IfG.CC -
Institute for eGovernment

Public investment in pan-European information technology infrastructure for governments leads to substantial quality-of-service and productivity gains for enterprises and taxpayers, worth up to euro 1.8 for each euro invested, says a new report by the European Commission's Interchange of Data between Administrations (IDA) programme. Technological change has long been considered an important driver of productivity growth and enhanced competitiveness. This study, on IDA's Trans European Services for Telematics between Administrations (TESTA) project, estimates annual costs at �4.8 million and annual benefits at euro 8.6 million. Enterprise and information society Commissioner Erkki Liikanen said: "We already know that public IT investment can generate substantial productivity gains in the public sector, as well as in private enterprise, as pointed out in the recent Communication on eGovernment (IP/03/1300). This study provides welcome proof of its benefits to taxpayers. Besides cost savings, the TESTA study shows that investment enhances the quality and availability of pan-European public services. I look forward to seeing further work along these lines."

The TESTA (Trans European Services for Telematics between Administrations) network, is the largest of the 30 public service IT infrastructure projects funded by the European Commission's IDA programme. It provides a controlled communications environment for public administrations to exchange administrative information with a guaranteed quality of service. TESTA interconnects the European commission and national administrations across Europe in sectors such as justice and home affairs, health and consumer protection and statistics. The 'Cost & Benefit Analysis of TESTA' report concludes that investment in TESTA provides a net-benefit factor of 1.8 (i.e. yearly benefits exceed yearly costs by 80%). The estimated yearly benefit is 8.6 million Euro with yearly costs of 4.8 million Euro.

In addition to return on investment, qualitative factors, such as increased quality and time saving as a result of the use of TESTA, have been included in the analysis. User surveys show a high average level of satisfaction, which is confirmed by a 300% increase in the amount of data transferred over the network from January 2002 to June 2003. The study predicts further growth in demand for TESTA services and advises on next steps.

The report also introduces the IDA Value of Investment (VOI) methodology. Traditional cost-benefit analysis focuses on costs and their directly related financial gains (i.e. return on investment ROI). Qualitative benefits like increased availability and quality of services are normally left out of such analysis. However, for the public sector it is important to include benefits related to such gains. The VOI methodology makes it possible to include also these benefits if certain prerequisites are fulfilled.

The Commission has called for further assessment of the economics and benefits of eGovernment (COM(2003)567). It also intends to carry out further studies using the VOI methodology and, to this end, will set up a group of experts, focused on the cost-benefit analysis of public sector IT spending in the areas covered by the IDA Programme to facilitate knowledge sharing and to develop best practice guidelines.

Quelle: EU Comission