Last updated: October 15th, 2020
Guest Blogger: James Mahoney, Executive Vice President, Spruce.
State-owned enterprises (SOEs) are public-private partnerships imbued with revenue potential for tax-starved entities. Actively owned and managed SOEs deliver real public value. Government ownership has advantages in certain circumstances – furthering social outcomes, providing physical infrastructure, and creating stability in times of crisis within and across supply chains. However, there is a risk – as is the case in any business – where state ownership can reduce value, especially if organizations do not follow ownership and management best practices.
Challenges for SOEs
The public’s ever-increasing expectations for services and facilities akin to those offered by private enterprises create tension and political frustration for the SOE. The dialogue and priorities around these two distinct stakeholder groups and cultures can make it difficult for an SOE to make agile decisions and particularly to make changes where needed. No one can be everything to everyone, and SOEs can’t possibly make the public users and government managers equally happy all the time, the “play it safe”/stability mindset of the government side being a heavy influencer, as well as politics itself.
Provide value with data and analytics
It is here that the opportunity for leveraging the SOE’s data comes into play. Data can help strip away noise and biases to help the SOE focus on quantitative truths to inform all sorts of priorities and proactive decision-making to foster growth for the property.
The best-managed entities – public or private – thrive under active ownership and management. Both constituents and management should welcome the establishment of a proactive purpose and mission for the SOE linked to desired revenue, management objectives, and societal objectives and outcomes. Solid communication and data and analytics are imperative to surpassing goals and driving revenue.
Profitability silences most doubters. This will keep government overseers happy while creating funding to reinvest in the SOE to improve customer experience – whether that is through hiring more staff, lowering cost of entry, or modernizing infrastructure or facilities. There are multiple “winners” in that scenario, multiple objectives achieved (creating more employment opportunities, becoming more accessible to the public), and tangential benefits to private businesses, such as more visitors to dining and hospitality establishments.
(Learn more about how to leverage your data to deliver value to management and your constituents in the webinar entitled “Legacy Modernization for State-Owned Entities”)
Good reporting and data practices build trust between the government (owner), citizens, and other stakeholders (including other shareholders). Good data practices also enhance communication and inform objective development. SOEs must leverage technological and service innovations to deliver products and services that meet user needs within constrained budgets (doing “better for less”), as well as achieve desired economic and social outcomes.
Government objectives of SOEs are, generally speaking, to create wealth in the economy and well being and jobs for their citizens. Some perceive SOEs as needing to be “more public than public companies” since the wider public is the ultimate owner, weighing greater demands on transparency and accountability. There is an increasing recognition by governments for improved disclosure, transparency, and accountability among SOEs, and that is another area where data and analytics are imperative.
Efficient improvements/use of technology and innovative solutions improve SOE profitability. Transparency is not just concerned with the mere release of information, but rather the quality, timeliness, and reliability of the information organizations make public. True accountability and sound decision-making require transparency while maintaining records to back up those decisions.
The risk for SOEs is the perception that they are government-owned “black holes,” which consume taxpayer money without delivering appropriate levels of returns or desired societal outcomes due to less competitive pressures to operate efficiently and effectively as compared to their private-sector counterparts.
Solid data and analytics for SOEs create value and deliver outcomes, helping them become innovative and agile. This, in turn, enables SOEs to remain commercially relevant, which is positive for company shareholders. At the same time, it creates jobs and drives growth in existing and emerging industries, which is positive for the economy and society. This is an example of striking an appropriate balance between managing internally (maximizing enterprise efficiency and effectiveness) and leveraging external influence (facilitating good growth in society).
Power up with technology partners
Information Builders, Inc. (ibi) is a global provider of data and analytics software. We have the ability to integrate any database, file, or application and transform it into actionable, visual information. Partnering with SpruceTech, a leading provider of solutions and technology services, we deliver creative ways for SOEs to transform themselves.
Some of the ways we help include:
- Creating a dashboard to measure and maximize the utilization of SOE facilities to the economic and social benefit of regions and to minimize the financial burden on state and local government by maximizing revenue opportunities
- Creating an outside-in estimate of business revenues and tax liability and compare them to self-reported values, allowing reconciliation and visibility into SOE utilization and revenue maximization in business planning
- Eliminating disconnected data and entities in ways that reveal potential fraud and use advanced predictive models to estimate the likely revenues of each business model
The technology behind the data and analytics revolution is sufficiently mature, and successful private- and public-sector use cases abound. The investment in IT, data, and analytics infrastructure is modest compared to the potential revenue gains.
Of course, transforming agencies to take full advantage of data and analytics requires a comprehensive strategy and dedicated leadership. But while a full-scale transformation takes time, governments can ramp up quickly and begin capturing revenue gains immediately.
James Mahoney is known both within the company and across Spruce’s client base as an innovative leader and committed colleague. He provides clients with guidance derived from years of insight into strategic technology planning and program management. Since joining the team in 2014, he has applied his expertise as the head of Spruce’s Professional Services division to the effect of rapid expansion.