If all the KPIs are green and the company is not making a profit, than the indicators are likely incorrect.
There is no bottom line in government. Outputs and outcomes are the results. Financial – in this case, budgets, is the input. This makes it very difficult to determine whether the KPIs are correct. There could be false positives and false negatives.
Social media in government, or Government 2.0, can engage citizens and civil society to report on outputs or outcomes. For example, the Ushahidi platform is used to monitor elections, disaster response and corruption.
The next stage in citizen engagement is crowdsourcing through expert groups or the public. This shows promise when managed correctly. For example, an effort at the White House generated some unexpected ideas. The principle of using citizens to propose and vet solutions reduces the burden on governments and may generate ideas to solve important problems.
Participatory budgeting is a process originally developed in Brazil to engage citizens to improve budgets. Adoption of participatory budgeting has grown particularly at local government. My sense is that the immediacy of service delivery in local government can create a critical mass of participation. The use of neighbourhood and civil society meetings and government outreach may not be sustainable in large regional governments and many national governments.
My view is that participatory budgeting will become virtual in the future. We can learn from the lessons in participatory budgeting to improve outcomes.
There is some sensitivity in governments to crowdsource policy because policy is considered the purview of political wonks. There is a notion of budget confidentiality in Canada that may restrict the kind of openness enjoyed in developing countries.
Many argue that open government, social media, crowdsourcing etc. just costs money. I’ve summarized the business case for open government in a previous entry. A recent Transparency Camp Brainstorm identified the following benefit categories for open government:
David Eaves argued that open data can reduce the cost for reduce the costs of Freedom of Information processing
The resistance to social media and open data in developed nation governments contrasts to the attitudes from many developing countries. I find a greater acceptance of the value proposition of open government in countries like Timor-Leste, whose transparency portal is an amazing achievement, than in G8 countries. The commitments for the Open Government Partnership show that these countries are innovating beyond expectations. This could result in a more engaged population with a deeper form of democracy than we enjoy in Canada today.
As I’ve written before, social media will be transformational for Public Financial Management. The key driver in developing countries is the need to sustain reform. This doesn’t mean sustaining the PFM “status quo”. Or, tweaking processes. This means continuous modernization and reform. Catching up to developed countries. Leapfrogging developed countries. This effort requires citizen engagement.
Let’s hope that governments at all levels in Canada do not hold back and get leapfrogged.