Friday, August 27, 2004

Sacramento’s Urban Legends

Remember the story about the lady who tried to dry her poodle in the microwave? Or the claim that the Income Tax isn’t lawful because Ohio isn’t really a state? These are classic "Urban Legends", modern folklore that circulates by word of mouth and post of blog, apparently plausible tales that seem to emerge from some collective modern subconscious. Such false beliefs are usually harmless enough, except when politicians try to use them to win support from a gullible public.

A case in point is Recommendation GG #44, one of the 279 proposals contained in the California Performance Review recently sponsored by Governor Schwarzenegger. The prosaic recommendation that California’s various state agencies increase their use of the internet for doing business with each other is scored as saving $100,000,000.00 over five years, at a cost of only $1,300,000 -- a 75 to 1 payoff. 300 "Document handlers" -- a term the Review uses interchangeably with "administrative and information workers" will be reassigned or let go from the State payroll.

It's nice to be hi-tech, but one wonders how the Review concluded that "integrated document management" will produce the organizational equivalent of the free lunch? Was there a specific analysis of how state government departments now operate, and an evaluation of the financial and personnel costs of change? Of course not. The Review relies on sales brochures from small, privately held companies that are trying to promote themselves for jobs as consultants. These glossy claims are prefaced with disclaimers, such as:

"The information provided herein is provided for informational purposes only and is not intended or offered as a guarantee or warranty of any kind."

The Performance Review takes an Urban Legend approach to financial analysis. Recommendation GG #44 alone contains at least three examples. The first one gives us a rare peek at an Urban Legend being born. The Performance Review says that State offices have been moving documents to an Adobe Acrobat electronic format, and then claims:

"While this is an improvement over the paper format, further efficiencies using modern electronic document management systems and software would result in:

  • A 75 percent reduction in time spent locating and retrieving documents;
  • A 75 percent reduction in time spent filing ;
  • A 50 percent reduction in copying costs;
  • A 75 percent reduction in off-site storage costs;
  • A 75 percent reduction in on-site storage costs;
  • A 50 percent reduction in overnight shipping expenses; and
  • A 50 percent reduction in filing supply expenses.[6]"

Wow! All those numbers. But why only "50%" and "75%" reductions? Why not 55% or 62.3%? Let’s see where those numbers come from:

"Note [6] "Return on Investment" Sandy Schiele and Betsy Delfosse, http://www.openarchive.com/ http://www.openarchive.com/articles_home.htm (last visited May 5, 2004)."

OK, this is sales literature. Sandy Schiele is in charge of sales for Open Archive Systems, Inc., a privately held New Hampshire company, and Betsy DelFosse is the contact person for press releases. But where did OAS get the figures?

"By adding together document handling costs and storage expenses, you generate a realistic estimate for your document expenses today. Using this data, the following chart illustrates how to compare your current document handling methods with a document management system. Measuring the effectiveness of a document management solution requires that you realistically think about the departments it will impact as well as the number of employees and the value of their time. The values below are just suggestions.

  • Reduction in time spent locating and retrieving documents 75%
  • Reduction in time spent filing 75%
  • Reduction in copying 50%
  • Reduction in off-site storage costs 75%
  • Reduction in on-site storage costs 75%
  • Reduction in overnight shipping expenses 50%
  • Reduction in filing supply expenses 50%

Now, multiply these percentages by the calculations in the first section. This will give you an idea of the monthly savings your company will realize by implementing a more efficient document management solution."

"The values below are just suggestions." That means the numbers aren’t real. They are being made up for the sake of example. But the Performance Review says "further efficiencies would result in" these particular savings. Through the magic of stupidity the hypothetical becomes the real. Thus the apocryphal turns into Gospel.

So that's how it works. Numbers that were originally pulled out of thin air will no doubt to be quoted by future generations of consultants touting the benefits of electronic document management. "The California Performance Review found there was a 75% reduction in time spent filing..."

It’s like that old joke about the former Soviet Union. Did you know that back in 1987, an investigation revealed that 57.2% of all statistics in Uzbekistan were falsified?

ps I'm having a little trouble sending comments so if I do it twice please excuse me and I apologize.
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