Forrester study commissioned by AWS estimates an ROI of 33% from data integration

Data can improve traffic congestion, enhance delivery of critical government services, and save millions of dollars, according to a recent study by Forrester Consulting. Commissioned by Amazon Web Services (AWS), The Total Economic Impact of Data Integration for the Public Sector analyzes the benefits, costs, and best practices associated with data integration. The purpose of the study is to provide readers with the framework to evaluate the potential financial and socioeconomic impact of data integration for public sector organizations.

The study examines the return-on-investment public sector organizations may realize from data integration initiatives. Data integration is a type of data sharing that involves record linkage, which is the joining of data based on common data fields such as name, license number, or an encrypted “unique ID” that is used to link or join records at the individual level. Organizations use data sharing to improve citizen engagement and overall government efficiency through more streamlined services and research, which translates to better informed decision-making.

“At AWS, we’re inspired every day by our public sector customers who are leveraging data to deliver enhanced citizen services and make more informed decisions,” said Kim Majerus, vice president of global education and US state and local government at AWS. “Our goal with this study is to help even more public sector organizations worldwide understand the potential benefits that data integration can have on their end missions.”

Forrester applied its Total Economic Impact (TEI) methodology to the public sector for this analysis and interviewed representatives from organizations that invested in, helped implement, or helped manage data integration initiatives. The deep dive conversations provided details on the unquantified benefits and improved customer experience realized as a result of the data program. Forrester aggregated the experiences and combined the results into a composite organization within state government that invests in more interoperability and creates a data integration unit, which helps its stakeholders realize the value of data governance frameworks.

The resulting data illustrates notable quantified benefits for the public sector including process and operational efficiencies amounting to more than $15 million in savings over five years. The composite organization automates and improves the efficiency of existing processes such as data entry, reporting, and the fulfillment of data requests. Its newly established data integration and management unit also takes on tasks that local organizations previously ran, which minimizes duplicative effort and enables efficiencies from economies of scale.

The study also measures direct cost savings of $3.5 million associated with interoperability. The composite organization directly reduces its expenditures on external vendors and service provision by up to 10 percent and additionally saves tens of thousands more dollars annually by retiring its legacy technology, such as old servers or software.

The application of data integration can save lives in addition to money. In Virginia, data integration helped battle opioid addiction. A single community went from 28 fatal overdoses in January through March of 2019 to zero in April and May as a result of the coordinated actions of law enforcement, public safety, health services, and community leaders.

There are also a number of unquantified benefits reflected in the report including improved decision-making among federal, state, and local public sector leaders. Once the framework is established, it can be quickly pivoted to address different use cases and achieve additional goals, such as battling a pandemic.

“When the pandemic hit, we were ready. Because of the established framework, we could onboard private entities, from hospitals as data producers to health departments as data consumers,” said Carlos Rivero, former chief data officer of the Commonwealth of Virginia.

Interoperability can also facilitate or enable academic research. The goal of education research is to answer questions that can spur meaningful change and improve outcomes for schools and students. To answer these questions, researchers often need access to both aggregated and student-level educational data. Interviewees said having a centralized data management body to make data available and garner permission from local districts helped their organizations provide academic institutions or programs with aggregated and cross-program data to support their research. When research is published, it can be used to further improve service delivery and decision-making. 

Conclusion

The representative interviews and financial analysis in the report found that the composite organization experiences benefits of $23.3 million over five years versus costs of $17.4 million, adding up to a net present value (NPV) of $5.8 million and an ROI of 33 percent.

Forrester’s findings in The Total Economic Impact of Data Integration for the Public Sector demonstrate that although there is an initial investment cost for organizations in data integration, interoperability can save tax payer dollars and alleviate administrative burdens. Over time, the study finds that while the cost of launching an integrated data system usually increases linearly, the value and benefits created by data integration often grow exponentially.

To read more about the quantified and unquantified benefits as well as the costs associated with data integration, download the full study.