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Business intelligence: Customers and the public sector

Who are the real customers of the government?

This article originally appeared on the BeyeNETWORK

Does the government have customers? It might seem a silly question to ask, yet it’s at the heart of a lot of what business intelligence should be focusing on in the public sector. The answer, of course, is yes. But who, then, are the government’s customers? It is very easy to say the citizen, or the taxpayer, or Congress given their representational role in our democracy. And yet, these are the superficial answers that don’t get down to the level that is necessary to start positioning our systems to yield the business intelligence that will best serve “we the people,” the real customers of government.

The dictionary explains that a customer is “a person one has to deal with.” Going further, and more in line with our every day personal experience, a customer is “a person who buys goods or services from a store or business.”

If we follow this line of thinking and ask again whether the government has customers, we should be able to answer the question by also describing what product or service these customers are “buying” from the government. I’ve put the word “buying” in quotes for a reason. This will become more evident as we go further into this article.

 First of all, let me suggest a typology or categorization of government customers. According to my analysis, there are at least six distinct types of public sector customers. They are:

  1. Customers that “buy” real goods and services;
  2. Customers that “buy” licenses, permits, authorizations, certifications, etc.;
  3. Customers that “buy” benefits from the government;
  4. Customers that “buy” jobs in the government;
  5. Customers that “buy” compliance; and
  6. Customers that “buy” internal services.

The first category includes anyone that actually buys real goods and services from a government agency. Examples of this are people or organizations that acquire Sacagawea dollars or a commemorative coin from the U.S. Mint (Department of the Treasury), buy surplus goods from the Army or purchase stamps from the U.S. Postal Service. The transaction implies that you as a customer pay real money in order to obtain a good or service that you want.

The second category covers a broad range of individuals and organizations that must acquire licenses or permits from the public sector at the federal, state or local levels. Examples of this are drivers that need licenses from state motor vehicle administrations, pilots that must be certified by the Federal Aviation Administration, contractors needing building permits, hunters and fishermen needing licenses or ordinary travelers requiring passports from the Department of State. In this transaction, a person or organization receives an authorization to engage in some activity that has been statutorily regulated in exchange for providing information, performing a possible skills test and frequently paying a fee to cover the government’s administrative costs.

The third group encompasses anyone who receives “benefits” from the government. What exactly are “benefits?” It includes benefits—anyone receiving food stamps at a local USDA distribution center, a neighborhood clinic receiving a cash grant from the Department of Health and Human Services, a low-income individual obtaining a rent subsidy from the Department of Housing and Urban Development (HUD) under Section 508 of the  housing statute, a bed-ridden senior citizen receiving a Medicare payment for home care services or the parents of two third graders in an inner city neighborhood obtaining an education voucher. The transaction is that an individual receives a real “benefit” in money or in kind, in exchange for either providing some service that the government desires or for being “eligible” under some criteria usually established under the law.

The fourth category is a bit fuzzier. This is one where the customer, or prospect, tends to be an individual as a candidate for recruitment by the government. These are potential customers that “buy” into the government as a workplace. They are “buying” jobs from the government. The most obvious government organizations selling jobs—and themselves as a good place to work in—are the military. Hence the frequent ads from the Army (“An Army of One”) or the Marines (“A Few Good Men”) during NFL football games, or their ever-present recruiters at shopping malls or county fairs. The transaction is that in exchange for accepting an offer of employment from a government organization you receive certain incentives, aside from your normal compensation. These transactions are similar to the incentives businesses often provide to obtain new customers or sign-up bonuses for new employees.

Then there is that fifth category of government customers that “buy” compliance or piece of mind. The government entities “selling” here often have monopoly power over the goods or service being provided. Examples are tax submissions and payments to the Internal Revenue Service or their state counterparts; or participating in jury duty as required by the different jurisdictions where we reside.

The last group is constituted by internal customers that “buy” goods or services from their own agencies in order to do their jobs. Examples of this are individuals being served by help desks, logistics shops, a motor pool or administrative services. Information technology is almost always one of these services. The transaction here is similar to internal exchanges in any organization. There are costs involved to the “seller” that must be paid either directly by the “buyer” through a chargeback scheme or indirectly through other budgetary accounting allocations.

The importance of having a typology or categorization of government customers relates to the fact that in the private sector it is usually a small percentage of customers that provide a business with the majority of its profit. Hence knowing who your “good” customers are is very important to business. The numbers are very telling. Consider the implications reported in a 1998 CIO Enterprise article that quotes the fact that one-half of 1 percent of rental car customers rent a quarter of all cars; and only 27 percent of Midwest bank customers account for 100 percent of their profit. In effect the emergence of customer relationship management (CRM) is tied directly to the need for obtaining these insights in order to develop the most sensible strategies to deal with good customers. Business intelligence, of course, is the principal tool for this analysis and discovery.

Are there similar statistics involved in the public sector? We believe so. Hence, it is critical to know who the “good” customers are for Medicare, the FBI, the Veterans Health Administration, the Nuclear Regulatory Commission or the IRS.

It is essential in the private as well as the public sector to know exactly who your customers are; what they are buying from you; whether they are satisfied or not; how you are pricing your product and many more relevant questions. Ultimately it is about knowing who your good customers are in order to treat them accordingly. The definition of what a “good” customer is may vary from the private to the public sector, but it will also vary from one government agency to another. The only way to discover and understand these dynamics is through business intelligence.

Editor's note: More government articles, resources, news and events are available in the Business Intelligence Network's Government Channel. Be sure to visit today!

Dr. Barquin is the President of Barquin International, a consulting firm, since 1994. He specializes in developing information systems strategies, particularly data warehousing, customer relationship management, business intelligence and knowledge management, for public and private sector enterprises. He has consulted for the U.S. Military, many government agencies and international governments and corporations.

Dr. Barquin is a member of the E-Gov (Electronic Government) Advisory Board, and chair of its knowledge management conference series; member of the Digital Government Institute Advisory Board; and has been the Program Chair for E-Government and Knowledge Management programs at the Brookings Institution. He was also the co-founder and first president of The Data Warehousing Institute, and president of the Computer Ethics Institute. His PhD is from MIT. Dr. Barquin can be reached at

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