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A new System Dynamics model to improve internal and

external efficiency in the paper digitization of Italian Public

Administrations

Nunzio Casalino1, Stefano Armenia2, Carlo Maria Medaglia3, Silvia Rori4

Abstract: In this paper, we developed a new System Dynamics model in order to

identify the benefits arising from the digitization process in the Italian Public

Administration. Our study initially describes the problem in terms of the underlying

structural relationships among the variables that constitute the system. A systemic

approach allows introducing many soft aspects of the problem that reveal themselves

as crucial ones and provides a rich analysis that shows how issues brought by social and

psychological factors may become a great obstacle to organizational change.

In particular, our analysis has focused on the interaction between the world of citizens

and the world of the administrations, in the domain of the 8101 Italian Municipalities.

By means of the System Dynamics approach, it has been possible to study the structure

of the system both from a qualitative and quantitative point of view. The study has

allowed identifying public management policies and management leverages that may

constitute the main variables on which the Italian Public Administration can act in order

to improve its internal and external efficiency and in order to confer an added value to

the services being offered.

Keywords: Public Management, Policy Making, Decision Support Systems, System

Dynamics, Complex Systems, Digital Organizations

1 Universit degli Studi Guglielmo Marconi, Dipartimento di Scienze Economiche ed Aziendali, Roma, Italy,

[email protected] CATTID, Universit degli Studi di Roma La Sapienza, Roma, Italy, [email protected] CATTID, Universit degli Studi di Roma La Sapienza, Roma, Italy, [email protected] CATTID, Universit degli Studi di Roma La Sapienza, Roma, Italy, [email protected]


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1. Introduction

E-government represents the process of Public Administration computerization that,

together with organizational change actions, allows dealing with the documentation and

with digital procedures supported by ICT (Information & Communication Technology)

in order to optimize the government agencies activities and to offer the customers

(citizens and enterprises) a better service. Therefore, it regards the adoption of

technological resources meant to optimize, by means of a fast information exchange, the

inner and external relations of the administrative engines and to improve, through a

greater speed and flexibility in distribution, the supply of services to the citizens. E-

government constitutes a wide process of innovation that involves both the inner

administrative lawsuit and the logical external relations, thus representing a

multidimensional trend that has revolutionized the way by which Public

Administrations work.

A positive correlation exists between the progressive diffusion of the technologies in the

Public Administration (PA) and the increment of collective social-economic welfare.

This relation between PAs and ICT demonstrates an unavoidable change in today's

society: the development of ICTs and their consequent adoption in Public

Administrations allow improving the offering of public services to the citizens and, at

the same time, to save money and make a more efficient management possible.

Italy is in a position of delay in comparison with other European Countries, and most of

the Italian Administrations critical issues are connected to the adoption of Internet by

administrations and citizens. The e-gov 2012 Plan document represents a fundamental

governmental action for the digital (and economic) future of our country. In a context of

economic crisis, the e-gov 2012 Plan, faces, within the Lisbon strategy, the problem of

digital divide between Italy and the more advanced countries and focuses on the goal forthe administrations to improve their efficiency and effectiveness. In particular, the e-gov

2012 Plan relies on a previous act named Codice dellAmministrazione Digitale

(CAD, or Digital Administration Code) in order to focus the attention and the

innovation on four main aspects: quality of the public administration, web 2.0

technologies, adoption of on-line services for the citizens and customer satisfaction.

Thus, innovation by means of ICTs means to challenge what is new, to change the

organization, to re-engineer processes: in such a context, it is clear that digital


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technologies play an important role5. In general, innovation cannot proceed without

heavily relying on technological aspects: various technology types have determined a

new way to think, to create, to make. During the course of industrial history,

technological progress has in fact impacted the physical component of any economic

activity rather than on the component concerning with the ability to elaborate

information.

Strictly connected to the concept of e-government, is the topic of paper reduction and

document digitization that represents the focused actions of the Italian Government to

resolve the problems and issues connected to paper usage: these are basically related to

data access and transmission, high costs for moving and searching documents, as well

as problems related to physical space usage, management costs and times. The topic of

digitization has a remarkable effect on the entire administrative system and its long-

established culture since it impacts the whole way to work in Public Administrations.

For these reasons, the document digitization is a topic that drained a growing attention

from public regulation bodies and agencies, and will likely produce a deep change, by

far today still under development, of the way to work of private and public

organizations.

2. Problem setting and previous research

E-government is a multidimensional phenomenon that has revolutionized the way to

work in the Public Administration: it regards the adoption of technological resources to

try to optimize6, by means of a faster information exchange, the internal and external

processes of administrative units as well as to improve, through a greater rapidity and

flexibility in their sharing, the service supply to the citizens.

The European Union has contributed and still contributes to the development of thisprocess with specific initiatives that confirm an interest to the propulsive value of the

new technologies. Among the most important guidelines, it is worth to mention the

following ones:

e-Europe 2002 Action Plan; e-Europe 2005 Action Plan;

5 Morecroft, J.D.W., Sterman, J. (2000). Modelling for learning organization. Productivity Press, Oregon. 6

Sterman, J.D. (2000). Business Dynamics - System thinking and modeling for a complex world. IrwinMcGraw Hill, Boston.


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i-2010 EU Strategic Framework.The development of e-government in Italy represents a continuous effort towards the

adoption and accomplishment of European strategic lines and objectives, ultimately

pointing at the establishment of the so-called Information Society. Italy has

implemented European directives mainly by developing several actions which focused

on the accomplishment of two main outcomes: on one side, the definition of a

framework including support laws and rules, and on the other, the implementation of a

series of investments at a central administrative level, at regional level and at a local

level by promoting projects which have been co-financed by the government.

The simplification of administrative processes goes back up to the first 90s, when

public administrations started getting interested in regulations directed to the

improvement of service quality for the citizens. Furthermore, today in our country the

technological reform matches with a federalism process: the authority to innovate is

therefore delegated to Regions, Provinces and Municipalities, all trying to improve their

services for the citizens.

At present, the general goals of the Information Society in Italy are the following:

increase on-line services for citizens and enterprises (Electronic ID, NationalService Card, Digital Signature);

Human Resources and people empowerment (by means of a better knowledge ofICTs and training courses, also supported by e-learning);

greater efficiency and effectiveness for Public Administrations (i.e.: by adoptinge-procurement services, digital procedures, certified e-mail, etc.);

Transparency (with the possibility for the citizens to track the state of theirauthorizations, records and documents);

Quality (thus improving citizen satisfaction).The digitization process represents a remarkable example of change in Public

Administrations, from both an organizational and a managerial point of view, all

supported by ICT adoption. The concrete goal of the digitization process is the

progressive reduction of the paper documents managed by the Administrations and the

proportional and progressive increase of the digitized documents together with the

replacement of supports traditionally used to store administrative documentation. The


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introduction of specific tools like the official adoption of the digital document, certified

electronic mail (PEC), electronic ID card (CIE) and national services card (CNS),

represented part of the internal change of the Italian Public Administration.

The digital document is the IT representation of acts, facts or data legally relevant

(Art. 1, car. P, CAD); it is valid under any term of law and it can satisfy the same

requirements of the paper document. The IT document offers significant advantages for

the Public Administrations, since it allows faster training and communication, it can

include multimedia and it can be more easily managed and archived.

The digitization of documents thus represents the fulcrum of change in Public

Administration because it is from it and into it that the different administrative actions

diverge and converge.

The Certified Electronic Mail and the Digital Signature also represent examples of tools

that overcome the weakness of their protection by introducing the concept of the legal

validity of the information exchanged.

The law about digitization helped defining the concept of information protocol

management as the generalized adoption of digital documents and the electronic

management of administrative processes; with an information protocol, in fact, there is

a better search capabilities, more availability of information, increased security and a

great reduction of spread times.

The documental management system was conceived in order to simplify the life of

citizens and the working activities by making all documents available with less time,

space and costs. The goal of the Document Management System (DM) is quite

ambitious and covers the whole life-cycle of a document in an organization, from its

creation to the sharing between customers, eventually passing through flows of

approval.All these tools represent the most important means of a radical administrative

transformation that involves the more general digitization process which thus, as a

substantial change about the way of working inside Public Administrations, ultimately

allow for significant advantages in terms of costs, times and human resources7.

By all this, we thus see how the paper documents can be replaced from full electronic

ones without necessarily breaking any term of law: today, the Italian normative system

7 Senge, P. (1992). The Fifth Discipline. Bantam Doubleday Dell Publishing Group, New York.


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in fact allows administrations to digitize and, therefore, dematerialize documents with

large benefits in terms of efficiency, savings of space, economies of scale in their

management and savings of time in terms of information search and data recovery.

The Paper Digitization experience has been previously considered under multiple points

of views. At CNIPA, several activities of search and analysis of the governance policies

regarding the digitization process in Italian Public Administrations8 have been carried

out. By means of the System Dynamics methodology, the issue has been studied with

two different approaches.

The first approach has been based on a technical experimentation for the definition of

models to support possible decisions for managing the digitization process and

considering the effects of exogenous phenomena in the Public Administration. The

second one was on the other hand based on the aspect of the distribution of new

technologies and on the problem of the size of digital archives.

3. Dynamical Hypothesis and qualitative modelling

The main object of this paper is to examine, through the use of the System Dynamics

methodology, how the digitization of documents inside Public Administrations

represents a new perspective, for the digital administration, that can bring great

benefits.

System Dynamics is a methodology fit to understanding the behaviour of complex

systems over time. It deals with internal feedback loops and time delays that affect the

behaviour of the entire system. What makes using system dynamics different from other

approaches to the study of complex systems is the use of feedback loops and stocks and

flows. These elements help describe how even seemingly simple systems sometimesdisplay baffling nonlinearity.

Originally developed in the late 50s to help corporate managers improve their

understanding of industrial processes, system dynamics is currently being used

throughout the public and private sector for policy analysis and design9.

8 Casalino, N. (2008). Gestione del cambiamento e produttivit nelle aziende pubbliche. Metodi e

strumenti innovativi, Cacucci Editore, Bari.9

Robert A. Taylor (2008). Origin of System Dynamics: Jay W. Forrester and the History of SystemDynamics. In: U.S. Department of Energy's Introduction to System Dynamics, October 2008.


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System dynamics is an aspect of Systems Theory as a method for understanding the

dynamic behaviour of complex systems. The basis of the method is the recognition that

the structure of any system - the many circular, interlocking, most of the times time-

delayed relationships among its components - is often just as important in determining

its behaviour as the individual components themselves. Examples are chaos theory and

social dynamics. It is also claimed that because there are often properties-of-the-whole

which cannot be found among the properties-of-the-elements, in some cases the

behaviour of the whole cannot be explained in terms of the behaviour of the parts, nor in

terms of their linear composition.

The key elements of system dynamics models are feedback, accumulation of flows into

stocks, non-linear relationships among the many variables defining the complex

structure of the system, and time delays.

In this case, the start point of our analysis was the explicit distinction between the

environment of Public Administration and the world of citizens, which allowed

studying both the internal phenomena of the two realities and the interactions between

them.

On the administration side, the document management process has been considered, in

order to analyze how an acceleration in the computerization of Public Administrations

may not only influence the adoption of tools like the Electronic Certified Mail (ECM)

and the Digital Signature (DS), but also the overall amount of internally managed

digital documents and, consequently, the archiving cost savings and the unit

production costs (the cost to produce each single digital document).

From the citizens side, it has been analyzed how the IT literacy of the chosen target. as

well as the familiarity with internet and with on-line services offered by Public

Administration, is an important variable in order to reduce the national digital divide(especially if compared to other European countries).

Since a shared view of this issue is not established yet, we considered giving a realistic

representation of such a complex problem also by means of a quantitative analysis. The

digitization process, in fact, implies a deep change in many aspects of the PA, both

technological and from the point of view of the tools needed to accomplish all the

activities, till even to the whole redefinition of document management systems. These

aspects, together with the inevitable obsolescence of the technological supports (a


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document might not be readable tomorrow when the device reading the support

becomes obsolete), clearly show how the digitization problem is not a simple issue, and

must be described by means of proper tools of analysis.

The aim of the model is to explain how the digitization (also known as

dematerialization) process is able to bring considerable benefits to Public

Administration and how this phenomenon may spread in the current context.

It was however necessary to recur to some hypothesized behaviour and/or function for

some of the systems variables; such hypotheses have been validated by domain experts

and considered as totally realistic.

The main assumptions on the model made during our description of the problem

concern the following aspects:

a percentage of financial availability for ICT public spending is used to improvemarketing with the intent to make aware citizens to use on-line services and

consequently, to use digital services offered by Public Administrations

there is a stark distinction between the PAs workers and citizens: we do notconsider the situation in which the two variables coincide

Our analysis also includes a few elements that until today were not yet considered in the

available literature on this problem, like the word-of-mouth effect, whose effects on the

technical digitization process are hard to forecast without a system analysis; according

to our approach and systemic view of the problem, those variables are crucial to

understand the various behaviours of the system.

According to the System Dynamics approach, the model has been built starting from a

qualitative causal map, which describes the main relations and interconnections betweenthe various parts of the system. This map is represented by an oriented digraph 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, which is intended to mean either a 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 either

Reinforcing Feedback Loops, pushing the system towards instability, or Balancing


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Feedback Loops, which tend instead towards a stability of the system. To further

clarify, when a variable indirectly influences itself (that is, through other parts/variables

of the system) we can identify a feedback loop. Also, a red oriented link represents a

direct (positive) relationship, while a blue oriented link represents an inverse (negative)

relationship.

The causal map is the starting point before creating a stock and flow model. Stocks are

accumulators that constitute the state and memory of the system: in fact, their values

arent calculated instantaneously (since they are accumulated), thus creating an implicit

delay effect in the system. Every stock gets modified by Flows which can increase

(Inflows) or decrease (Outflows) the stock level value 10.

A representation by means of the above mentioned feedback loops, works quite well to

analyze the context surrounding the document management procedures. At the end of

the simulation of the model that we will introduce in the next sections, it will be then

clear which policies must be implemented in order to make the new technology

successful, and which advantages might be obtained through its use.

Like already pointed out, while formulating the problem we built a causal relationship

diagram (CLD) that is an oriented di-graph that connects the investigated variables

through some directly or inversely proportional causal relationships. The creation of the

causal map of the system under investigation was carried out by incrementally joining

previously constructed smaller causal maps, which represent smaller sections of the

system.

The overall causal loop diagram is showed in Figure 1. Though in our analysis we chose

to explicitly distinguish between two different worlds(the Public Administration and

the citizenship side) and notwithstanding the fact that the two sectors appear asgraphically separated, it is of course impossible to think of one sphere independently of

the other one since may of the variables on one side directly or indirectly influence

variables on the other side and vice-versa.

On the citizenship side, aspects like the IT literacy of citizens, internet use capabilities,

network broadband size, and general aspects regarding the use of on-line services are

considered. This last aspect directly influences the world of Public Administration: the

10

Burns, J.R. (2002). A component strategy for the formulation of system dynamics model. In: 20thInternational Conference System Dynamics Society.


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use of on-line services offered by the PA, in fact, increases the number of digital

documents that the PA will have to manage while the use of physical desks will

continue to increase paper documents. These availability of services and IT

infrastructures, as well as the quality of the offered service, all contribute to positively

influence the satisfaction of the citizens and, therefore tend to increase the interaction

with Public Administration over time, thus further increasing the use of digital services

in a virtuous cycle.

On the Public Administration side, aspects of the documental flow have been taken in

consideration, both for digital documents, recorded documents (documents that are

given a protocol number when being officially received by the administration), digitally

archived documents, as well as also aspects concerning the skills of PA employees and

ICT infrastructures.

Fig. 1 The overall causal loop diagram

Studying the influence map in a higher detail, it was possible to identify some feedback

cycles. The cycles identified with the letter R are positive or auto-reinforcing cycles


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and are represented by a red curved arrow, while the cycles identified with the letter B

are negative or auto-balancing cycles and are represented by blue curved arrows. Cycles

are also numbered in order to easily track them and for easiness of reference during the

analysis. The first reinforcing feedback R1 (Figure 2) shows that if the on-line

interaction between PA and citizens increases then the citizens computer knowledge

grows and, consequently the Internet usage produce an increment of the number of hits

to the PA websites. In this way it increases the use of on-line services and,

consequently, the amount of users of such services. This brings over time to an

increment of digital documents in the PA and, therefore, of recorded documents both in

traditionally way and in ASP11 mode, thus reducing the average unit cost of document

production; and in such a way also increasing the perception of the advantages of an all-

digital PA.

11 An application service provider (ASP) is a business that provides computer-based services to customers

over a network. Software offered using an ASP model is also sometimes called on-demand software or

software as a service (SaaS). The most limited sense of this business is that of providing access to a

particular application program (such as customer relationship management) using a standard protocol

such as HTTP. The need for ASPs has evolved from the increasing costs of specialized software that have

far exceeded the price range of small to medium sized businesses. As well, the growing complexities of

software have led to huge costs in distributing the software to end-users. Through ASPs, the complexities

and costs of such software can be cut down. In addition, the issues of upgrading have been eliminated

from the end-firm by placing the onus on the ASP to maintain up-to-date services, 24 x 7 technicalsupport, physical and electronic security and in-built support for business continuity and flexible working.


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Fig. 2. R1: Cycle of influence about the use of online services by citizens on the cost savings of protocols for the

Public Administration

The auto-balancing feedback B1 (Figure 3) evidences how the on-line interaction

between PA and citizens leads, through the Internet usage and the number of hits to the

PA websites, to an increment of the on-line services with a consequent growth of the

digital documents and, therefore, of recorded documents. In this way it increases the

usage of on-line services, leading to a growth in the users of such services. This leads to

an increment of the digital documents and, therefore, of archived digital documents as

well as to a need to increase the recording rate. In this way, the dimension of digital

archives grows but the contained costs of managing digital archives with respect tophysical ones make it possible to obtain cost savings.

Fig. 3. B1: Cycle of the use of online services by citizens' savings on storage costs for the Public Administration

Figure 4 shows that while the on-line interaction between PA and citizen increases, also

the citizens IT literacy (basically computer use, also influenced by external factors like

school and/or previous learning) tend to increase and, consequently Internet usage will

spread among citizens. This will carry to an increment of the number of hits to the PA

websites that will in turn increase accesses to on-line services. A fraction of potential

users of on-line services, not satisfied from the online experience, will likely continue to

access traditional desks in order to use PA services, thus increasing the average service-


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time of such services and consequently reducing. the quality of the offered service

(quality is inversely proportional to the average service-time).

Fig. 4. R2 Cycle of the increase of computerization for citizens

Figure 5 shows how the PA digitization allows for a better online service offering. PAs

will be able to offer more services to the citizens, thus increasing the relationship

between the two worlds.


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Fig. 5. B2 Cycle cost savings of digital archiving

A greater interaction will in turn produce an increment of the overall documents inside

the Public Administration (endogenously and exogenously created) that will cause the

need for a greater document recording rate and, consequently, an increase in the size of

the digital archives. However, costs for digital archiving and management grows less in

comparison to the cost of paper document archiving and management, and this aspect

will make the Administration aware of the advantages introduced by the new digital

technologies, which will thus go forward on its road to innovation. To innovate however

also means for an administration to be able to improve its IT infrastructures and devices

(which in this study we meant in terms of the percentage ratio between total employeesand available personal computers) as well as properly training employees on ICT skills.

In general, a digitally enhanced (also in terms of the skills of its employees) public

administration is more able to offer (better) services to citizens, thus improving and

increasing the interaction between the two worlds. This in turn produces an increment

of instances and requests being made by citizens towards the public administration and

thus an overall increment in documents that have to be managed by the PA. Such

documents have to be recorded when they enter the administration and a part of them

get recorded internally while some part gets recorded as an outsourced service (in ASP-

mode). Recording documents in ASP-mode introduces a cost saving aspect, which thus

impacts again on the perceived advantage for the administrations derived from the

digitization process.


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Fig. 6. R3 Cycle of the increase of savings in average unit costs of production of protocol ASP documents

4. Model construction

The causal map built and analyzed so forth, only constitutes a qualitative description of

the system. The spectrum of possible behaviors due to the peculiar composition of the

structure of the system is surely restricted to main archetypical behavior classes, but an

important element, the complexity and non-linearity of some relationships, may still

lead to an infinite set of possible system behaviors. So, there is a need for testing model

behaviors by testing its inputs and relationships among variables and checking whether

the resulting behaviors are in line with the initial base assumptions and hypotheses (our

initial mental models on the system). In order to perform such evaluations, we need to

make our model quantitative, by transforming it in a Stock & Flow Diagram (SFD), and

defining all variable equations, their initial values and parameters in the model. Then we

will be able to simulate our model in order to test our assumptions, which, again, were:

a percentage of financial availability for ICT public spending is used to improvemarketing with the intent to make aware citizens to use on-line services and

consequently, to use digital services offered by Public Administrations

there is a stark distinction between the PAs workers and citizens: it was notconsidered the any situation in which the two variables coincide

Thus, after our previous analysis by means of causal relationships diagrams (CLD), we

went on by organizing the CLD into five, possibly self-consistent, subsectors, in order

to build a model which according to our initial assumptions ought to be as close to the

real system organization as possible, thus describing both Public Administrations

internal dynamics concerning the digitization process and the evolutions of the

innovation diffusion through the citizenship, as well as analyzing the main relationshipsbetween these two main worlds.

Moreover, we defined which variables in our first qualitative model may be represented

by stocks and their associated flows, and tried to identify which variables in the model

may induce a high sensitivity in the model, that is those variables whose change, even

small, may induce a great change in the behavior of the whole model. Also, by

identifying among them the management leverages, it would be possible to test

strategies by means of policies which aim to improve the systems performances.


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Testing strategies by means of a simulated model could thus help in finding out which

policies may optimize the systems behavior, which ultimately consists in implementing

a decision support system.

Starting from the CLD and our initial assumptions (see par. 3), we incrementally passed

from a CLD where stocks and flows were identified and drawn, to build the Stock &

Flow diagram (SFD) of each sub-sector (thus also checking the incremental behaviors

of the sub-models).

Also, the identification of points of delay in the system is a key element to the

understanding of the overall behavior of the system, since their presence contribute to a

more difficult and complex understanding of cause-effect relationships (generally

speaking, it is usually harder to find out which cause has determined a certain effect

when the cause is far in the past).

After simulating and evaluating the behaviors of each sub-model, we went on with the

construction of a wider model were links among the various sectors were identified and

new feedback loops created (thus in turn generating completely new dynamics).

Just to give an idea of the initial part of this long and complex (thus out of the scope of

this paper) modeling process, we show a SFD concerning a peculiar sector of the main

model and we point out the feedback loops created by the relationships among the

variables in the model.

In Figure 7, we show how the adoption rate of online/digital services, influenced by the

contact rate based on the word-of-mouth effect among users, tend to increase the level

representing the current/actual users of online services, thus in turn increasing the

probability of a successful contact by means of word-of-mouth (that is, the probability

that a potential user gets convinced by an actual user when the latter positively talks to

the former about the services hes using). Also, the adoption rate is modified by theeffects of marketing expenses (thus in turn increasing the possibility that a non-digital

user may incidentally come to know about the new technology and possibly get

interested to it and ultimately adopt it), which is basically a share in total PA provisions

for ICT expenses: this added effect is to raise the adopting users more sensitively.


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Fig. 7. Example of feedback in the model of the use of online services

A feedback loop allows the establishment of a retroaction from the stock of Actual

Users to the adoption rate, which drains from the Potential Users, by means of a

contact ratio (the auxiliary variable in-between, on the path from the stock to the rate

driving its inflow), which is influenced by the relative values of the two stocks. The

increase of Actual Users will in turn influence the number of requests to the

administrations and thus the interaction between administrations and citizens.

Such behavior leads to a greater and better interaction between the public administration

and the citizens, the latter tending to increase over time their competences concerning

the use of those online services offered by the administrations.Overall, as said, the implemented model includes five main processes/sub-sectors:

1. the document flow in PA2. the model of the adoption of ECM and DS by small Public Administrations3. the model of improving the quality of offered services4. the model of interaction between PA and citizens5. the model of the adoption of online services by citizens.


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We will now cover these sub-models in further detail.

In sub-model 1 (documents flow in PA), the main variables are the dimensions of the

archives, the total amount of paper documents, the recording rates (considered both as

the internal recording rate as well as an external recording, or in ASP-mode which is an

external service), the archiving rate and the flow of incoming digital documents, and all

of them were used to quantify the cost savings for the PA. Specifically, by considering

constant values for archiving costs, and by multiplying them by the number of archived

digital documents obtained in the simulations we evidenced a cost saving over time

while paper archives gets reduced in size by digitization and while digital archives

increase in size. In particular, sub-model 1 shows how the digitization of documents

will lead to interesting cost savings for the Public Administration.

The stock representing the amount of paper documents inside the Public Administration

is incremented both by a flow of paper documents produced endogenously to the PA

and by a flow of paper documents originated by the access of citizens to physical

counters in non-digital public offices, in order to use public services. The total amount

of paper documents gets digitalized over time and such a flow, together with the flow of

endogenously produced digital documents increases the stock representing the total

amount of digital documents inside the PA. From here, a percentage of digital

documents gets archived without being first recorded and given a protocol number.

Also, a percentage of those recorded, gets recorded by means of an external service (the

so called, and previously mentioned, ASP-mode). Costs are thus reduced due to the

reduction of physical archives as well as to the savings due to digital documents

recording in ASP-mode (that is, by decreasing the costs for internal recording).


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Fig. 8. The submodel of the document flow in PA

In sub-model 2 (adoption of ECM and DS in Public Administration) we used a Bass

Model, purposely modified for this case, where the rate of adoption is the probability of

interaction between administrations who already use the technology and those who

could potentially use it (see Figure 9).

Fig. 9. The submodel Bass for PEC and FD adoption by administrations


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Sub-model 3 (improving the quality of offered services) represents how, by increasing

the quality delivered by employees of the Public Administration while offering their

services, the customer satisfaction tends to grow in time.

The quality of services increases due to a better ICT training for public employees in

small administration as well as due to better ICT infrastructure (initially represented as

the ratio of the number of PC per 100 employees), and thus ultimately influenced by the

percentage of skilled employees in the public administration. Under this view, the

customer satisfaction increases when citizens perceive an increase in the number of

skilled public employees as well as an increase in the accessibility and usability of

online services (thus including also the important factor of better ICT infrastructures

i.e.: broadband).

Fig. 10. The submodel of service quality

Sub-model 4 (interaction between the Public Administration and citizens) represents

the point of contact of the two worlds. It models the PA on the side of service-offer and

the citizenship on the side of service-demand.

The level representing the intensity of the interaction is fed by two flows, one

representing the offering of online services from the Administrations and the other

representing the demand for online services, both also influenced by the availability of

broadband and internet connectivity. The demand and interaction, by means of ICT


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alphabetization and internet familiarity, also contribute to define the general digital

divide of the population.

Fig. 11 The submodel of interaction between citizens and PA

Last but not least, sub-model 5 (adoption of online services by citizens) is based again

on a Bass Model, modified to represent the mentioned behavior.

As mentioned at the beginning of this paragraph, the adoption rate of online/digital

services, influenced by the contact rate based on the word-of-mouth effect among users,

tend to increase the level representing the current/actual users of online services, thus in

turn increasing the probability of a successful contact by means of word-of-mouth (that

is, the probability that a potential user gets convinced by an actual user when the latter

positively talks to the former about the services hes using). Also, the adoption rate is

modified by the effects of marketing expenses (thus in turn increasing the possibility

that a non-digital user may incidentally come to know about the new technology and

possibly get interested to it and ultimately adopt it), which is basically a share in total

PA provisions for ICT expenses: this added effect is to raise the adopting users more

sensitively. Moreover, we added an outflow representing those users that didnt find

themselves comfortable with the new technology and thus go back to non-digital

services use.


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Fig. 12. The submodel of Bass for online services

5. Policy scenarios & simulation results

As a first test, we have put the model under the so-called condition of simulation

stress, in order to extract realistic and acceptable values for them. The time window

considered for our simulation scenarios is set to five years. After a few warm-up

simulation runs, the values for the input variables were defined as the following ones:

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 who follow ICT courses: 50% -70% Administrations using ECM and DS: 5245 Municipalities Administrations not using ECM and DS: 2856 Municipalities

As said, the starting assumptions used in the description of the model are concerned

with the differentiation of public employees from citizens and with the percentage of


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financial availability for ICT marketing by Public Administrations (representing the

intention to make citizens aware of the need to use online services and consequently to

use services offered by the Public Administration).

The output variables that we chose to examine are:

number of current and potential users of on-line services adoptions by word of mouth and adoptions due to the marketing effect savings in average unit-cost of document production and archiving quality of provided services customer satisfaction increase in Public Administrations using ECM and DS

Thus, with reference to the initial assumptions, we considered three different scenarios:

use of online services by citizens Public Administration cost savings use of ECM and DS

5.1Use of online services by citizens

With reference to our initial assumptions (see par. 3), we first checked for the behavior

of the population using on-line services. The population has been initially sub-divided

into users already using online services and users non using online services.

Fig. 13 The simulation of the use of online services by citizens

By means of a contact rate mostly influenced by the word-of-mouth effect, those

already using such services influence, over time, users who did not use online services,

and the overall behaviour displays a logistic growth/decay for the two related stocks.

Currentusers of

on-line

services

++

Use of on-

line services

Potential users

of on-line

services

Word of mouth

+

+

-


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Figure 13 shows the causal map for the use of online services by citizens and the

simulation results associated to the behaviour of the system, which is in line with the

Bass-model typical behaviour.

Quantitative results are the following:

the number of current users exceeds the number of potential users during thefourth year

at the end of the fifth year of the simulation more than 45% of potential userschose to use the services online

Also, in this scenario, we evidenced how one of our initial assumptions, the marketing

expenditures by the PA meant to sensitize citizens towards the adoption of the use of

online services, is a fundamental aspect of the model. In fact, the marketing effect,

together with the word-of-mouth effect, contributes to the increase of online services

users, and in particular, has the effect to speed up the process.

So, the graph in figure 14 shows the causal map for the use of online services by

citizens, highlighting the influence of the word of mouth effect and the so-called

"marketing effect" which enhances the perception that users have about online services.

Fig. 14 The simulation on adoptions by word of mouth effect and adoptions of marketing effect


the adoption drivers act with a very different magnitudo adoptions due to word of mouth far outweigh the adoptions due to the marketing

effect

Use of on-

line services

Current usersof on-line

services

Potential users

of on-line

services

Word of mouth

Marketing effect for the

PA on-line services

+

++

+

+

-


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5.2Cost Savings

By analyzing the systems behaviors, we were able to infer that the increment in the use

of digital documentation in the Public Administration leads to cost savings in terms of

document production and archiving, partially due to a major use of internal digitization,

as well as of ECM and DS, and partially due to an increase in the use of online services

from the citizens. In fact, while digital documents increase over time, it is possible to

reach economies of scale that have far better ratios than those concerning paper

documents, since archiving and production costs tend to increase far less than in the

paper case, thanks to the use of new technologies, as also the costs of document

recording tend to decrease thanks to the use of the ASP-mode recording.

The graph in figure 15 shows the causal diagram relative to the impact of the size of

digital archives and the number of documents recorded in ASP-mode on the average

unit cost of document production and archiving.

Fig. 15 The simulation on adoptions by word of mouth effect and marketing effect


savings on storage costs are achieved much faster than savings on average unitcosts of production of documents

5.3ECM and DS adoption

We also simulated the outcomes due to the use of ECM and DS by the analyzed

administrations. The system initially took into account the ration of the number of

municipalities already using ECM and DS (2856) to the number of those ones not using

such tools (5245).

-

-

Perceived

benefit to the

PA

Cost savings for

archived

documents

Size of digital

archives

Average unit

costs of

production of

ASP

protocol

documents

inside PA

+

+

-

Digital

documents

stora e costs


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5.4.1 Percentage of marketing expenditure

The first management leverage to be used is the one related to the percentage of

marketing expenditure, with a variation from 5% to 7% of the input value.

Among the most interesting results, the graph in figure 17 shows an increase in the

value of the share of expenditure in ICT by the PA for marketing and, then, in the

awareness of citizens: there is a significant change in the rate of adoption of online

services by users who get informed and interested in using the new services.

Fig. 17 Rate of adoption of online service


By the end of the fifth year, over 48% of potential users have become currentusers compared to previous 45%

The most significant changes in the value of marketing expenditures are related to cost

savings for the Public Administration.

Fig. 18 Savings in average unit costs of production and storage costs with the 1st lever management


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variation of +0.25% savings in average unit cost of production variation of +0.20% savings in storage costs

5.4.2 Percentage of employees who follow ICT courses

The second managerial leverage is introduced by the percentage of employees who

follow courses in ICT, which has been considered to be varying from 50% to 70%.

Among the most interesting results is the one relating to the rate of ECM and DS

adoption; the graph in figure 19 shows how to an increase in the percentage of

employees who follow courses in ICT, corresponds a significant change in the rate of

adoption of certified electronic mail and digital signature.

Fig. 19 Rate of adoption PEC and FD


By the end of the fifth year, over 89% of documents have become currently ECMand DS generated documents, compared to the previous 75%.

By increasing the percentage of employees who follow courses in ICT, there is a

significant change in the rate of the services offered by the Public Administration

which, in this new scenario, thus has more human resources able of delivering such

services.


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Fig. 20 Rate of the services offered by the PA


increase of +28% of services offered on the web compared to the baselinescenario

Even in this case, the most significant effect of the variation in the percentage of

employees who follow courses in ICT is related to cost savings for the Public

Administration.

Fig. 21 Savings in average unit costs of production and storage costs with the 2nd lever management


variation of +1.03% savings in average unit costs of production variation of +0.70% savings of storage costs

5.4.3 Both management levers

The most significant scenarios have emerged, however, by implementing both

management leverages.


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Fig. 22 Level of interaction PA - citizens with both levers management

As an indirect result of the increasing of the variables related to the expenses for

marketing from the government and the percentage of employees who follow courses in

ICT, it can be seen that the interaction between PA and citizens will grow more strongly

than in the baseline scenario.

Quantitativeresultsarethefollowing:

increase of 5.6% compared to the basic documents

Figure 23Flow ofdigital documents arriving with both levers of management

By increasing the interaction between PA and citizens and with the increase of other

variables, such as the adoption of ECM and DS, the flow of digital documents entering

into the Public Administration consequently increases.


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Figure 24Rate of protocols and storage.


percentage change compared to the scenario without implementation of thepolicy of +5.6% documents/month.

Assuming the above management policy, there is an increase, as already mentioned, of

the flow of digital documents on arrival and, consequently, a higher rate of protocol and

a major rate of document filing.

Figure 25 shows as implementing both policies, the Public Administration can save

significant costs.

The results obtained are as follows:

variation of almost +1.3% savings in average unit costs of productionvariation of +0.9% savings of storage costs

Figure 25Savings in average unit costs of production and cost of storage management with both levers.


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We also report results for the savings in storage costs due to the use of digital

documents instead of paper documents and for the savings on the average costs of

production of digital documents due to recording in ASP-mode.

Table 1.Savings in the cost of storage and in average unit costs of production of documents

Time cost of storage () Timeaverage unit costs of

production ()

2009/01/01 0 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

With the use of digital documents, the cost savings for the Public Administration is

growing from year to year.

Table 2.Trends for savings in the cost of storage and in average unit costs of production of documents

Time cost of storage () Time average unit costs ofproduction ()

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

The results in Table 2 were obtained following the implementation of two management

leverages: the percentage of marketing expenditures and the percentage of workers

taking ICT courses. The related variables have been changed, respectively, as explained

above, from 5% to 7% and from 50% to 70%. The simulation shows that, downstream

of the implementation of both policies mentioned, there is a significant increase in the

cost savings to the PA, especially with a variation of almost +1.30% savings in average

unit costs of production and +0.90% savings of storage costs. In conclusion, the model


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created provides a scenario, intended as a key systems model, which considering both

exogenous variables endogenous variables that reconstructs the dynamics of the context

of dematerialization allowing to understand the its functioning and the various

influences. Also, it is a tool for decision support for assumptions of future scenarios or

different combinations of variables.

6. Summary and overview

The analysis aims to be a study of the phenomenon of the dematerialization through the

methodology of System Dynamics. The system chosen to be examined is formed by the

world of the public administration, (the central point for modernization and for the

implementation of e-government), and from the world of citizens, stakeholders and

users administrative innovation. The system was initially studied by a qualitative point

of view through the establishment of causal maps consisting of direct or inverse causal

links between the variables involved. After drafting the causal map and its validation,

the following step was the realization of the associated simulation model. The

fundamental assumption of the description of the model is about the percentage of

funding available for ICT by the PA for the marketing intended as making aware the

citizens about the use of online services and, consequently, about the use of services

offered by the PA on the web. Another hypothesis was to divide the employees from the

citizens. The identification of the "managerial levers" can in some way, guide the

model towards a better situation aiming at the optimization of the system through

analysis and through the use of a support decision software.

The study revealed how the variables on the percentage of the expenses for the

marketing by the government, and the percentage of workers taking ICT courses

represent the managerial levers. Indeed, the simulations obtained by changing those datashowed significant trends in the related graphs. The simulations led to define a

significant savings for the Public Administration matching against an investment in at

least one of the managerial levers used. In a context in which it is clear the situation of

digital divide in Italy compared to other European countries, it is needed to invest in

marketing intended as making people aware of the online services provided by public

administration, and beside that investing also in human resources to employ in the

public structure in order to increasingly improve and optimize the internal work.


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7. Conclusions and future research

The study carried out revealed that the dematerialisation is a major challenge for the

benefits that the government can realize. Although it represents only a small

improvement that can be implemented in the reengineering of administrative processes,

it is a goal that could be achieved quickly. Dematerialisation, for its cross-cutting is

present in many aspects of the public system and that is why it is necessary to operate

with even more significant policy aimed at raising awareness of the use of the public

computerization.

The number of documents inside the Public Administration is increasing, either because

they are produced internally or because of relations with the users. Beside that, in the

public administration there is a huge amount of documents produced and printed in

many copies producing more and more paperwork. This issue involves questions of

document management and storage that, in turn, implies considerable criticism related

to both economics and logistic systems.

The introduction of a fully computerized document management system can lead to

significant improvements inside the Public Administration, with the computerization of

administrative processes, in fact, you can get great savings both in time and in economic

terms. We have seen how, the study revealed that there are at least two variables on

which the public administration should "leverage" to optimize its internal structure, and

consequently derive all the possible benefits.

First, it is clear as the public awareness plays a key role in the scheme. In the E-Gov

Plan 2012 it can be seen that among the many goals there is an innovation in terms of

services for citizens coming to the "customer satisfaction". To achieve this, it is

necessary that citizens use the online services and, in particular, the services offered bythe Public Administration. Regarding this issue, the Plan E-Gov 2012 highlights how

the digital divide between Italy and other European countries is alarming. This is the

reason for which the Public Administration should invest in this crucial aspect to make

the citizens aware towards the use of the services provided online.

Secondly, the inclusion of employees with ICT skills inside the Public Administration

emerged as another innovation key.


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In particular it results that the change in workers taking ICT courses is a key variable for

the sensitivity of the system, in fact, introducing workers able to " digitize" leads to

significant savings and, consequently, significant benefits for Public Administration.

The greater is the presence of staff able to contribute building a digitized public

administration and the greater, therefore, is the satisfaction of the users who use public

services delivered via the web. Furthermore, the internal document management, thanks

to qualified personnel, is consequently optimized. It is worth to underline that the

benefits from the process of dematerialisation of paper material within the Public

Administration are obtained mainly for large quantities of documents. For small

amounts of material to be scanned, the investments made in infrastructure necessary for

the process of dematerialisation cant be recovered.

In a final analysis, it all once more come down to a very simple concept: the Break Even

Point must be met to recover the investment and, consequently, start deriving the

benefits of innovation.

Dematerialisation thus arises as a path of innovation of government, through a process

of efficiency and transparency, allowing big savings in time and in direct and indirect

costs in terms of efficiency of administration.

Also, thanks to our System Dynamics model, as an approach to the analysis conducted,

it was possible on one hand to understand how the reality influences the dynamics of

today's management of dematerialization and on the other hand to understand how the

current decisions of implicit type may characterize the future development of Public

Administration. It is also essential an approach based on the simulation in order to

model the reality and, consequently, react in advance.

To meet the challenge and to change the way we think it is necessary to innovate;

scientific and technological essence of innovation is especially conceptual and it isnecessary, more and more, to look beyond our own horizons.

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7. CNIPADal CNIPA un servizio reale: il protocollo in ASP per la PA. Quadernino n.6.8. CNIPA:Il Codice dellAmministrazione Digitale.9. CNIPA:La dematerializzazione della documentazione amministrativa. I Quaderni n.24.10.CNIPA: La dematerializzazione della documentazione amministrativa Libro bianco del

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15.Morecroft, J.D.W., Sterman, J.: Modeling for learning organization. Productivity Press,Oregon (2000).

16.Ministero per la pubblica amministrazione e l'innovazione: Piano E-gov 2012.17.Radzicki, M.J.:Foundation of system dynamics modeling. Office of Policy and International

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18.Ridolfi, P.: Dematerializzazione e Semplificazione dei Procedimenti: lInnovazionePossibile. In: Dal protocollo alla conservazione sostitutiva: la gestione efficace di contenutie processi. Torino, (2007).

19.Ridolfi, P.:Il Codice della Amministrazione Digitale.20.Ridolfi, P.:La Dematerializzazione dei documenti: idee per un percorso.21.Senge, P.: The Fifth Discipline. Bantam Doubleday Dell Publishing Group, New York

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