Transform or Vanish

Don't ask: "What can we do with the resources we have?"

Ask: "What do our customers need, and how can we provide it?"

Change the way your agency thinks about how it provides its services, or your agency will disappear in the next couple of decades, argues a new study on how the public sector will change in the 21st century.

This stark forecast is one of several bold predictions KPMG Peat Marwick LLP, the international accounting firm, makes in "Organizations Serving the Public: Transformation to the 21st Century," a sweeping analysis of the changes that will confront and ultimately sweep away much of the public sector of today, according to the study's authors. KPMG interviewed leaders in federal, state and local governments, heads of nonprofit organizations and journalists (including Government Executive editor and publisher Timothy B. Clark), and analyzed several studies and surveys to reach their dire conclusions.

The study cites five major societal shifts that will change the way government does business:

• Demographic changes, most importantly the aging of America's population, increasing diversity and the erosion of the traditional family.
• A blurring of the line between the public and private sectors.
• The pervasive influence of communications technology.
• Economic globalization and a widening income gap.
• A severe distrust of politics and government.

But the survey also found that taxpayers want the government to spend their money more wisely. More than 80 percent of respondents said their state government spends money on the wrong things. Only 11 percent said it spends too much.

As the federal government has devolved responsibilities to the states and reduced its workforce to the lowest level in decades, the KPMG study found, federal employees have been demoralized and themselves have lost trust in government. "As downsizing continues, morale will continue to drop, as those who remain take on the tasks of departed colleagues and wonder who will be the next to go," the report argues.

Whereas many government programs were guaranteed continued funding in the past, agencies will increasingly have to prove they are providing value to the American taxpayer, the study predicts. Because the private sector has improved customer service as prices have gone down, people will expect the government to do the same.

People "are no longer satisfied to wait in long lines for a process to be handled manually when technology could perform the transaction almost instantaneously," the report says.

Agencies will not be able to use "scarce resources" as an excuse for poor service. Instead they will have to search out ways to improve their services with fewer dollars. Strategies will include consolidation, outsourcing, creating performance-based organizations, and forging partnerships with state and local governments, nonprofit organizations and private firms.

Be wary of assuming that your agency is safe from change, the report argues. "Organizations can either change course today or face the real threat of going out of business tomorrow," it predicts.

The study ultimately warns: "If your organization is needs-based and you are providing a service customers value, you will get the required resources. If not, your organization's existence will be in serious danger."