Ian Cuddy

We all want digital inclusion - so I was delighted to see the launch this week of the Race Online 2012 campaign by Martha Lane Fox, the Government's Champion for Digital Inclusion.

Of particular note is new research unveiled by the campaign which attempts, possibly for the first time, to quantify the potential financial benefits to the UK ( including government) from achieving greater digital inclusion.  The Economic Case for Digital Inclusion – an independent report by PricewaterhouseCoopers - estimates this to be worth a staggering £22 billion.

One of the 'key findings' highlighted in this report is that:

Government could save at least £900 million a year [their emphasis] in customer contact costs if all digitally excluded adults got online and made just one electronic contact per month.

The actual estimate is some £918m which, by anyone's measure, represents a significant sum of hitherto-unidentified government efficiency savings.  So how did they arrive at this?

According to the report, the figure refers to 'the potential efficiencies that can be derived from switching contacts and transactions to online channels' from more expensive ones.  As the research says, interestingly, in a section headed 'Evidence', 'from the perspective of public service transformation, digital inclusion is primarily an issue of channel strategy and migration.'

The £918m sum, says the report, is based on 'evidence from 19 local authorities' on 'average costs of transactions in different channels' gathered in 2008.

And unfortunately, this is where things start to get a little confused.

It begins on p.47 where an interesting table is provided giving a side-by-side comparison of these relative costs-to-serve. This apparently shows that on average, 'face-to-face' costs a hefty £10.53, 'telephone' £3.39, while 'online' comes in at an amazing 8p.

These are, of course, only one of many, often widely-varying estimates of transaction costs as Mick Phythian documented recently.  PwC could, for instance, just as easily taken figures derived from Socitm's national benchmarking exercise, which sampled far more councils, and were published in March this year and quoted by Martin Greenwood in his presentation a few days ago at the Government 2010 conference.  (Socitm's research, just for reference, put the average cost of servicing face-to-face enquiries at £6.56 and web transactions at £0.27.)

The source of PwC's research is given in a footnote as 'Customer Contact Profiling Report – ESD Toolkit' by 'Aston Campbell Associates 2008'.  Sadly the link given in the report doesn't work, however following some quick Googling I was able to track down this particular research. I believe PwC meant to link to what this PowerPoint presentation from June 2008.

Slide 7 of the presentation, headed 'Channel Costs' indeed shows face-to-face contact costing on average around £10.56. But on closer inspection, it transpires this was just the figure reported by the London Borough of Lambeth, one of the 19 councils surveyed.  Next to this is an entirely different figure from Chorley Borough Council who put the cost at £6.49 - tying in nicely with Socitm's estimate. PwC seem to have chosen to ignore this, which is slightly odd.

The 8p cost for 'online' contact and transactions cited in The Economic Case for Digital inclusion is also a complete mis-reading of the original research.  The 8p doesn't refer to 'online' - it's for contact solely via web forms that are integrated with councils' back-office systems.  In fact, this same presentation highlights that when councils measured the average cost of dealing with email enquiries, this came out at a whopping £6.33.  Which according to the research, makes email actually more expensive than face-to-face contact.

Another rather significant finding of the research, which I failed to find in the PwC report, was that those most likely to be among the 'digitally excluded' were also those least likely to shift channels, which would dampen expectations for potential efficiency savings.

None of this should really come as a surprise to anyone with an interest in customer contact in government, not least PwC as a major provider of consultancy on Transformational Government.  As this landmark UK government study highlighted back in 2006, if electronic services aren't integrated, meaning that councils have to manually re-key electronic data into back-office systems (still extremely common in local government), the true cost of a web transaction can exceed contact by other 'traditional' channels.

Channel shift isn't simply a case of getting people who don't use the web to make electronic contact with government and bingo, efficiency savings. As Bad Science would say, I think you'll find it's a bit more complicated than that.

You can download the PwC report here.