A System Dynamics model to identify and measure the paper digitization advantages in Public Administration Nunzio Casalino1, Stefano Armenia2, Mauro Draoli3
Abstract. This study provides a System Dynamics model built to identify the benefits arising from the process of digitization in the Italian Public Administration. The paper describes the process in terms of the causal relationships between systemic variables that define the underlying structure of the problem. The analysis focuses on the interaction between the “outer world” of the citizens and the “inner world” of the Italian Administrations, by designing a causal loop diagram and a stock and flow simulation model. The systemic approach allows considering many crucial aspects for the digitization problem and provides a rich analysis that shows how those obstacles brought forward by social and psychological factors may become a great obstacle to organizational change.
Introduction The process of managing digital documents is recognized as faster, safer and cheaper than the paper one. Granting fast process and reducing costs both for the public and for the private sectors, it can be used as a high leverage tool in order to gain a higher efficiency rate [1], [5]. The e-government is a broad process of innovation in public administration with particular reference to the internal administrative process and to the relations with the outside world. There is a positive correlation between the gradual diffusion of technology within the Public Administration and increasing socio-economic well-being [14]. Paper dematerialization is an issue that has affected mostly the existing rules making a radical transformation, still in place, of the activities of public and private institutions. In particular, the collection of norms known as “Codice dell’Amministrazione Digitale” is on a real overhaul that transforms the existing digitization in a strong requirement for the institutions, introducing at the same time, in relation to the documentation to be submitted to the administration, new guaranteed rights to citizens and companies [10], [11]. The following government plan, known as “Piano E-gov 2012” is another key initiative for the future of the Italian country. In a context of economic crisis this Plan, in line 1
Università degli Studi “Guglielmo Marconi”, Dipartimento di Scienze Economiche ed Aziendali, Roma, Italy,
[email protected] 2 CATTID, Università degli Studi di Roma “La Sapienza”, Roma, Italy,
[email protected] 3 CNIPA - Centro Nazionale per l’Informatica nella PA, Roma, Italy,
[email protected]
with the Lisbon strategy, deals the problem of competition distance between Italy and more advanced Countries, aiming to renew the institutions and to improve the efficiency of Public Administration. Among the main objectives of the new E-gov Plan, there is one relating to paper digitization whose goal is to reduce, within 2012, the conventional paper flows and to increase totally digital documents [15].
A perspective on document digitization While seeking streamlined processes and better customer satisfaction, many Italian Public Administrations are also looking at the document workflow management aspect as a potential solution to gain in efficiency while maintaining a high customer satisfaction. However, the simplification process of administrative activity goes back to the early 90s when the public institutions was concerned by rules involved to improve the quality of services for the citizens. In this context, the process of paper digitization is an example of “change” in the Italian Public Administration, both in technical and organizational/managerial aspects, led by the ICT development and especially for their diffusion and adoption. The declared purpose is the progressive reduction of the number of paper administrative documents handled by the administrations, while managing a proportional and gradual increase of the digital document management combined with the replacement of traditional hard copies. The introduction of specific technologies such as digitization, the certified mail, digital signatures, the electronic ID and the card of national service, was part of change inside the PA Italian. The digital document is the “computer representation of actions, facts or data legally relevant” (Art. 1, lett. P, CAD), which is valid for the purposes of the law and may meet the same requirements of the paper document. Digital documents offer significant benefits for the Public Administration. It will allow faster drawing up and transmission, can be multimedia; presents ease of management and storing. The digitization of the document is essential for the Public Administration change because it is from and in it that diverge and converge the different administrative activities; the introduction of on-line documents are different options for computer-based processes (such as payments on-line) and the digitization allows a paper to become computer-based. The certified e-mail and digital signature represent additional tools to overcome the “weakness” of their predecessors, introducing the concept of legal validity of the information thus exchanged. Legislation on digitization field has led to define the concept of data-management protocol such as the widespread adoption of document management system and electronic administrative processes, with protocol information. Indeed, there are more opportunities to search, greater availability of information, greater security and faster time of transmission. All of these instruments represent the most important means of radical administrative transformation that digitization entails because permit, in addition to a substantial change in the way of working inside the Public Administrations, significant advantages in terms of cost, time and human resources management.
A dynamic analysis of the Digitization Process Our study has focused mainly on the analysis, by means of the system dynamics approach, of how the document digitization process in the Italian public administration may contribute to the vision of the so called “digital administration” which, according to this vision, ought to produce great benefits for the citizens and for the same public administration. Our starting point was the identification of the two main interacting “worlds”, the “inner” world (or PA world) and the “outer” one (or citizens world), which in turn has allowed us to first study the specific dynamics of these two sub-models and then the dynamics due to the interaction between them. On the Administration side, we studied the whole document management process, pointing out how the introduction of new IT technologies (like the Certified Mail and Digital Signature services) may influence the volume of internal digital documents, thus saving both on average document production and archiving costs. On the citizens’ side, we analyzed how IT alphabetization and being used to interact online with PA-offered services by means of the new technologies constitute important variables which are able to reduce the Italian Digital Divide with respect to the European average. However, some obstacles still exist which prevent a full and satisfying interaction experience between administrations and citizens, and these are mainly due to cultural issues and attitude towards change. In fact, the digitization process implies a deep change in many domains inside the PA, both on a technological perspective and from the tools needed to accomplish all the activities, up to the eventual redefinition of the whole document management system.
Methodological Approach The main hypotheses that we assumed while conceptualizing our model concern the resources which are available for the PA to be spent on the marketing and promotion of the new online services, thus ultimately stimulating the citizens to use them. The final objective of our policy analysis will be to show to what extent the digitization process may lead to sensible advantages for the PA, also trying to analyze how such a process may get spread out in the actual context. It was however necessary to recur to some “simplified” modeling or functions for some of the systems variables; such hypotheses have been validated by domain experts as totally realistic [1], [10], [11]. Our analysis also includes a few elements usually not considered in “classic” digitization literature, like the word of mouth effect, whose impacts on the technical digitization process are hard to forecast without a systemic analysis; according to our approach [9], those variables are instead crucial if we want to understand how eventually the system is able to succeed in its mission.
The causal relationships diagrams According to the System Dynamics approach, the model has been designed starting from a qualitative analysis carried out by causal mapping, which describes the main relations and interconnections between various parts of the system. This map is represented by an oriented di-graph G(V,E), where the vertex set V represents the variables, while the edges set E represents effects (positive or negative) that a particular variable causes on the next linked one. Each causal link is described by an algebraic sign that shows either the direct (positive) or inverse (negative) proportionality between each couple of elements. The cycles appearing in the graph are called causal feedback loops, and they may be Reinforcing Feedback Loops, those having an even number of “minus” signs) and Balancing Feedback Loops (those having an odd number of minus signs). The relations among the reported systemic variables have been validated both by CNIPA experts and by previous studies [1]. The first reinforcing feedback (R1) loop shows that if online interaction between PA and citizens increases, then IT alphabetization grows and consequently Internet usage, and this will increase the number of accesses to the PA websites. In this way the online service usage will grow, together with actual users of these services. This growth is followed by an increased introduction of digital documents and a consequently increased quantity of digital documents inside the PA and of documents registered, decreasing the documents average unit cost of production; thus, the advantage perceived from PA grows, and so the latter increase its computerization.
Fig. 1. R1: Loop describing the impact due to on-line services utilization by the citizens on public administrations cost savings from protocol procedures
The self-balancing feedback (B1) puts in evidence how online interaction between PA and citizenship causes, through Internet use and number of accesses to PA websites, to increase the online services usage with a consequent growth of the digital documents introduction and so of documents that can be filed. In this way digital archives dimension will increase together with their operative costs, which are in inverse proportion with PA obtainable advantage from digital documents storage versus paper documents storage. Public Administration, perceiving an advantage, will continue to computerize its processes.
Fig. 2. B1: Use cycle of online services by citizens' savings on storage costs for the Administration
A System Dynamic based Digitization Process model The causal maps are just the starting point for creating a stock and flow model, which can then be simulated to study the system if a policy reach its goal or not. In general, the Stocks (or Levels) are accumulators that shows the state of the system, and works as memory of the system; their values aren’t instantaneously calculated, creating an implicit delay effect on the system. Every stock has variations due to Flows, that can increase (Inflows) or decrease (Outflows) the stock level. This representation works well to analyze the feedback loops aforementioned, that are the depiction of the context surrounding the document management procedures. Implemented model describes five main processes: the document flow in PA, the model of the adoption of PEC and FD in Public Administration, the model of the quality of offered services,
the model of interaction between PA and citizens, the model of the adoption of online services by citizens. At the end of the simulation (which will be detailed later in this work), it will be clear which leverages and governance policies ought to be implemented in order to make the digitization technology successful, and which advantages may be obtained through its use [8], [9], [12], [13]. The main variables to describe the documents flow into the PA are the archive dimensions and the total of paper documents, digital documents, documents archived in both ways that, granting the reduction of the average unit cost of production, can allow to quantify savings for PA against the only paper documents usage. Notably, from this model it can be seen how the paper digitization brings to interesting cost savings for the Public Administration. In the model of the adoption of Certified mail (PEC) and Digital Signature (FD) in Public Administration it was used the Bass Model, conveniently modified for this case, in which the adoption rate is given by the interaction probability among users that were already using the technology and the ones that, potentially, could use it. The adoption model of the offered services quality wants to represent how the citizens satisfaction increase with the quality supplied by the PA employed. The model of PA and citizenship interaction represents the union between this two worlds. In fact, it has been seen how this interaction is influenced by both services offered by the PA and services demanded by citizens to the PA itself. The most significant change concerns the adoption rate that empty the potential users stock to fill up the actual online services users level. This rate is influenced by word of mouth adoptions, through the contact between actual users and potential users and by marketing effect adoptions, influenced themselves by the percentage of ICT expenses in marketing, that makes aware potential users of these services.
Analysis of simulation results As a first step, we put the systemic variables under the so called condition of “simulation stress”, to provide realistic and acceptable values for them. The time line considered for our simulation scenario is five years. After a few warm-up simulation runs, based on the elaboration of some historical data [7] [10], the values which were identified for the following listed input variables were: paper document archiving cost: € 18,00; digital document archiving cost: € 9,00; average unit costs of production of paper documents: € 1,8; average unit costs of production of digital documents: € 0,9; percentage of marketing expenditure: 3% - 5%; percentage of employees trained on ICT: 50% -70%. Output variables subject to examination are actual and potential users number, the word of mouth adoption and the marketing effect adoption, average unit costs of production and storage saving, service quality and citizens satisfaction and actual and potential PA that uses PEC and FD. In the following we report the results related to storage costs saving given by the digital to paper document substitution and the
average unit costs of production of digital documents saving thanks to the ASP mode registration. Time 2009/01/01
cost of storage (€) 0
Time
average unit costs of production (€)
2009/01/01
0
2010/01/01
1.054.012,97
2010/01/01
398.510,43
2011/01/01
7.337.007,72
2011/01/01
2.216.152,69
2012/01/01
20.418.682,75
2012/01/01
5.005.948,37
2013/01/01
40.667.728,24
2013/01/01
8.288.606,73
2014/01/01
68.913.115,89
2014/01/01
12.035.753,75
Table 1. Savings in the cost of storage and in average unit costs of production of documents
With the digital documents usage, costs saving for Public Administration will increase from year to year. average unit costs of Time cost of storage (€) Time production (€) 2009/01/01
0
2009/01/01
4
2010/01/01
1.054.339,68
2010/01/01
398.641,08
2011/01/01
7.344.947,14
2011/01/01
2.218.902,18
2012/01/01
20.471.374,75
2012/01/01
5.022.167,28
2013/01/01
40.882.112,64
2013/01/01
8.348.202,47
2014/01/01
69.539.831,75
2014/01/01
12.192.170,10
Table 2. Trends for savings in the cost of storage and in average unit costs of production of documents
The results shown in table 2 were obtained through the use of two managerial levers: percentage of expenses in marketing and percentage of employed that follows ICT courses. These variables were varied respectively from 5% to 7% and from 50% to 70%. The simulation shows how, after the actuation of both the cited policies, there is a considerable growth of PA costs saving, with a +1.30% average unit costs of production saving and +0.90% of storage costs saving.
Conclusions The study carried out how paper digitization constitutes a big challenge for the Public Administration to reach many benefits. Paper digitization is the set of activities to solve the typical problems of the paper such as the access and transmission difficulties, high costs of handling, search, storing, space, costs and timing. The introduction of a fully computer-based document management within Public Administrations and companies, although it represents only a small improvement can
be applied in the reengineering of administrative processes, it is a goal that could take place quickly. The document management system, however, gives the possibility of several improvements within the administrations. With the digitalization of administrative processes, it is possible to obtain very large savings in time and in economic terms. The study shows that there are at least two variables on which the government should “leverage” to optimize its internal structure and, consequently, derive all possible advantages. First, we have seen as raising awareness of citizens plays a key role for the system. Second, another major challenge to introduce innovation in Public Administration concerns the improvement of ICT and organizational skills through proper training and recruitment. It should be emphasized that the benefits arising from the process of paper digitization within the administrations are obtained mainly on a large scale basis. It is needed, in essence, to overcome the breakeven point to cover investments and, consequently, derive its benefits.
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