Productivity Commission warns public sector to beware the "Mechanical Turk"

Productivity Commission warns public sector to beware the "Mechanical Turk"

Technology is a key driver of productivity growth in the public sector, but its impact can be very hard to measure.

People are still the secret sauce behind some apprarently automated online public services

People are still the secret sauce behind some apprarently automated online public services

Public sector agencies at times fail to match front-end with back-end automation, creating systems that require large amounts of costly and inefficient invisible manual processing.

The New Zealand Productivity Commission said this can be described as a “Mechanical Turk”, after a chess playing machine that toured Europe and America in the eighteenth century which pretended to be a robot but had a human hidden inside.

A push to move services online too quickly poses a risk that services may be offered before back-office processes , integration and automation are ready, the Commission says in a draft report titled "measuring and improving state sector productivity", released today.

"This can result in front-end services being conducted online while behind the scenes the back-office processes continue to be done manually," the draft says.

This occurred in some of MSD’s simplification programme activity when a rapid expansion of online applications was not matched with automated back-end processes, effectively presenting an illusion of automation.

A similar problem emerged at MBIE recently when the Ministry went to tnder for robotic process automation systems to automate back end processes that had come under pressure from growing online visa application volumes.

The Commission says technological progress is a key driver of productivity improvement and economic growth, yet can sometimes be difficult to measure.

"People are getting more processing power and connectivity for lower prices," the report says. "This can be particularly important for knowledge-intensive agencies and services.

"Simply measuring the expenditure on these intermediate goods and services would not pick up these improvements to input quality and volumes."

Therefore some “quality adjustment” may be required for productivity measures. Isolating and measuring technology's contribution to productivity is hard, and not just in the public service.

Problems in the market sector have also led to debates as to whether national statistics, and the recorded slowing in labour and multi-factor productivity in developed countries, are in fact the product of under- or mis-measurement.

A strong understanding of a public sector agency’s business processes and system flows is key to measuring productivity, the Commission's report says.

"In particular, work flows need to be documented and measurable so it is clear what work is done, how outputs are produced (with what inputs) and how quality is maintained."

This will allow business processes to be disaggregated and productivity measures and indicators developed.

"Data must be systematically recorded and tracked over time and the work flow processes should be sufficiently clear and consistent so organisations know whether apparent changes represent real changes in efficiency or not.

"Such data will also enable organisations to identify pressure points and bottlenecks, so they can find ways to improve efficiency, for example, through activities like re-engineering business processes or introducing new information technology – often using 'lean' type processes."

Concerns about an information technology “productivity paradox” were raised by economists in the late 1980s, after attributable improvements from ICT investment proved hard to establish.

"Over a decade of research since then has substantially improved our understanding of the relationship between information technology and economic performance," the Commission's draft report says.

Firm-level studies in particular suggest that, rather than being "paradoxically unproductive", computers have had an impact on economic growth that is disproportionately large compared to their share of investment and that this impact is likely to grow further in coming years.

Both case studies and econometric work point to new business processes, new skills and new organisational and industry structures as a major contribution of information technology.

"These complementary investments, and the resulting assets, may be as much as an order of magnitude larger than the investments in computing technology itself, the draft says.

E-government enabled by process simplification offers the potential for large improvement in productivity in the public sector along with a host of other benefits.

The OECD says technology will act not only as a strategic driver for improving public sector efficiency, but also “to create open, innovative, participatory and trustworthy public sectors”.

"The OECD views digital technologies as having potential far beyond efficiency and effectiveness to improving transparency and participation in government, social inclusiveness and government accountability," the draft says.

The Ministry of Social Development's simplification project was one that was in large part based on redesigning services to leverage technology and  improve efficiency.

Since March 2015, this has involved an effort to change the way clients access services, and to increase the use of online channels.

"It has also focused on improving the efficiency of MSD systems and processes, to reduce transactional work for staff and unnecessary compliance for clients."

Specific initiatives include implementing MyMSD, a mobile service that clients can access from phones, tablets or computers; rolling out the MyStudyLink smartphone app for students; enhancing voice-enable technology used in its contact centre so clients can do more for themselves, and; eliminating dozens of unnecessary letters and made others available online.

MSD submitted to the inquiry that simplification was client-centred, and the work programme was based on insights from clients and staff and involving consultation and co-design before implementation and testing and feedback during and after implementation. 

A "scaled agile" approach support  incremental technology improvements in small steps rather than 'big bang' releases.

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