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Industry pundits maintain that the biggest growth area in CRM over the next three years will be in the public sector, especially within state and local governments.
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Organizations that use CRM have long been raising the bar of customers' service expectations in the private sector. Those expectations are now crossing over into the public sector. Government agencies are feeling the same pressures as their corporate cousins--both financially and from customers. Recognizing the necessity and opportunities presented by those challenges, government agencies are embracing CRM to conquer them. In fact, industry pundits maintain that the biggest growth area in CRM over the next three years will be in the public sector, especially within state and local governments. Barton Goldenberg, president of CRM consultancy ISM, expects the government sector to spend at least $2 billion on CRM software over the next three years, and at least $3 billion on CRM services over the same period. "This is the number one growth sector in the CRM industry today. There is no question about it," he says. Currently, the three most common areas for governments' CRM investments are 311 initiatives (phone calls for nonemergency issues), case management, and billing capabilities. The following case studies reveal how three government agencies are already experiencing rousing success in those areas. One Call to City Hall The City of Baltimore--thanks largely to its investments in CRM--is perhaps one of the most highly acclaimed municipalities for its turnaround efforts. In 1999 the FBI and Drug Enforcement Administration declared Baltimore the U.S. city with the highest violent crime and drug addiction numbers. Geography had a lot to do with it: A substantial amount of international drug traffic comes into Maryland via Baltimore's seaport, which largely contributed to Baltimore's heroin and cocaine abuse problem. This was only part of the problem. From 1990 to 2000 the city's living conditions had been steadily spiraling downward. The unemployment rate, the slow growth of new jobs, and the median household income per capita--which ranked near the bottom of Maryland's 24 jurisdictions--made the city unbearable for many. Not surprisingly, Baltimore's population declined more than 11 percent over that decade. "When people left, so did their checkbooks and their taxes," says Baltimore Mayor Martin O'Malley.
It didn't help that the city's state and federal funding had also been slowly thinning. Perhaps the agency most affected was the Department of Parks and Recreation, which saw a drop from 1,380 employees in 1980 to 296 today. With the city's cash crunch, revitalization hopes were diminishing--until Mayor O'Malley took office in January 2000. Like many of his corporate counterparts, Mayor O'Malley was charged with generating more for less. He knew he had to act fast, as money would become scarcer if taxpayers continued to leave. Prior to his inauguration O'Malley was a city councilman pursuing efforts to fight the city's high crime rate. He had been evaluating New York City's crime tracking and forecasting software, called COMSTAT, and wanted to implement something similar in Baltimore. As the newly elected mayor, he did so--to track accountability not only for each Baltimore police precinct, but also for all city agencies. Mayor O'Malley also began to evaluate existing agency processes to get a sense of how city agencies were providing services to citizens. In one case he asked three water utility managers to explain the way in which the same citizen service request would be resolved. To his dismay he got three different answers. Citizens calling city agencies were often sent on wild goose chases, getting transferred up to seven times before speaking to the right person, according to Elliot Schlanger, CIO for the Mayor's Office of Information Technology for the City of Baltimore. To make matters worse, there was no way to track service requests, so if a citizen called a month later to check the status of a request, he would often have to repeat every detail. This inefficiency would fan a frenzy of phone calls from citizens to city agencies and from city agencies to other city agencies. In the most extreme cases upset citizens would write letters or phone their elected officials. O'Malley realized the city needed a work order platform that could guide agents down a uniform path for recording and tracking service requests. To find one he looked for cities that were recording and tracking citizen requests. Working with Schlanger, Mayor O'Malley discovered a surprising call center setup in Chicago. There they found an unlikely vendor, Motorola, servicing Chicago's call center with its own software, which was housed in a hosted data center. "It was the only government call center solution at that time that could track and record citizen requests," Schlanger says. So, the City of Baltimore bought Motorola's hosted solution, and Baltimore CitiTrack was born in January 2001. Baltimore's Department of Public Works was the first to launch CitiTrack. Today CitiTrack is a high-level, 24x7 work order tracking system designed to facilitate a centralized telephone and Web communication platform for constituents across all 35 or so of Baltimore's city agencies. To aid the mayor's "One Call to City Hall" campaign, the city also launched its 311 initiative, whereby all calls would come into one location, eliminating the need for hundreds of departmental phone numbers. But this wasn't enough for the tough, new mayor of Baltimore. In his eyes there was still one more critical step missing: accountability. Now that CitiTrack enabled city employees to record and track service requests, Mayor O'Malley wanted to make sure managers were providing the best possible service to citizens. To do this he needed insight into performance gaps. For example, if a call to fill in a pothole wasn't responded to within an acceptable time frame, the mayor wanted to know why. So the mayor launched Baltimore's CitiStat real-time performance measurement and management accountability tool set. CitiStat gave Mayor O'Malley such detailed specifics--down to within each department--that he was able to find out who was gumming up the works. In fact, two appointed officials were fired for failing to meet mutually agreed upon service agreements. "That's very difficult--for an elected official to fire someone he hired--but O'Malley is tough and demands results," Schlanger says. Today, service requests across all agencies are recorded, tracked, and managed. Citizens are assigned a service request number when they file a complaint. If a citizen calls to complain about an unsightly and unkempt neighboring home, for example, the citizen can call back a month later for a status report. Once the agent enters the service request number a screen pops up with details of what action has already taken place, which she can relay to the citizen. The CitiTrack and call center start-up costs were $2.5 million. The annual operating cost, which includes the use of CitiStat and Motorola's hosted services, totals $4.6 million. In its first year of operation (based on CitiStat management accountability, CitiTrack, and 311), the city saved $13.2 million in reduced overtime rates, increased productivity, and elimination of wasteful programs. After three years the aggregate savings will total more than $100 million, according to Schlanger. The gains aren't only financial. According to the FBI, O'Malley says, Baltimore had the largest reduction in violent crime out of any of America's top 20 cities, and the second largest reduction of drug-related emergency room admissions, behind Dallas. "My job is conceptually very simple," Mayor O'Malley says. "Every mayor is supposed to rally the people of their city to make their city a cleaner, safer, healthier place." If you do that, he adds, "then the private sector follows and you've got a vibrant city." For its efforts Baltimore won Gartner's 2003 CRM Excellence award, which represents the first time a government agency has won the award in the large enterprise category. Case Management Municipal CRM initiatives don't have to be as all encompassing as Baltimore's. The City of Las Vegas is the fastest growing city in the country, with about 3,000 to 5,000 people moving in each month. In 1985, when there were fewer than 200,000 people living in Las Vegas, a custom-built work-order system was sufficient. But today more than 500,000 people live in the burgeoning city, so the need to facilitate requests for the city's multiple services became apparent to Joseph Marcella, the city's CIO. In the past if someone called using the city's custom-built legacy system to complain about a pothole and was not lucky enough to get a representative from the Streets and Sanitation Department on the phone, the citizen would have to leave a voicemail message. Without a tracking number there was no way to link the original request to the work order, especially if the message was forwarded to another employee. "By having the points where the communication can get broken, the accountability is lost," says Don Jacobson, enterprise project coordinator for CRM for the City of Las Vegas. The legacy system did not provide a way of identifying who was entering the activity into the system, so there was virtually no accountability. Additionally, if the constituent had to file two service requests between two different departments, the legacy system was not equipped to simply transfer the service request to another department. Agents had to close one request to open a new one. After viewing a Hansen Information Technologies solution at a trade show, the City of Las Vegas tried its luck with Hansen 7.6, in November 2002. The first rollout began with the Streets and Sanitation Department and was followed by a phased rollout approach over the ensuing months to 14 departments. In addition to service requests the system enables constituents to apply for permits, pay for licenses, obtain building permits or a business license, report a complaint to the city, and use the Web to pay parking fines, traffic tickets, and sewer services bills. The City of Las Vegas is now digitally processing roughly 30,000 service requests each year. "We can save up to 4.5 full-time equivalents a month through Web self-service," Jacobson says. Additionally, he says, the city had a database for nearly all of it 14 departments. And although the city is processing more information, it consolidated its data to just three databases. The cost to implement Hansen was roughly $2 million, but according to Jacobson, the city's cost for IT per citizen has dropped from $35 per person to $20 per person, which he says falls below the national average of $28 per person. Revenue Management CRM is even penetrating individual agencies, such as Miami Dade County's Water and Sewer Department, which handles water and wastewater services for Miami Dade County, as well as storm water for eight government agencies. After discarding an unsuccessful CRM implementation, the water utility implemented PeopleSoft's Enterprise Revenue Management 7.6 customer information system (CIS) in December 2001, to consolidate billing and transactional information for its 440,000 addresses. "We were using a very old system that didn't keep and track information accordingly," says Wilson Ross, computer services manager for Miami Dade County, referring to the utility's former custom-built mainframe system. The utility switched to a client-server architecture running Unix on an Oracle database, and in October 2003 added PeopleSoft CIS because of its ability to handle different blended rates. "The rate module required no modification," Ross says. Additionally, the PeopleSoft CIS solution enables customers to access their account information and pay their utility bill online, providing 24x7 self-service capabilities. Fifteen percent of customers are now paying bills online. This eliminates delays between the time the bill is sent and the time the customer makes his payment. The water utility is planning to launch its first touch tone IVR this summer, which will automate the bill payment process over the phone. This will save a significant amount of agent time, considering the water utility receives approximately 3,600 bill payment calls each month--each of which generally takes between four and 15 minutes to complete manually, according to Ross. The water utility also is considering wireless devices to read water meters from the street, so field service professionals don't have to leave their cars and spend time searching for meters at each home. They can simply drive by and get a wireless reading from their cars. The time saved by switching from manual readings to digital readings would enable the water utility to move from a quarterly reading and billing cycle to a monthly reading and billing cycle without having to double its field service staff of 32 employees. "If you bill monthly, then people can manage their account better," Ross says. Once the data is captured digitally, importing the data into the PeopleSoft system will be easier than doing it manually, he adds. Whether it's investments in 311, case management, revenue management, or a mix of the three, one thing is certain: The results are promising for government agencies that embrace CRM. "[Government] is so virgin to CRM," ISM's Goldenberg says. "There is no other industry that even comes close to the spending [potential]." IN THE MONEY According to INPUT (a global database and analytical research provider to technology companies, government organizations, and higher education institutions), the U.S. federal government awarded more than $115 billion in IT-related contracts in 2003, which represents a 190 percent increase over the $60 billion spent the previous year. The top five departments (Army, Navy, Defense, Air Force, and NASA) received 85 percent, or $89.8 billion of all IT contracts in calendar year 2003. And studies show that state and local governments are next in line to see a lift in IT spending. U.S. state and local government spending on IT products and services will grow at a compound annual rate of 8 percent, from $46 billion in 2004 to more than $64 billion in 2009, according to INPUT.
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