Examining the Public Sector Industry Value Chain

Government organizations need to make evidence-based policy decisions to drive positive outcomes for citizens. SAP can help support our customer’s vision and strategy and understand mission-critical data in response to trends, events, outcomes and experiences.

This happens in parliament and at the administrative level of government. Policy and planning is about leveraging data as an asset and formulating decisions or basing policy decisions on facts and figures rather than assumptions or beliefs. Understanding the mission-critical data in response to trends or events, outcomes, and experience is critical.

Measuring outcome in the Public Sector is not straight forward, because:

• Government outcomes tend to be intangible, and therefore hard to meaningfully describe in concrete or quantifiable terms.
• Government outcomes change, often slowly, over the long-term, and so measurable change within traditional planning cycles may not be realistic.
• Government outcomes can be complex, affected by the interactions of several or many organizations, and so direct measures of success are not always within the control of a single department or agency.

Governments define their aspired outcomes as part of their budgetary planning process, and to measure these outcomes, Government define the associated metrics and KPIs that will be measured to assess the impact or magnitude of these outcomes.

Financial stewardship needs to adapt to the changing digital world to support improved quality of services. SAP supports customers to drive mission impact with solutions to improve stewardship of public funds and develop forward-thinking, citizen-centric policies. A state of the art PFM system is the digital foundation for data-driven intelligence, decision-making, and innovation throughout the entire value chain.

Managing public funds involves ensuring transparency and maintaining fiscal responsibility. Effective cash flow management guarantees that payments to citizens, employees, and vendors in the public sector comply with contractual obligations and relevant regulations (e.g. US prompt payment act, EU Late Payment Directive, UK Late Payment of commercial debts act, Canadian Federal Prompt payment for Construction Work Act to strengthen SME sectors and improve public procurement integrity).

Understanding the distinction between discretionary and mandatory expenditures is crucial for public financial management and policy-making, as it affects how governments prioritize and allocate resources.

• Discretionary Expenditures: are expenditures that the government can adjust on an annual basis during the budgeting process. They are not mandated by existing laws, offering flexibility in terms of how much is allocated and how funds are spent.
• Examples: Discretionary spending often includes funding for education, defense, transportation, and scientific research. Decisions regarding these expenditures are typically made through the annual appropriations process by legislative bodies.
• Mandatory Expenditures: These expenditures are mandated by law and are required to be funded. They typically involve entitlement programs where funding levels are determined by eligibility rules rather than annual budget decisions.
• Examples: Mandatory spending includes programs such as Social Security, and Pension payments or e.g. Medicare, and Medicaid in the United States. These programs have set criteria for eligibility and benefits, and funding is automatically allocated based on these criteria.

Solutions relevant for this business priority are for example Budget Operations, Public Sector Accounting, Grant Budget Operations, Public Sector Procurement, Core Human Resources and Delivery, Portfolio and Project Management, Real Estate Management

As people are experiencing innovative, personalized, and agile digital business models and expect the same with government. Governments need to transform to provide world-class services to citizens. SAP helps to deliver a unified, near-seamless citizen experience throughout every interaction transforming data into insight to analyze past and present situations, while simulating future scenarios

This includes citizen requests and case management across welfare programs, grants programs, tax collection, and also a utility service provision. Governments manage a variety of revenue collection regulations and need to maximize taxpayer compliance with a unified contribution, revenue, and tax management enhancing taxpayer service and satisfaction. On the expenditure side grants management processes along also diverse programs and regulations need to ensure accurate, compliant payments along the provisioned budgets. Both Taxpayer, Grantor and Grantee, and citizen service processes need to adhere to flexible business rules per program or revenue type avoiding fraudulent activities, while ensuring delivery on program goals.

Solutions relevant for this business priority are for example Tax and Revenue Management, Grantor and Benefits Management, Omnichannel self-service, Experience Management for Service

The value chain and associated processes will vary from one government to the next. Importantly these processes are executed iteratively and in parallel over and across government financial years and organizations. Each step in the value chain is interconnected with budget control, cash flow implications and the need for auditability to ensure that public services are delivered in a compliant and effective way.