IT AND INTERNAL SERVICE FUNDS

Public Management, Sep 2009 by Cohen, Sheldon

Information technology (IT) should not be an internal service fund as the article in the June 2009 PM recommended ("Faltering Economy: Time to Thoughtfully Challenge the Status Quo").

Internal service funds are typically used for items characterized primarily as nonstrategic operating costs such as printing, copying, telecommunications services, fleet maintenance, and insurance.

This is not what IT is about in 2009. If ICMA members' view of IT is this narrow, local government and the profession are in trouble. IT must be recognized as a tactical and strategic asset, and the use of it should be encouraged throughout the enterprise.

An internal service fund by definition sets up an immediate barrier to the use of IT-related assets by the local government's user agencies. As in a ride in a taxi, the meter runs from the first instant and doesn't stop until the end of the ride- and, in local government, there is no end.

What's more, making IT an internal service fund does not lower the cost of IT'S services to the local government's taxpayers. Establishing chargebacks to departments like police, fire, or public works- or even the city or county manager's office- does not change the net cost to the taxpayer.

The only exception to this is those services paid by users of enterprises, whose cost-based calculations should already include IT any way. Otherwise, in the case of IT, the internal service fund represents nothing more to taxpayers than legerdemain.

Is this really what local governments should be adopting as policy in 2009 and future years?

The brief answer is no.

Fiscal constraints can sometimes lead to decisions that don't take a sufficiently broad and deep view of the world of local government- who we are, what we do, why, and how. This includes the role of IT.

Indeed, a common issue we see in local governments is the limited deployment of IT that the governmental unit already has procured. In many instances, for example, we find leading local government software packages deployed only to about SO percent or less of their capability.

Managers should be doing everything possible to encourage the effective and efficient use of IT wherever this benefits the local government. Indeed, the critical role of IT as a key element in achieving both enhanced productivity and improved service in local government has been established for several decades.

Also, the notion that the internal service fund will cause departments to look to outsourcing of functions is not fully considered. If anything, local governments should have learned over the past 40 years that balkanization of G? is counterproductive. Although this notion of competition may work at the level of the U.S. government or large firms, the overwhelming majority of local governments simply do not present the scale of operations where this becomes feasible.

These faltering economic times call for thoughtful challenges to the status quo. The internal service fund applied to IT, however, is not one of them.

SHELDON COHEN

Manager

ICA Consulting, LLC

Andover, Massachusetts

shelcons@aol.com