The myth of savings

The most pernicious and widely believed myth associated with digital service delivery is that it will deliver cashable savings. It won’t, it will just add another set of costs.

Any savings and improvements come as a result of ceasing or reducing activities; like phone contact, face to face contact and handling paper.

It’s a popular myth as it’s very attractive to believe that simply by investing in new digital technology you can realise savings, the reality is you have transform how your organisation works in order to actually realise the benefits.

The report that started this myth is almost certainly the PWC Economic Case for DI 2009.  Within this sixty page report there is a single table which provides average costs per channel for transactions in the public sector.

Transaction cost by channel 2009 PWC

Transaction cost by channel 2009 PWC

To use a term I learnt from a physics professor friend of mine ‘it’s not even wrong’ meaning that its worse than wrong, in order to be wrong it would first have to set out a logical case and it does not.

In fairness to the authors PWC and Martha Lane-Fox it’s not the figures that are the problem it’s the way that they have so often been taken out of context and used without the necessary accompanying caveats by others.

If you want to understand why I have done the working out and gone back to source references in the papers below.

In summary look at the numbers before you leap into any significant digital investment.

Channel Shift: Delivering the Benefits

Delivering the Digital Dividend

Revolution-vs-evolution

For some amusement and education you may also want to google some of the ‘epic fails’ of the dot com age, the bright ideas that crashed and burned rather than turning into an e-bay or amazon.

Failed dot coms