AI in its different forms, both predictive and generative, improves service delivery internally across government institutions as well as externally with constituents. Internally, AI enhances decision-making and enables governments to anticipate needs and allocate resources more effectively. Externally, AI encourages citizen engagement by making it more interactive and personalized. AI insights guide policy development and ensure leaders create and assess more data-driven options.
Forrester research found that 35% of government and public sector decision-makers reported that their organization is planning to implement AI infrastructure in the next 12 months.1 These decision-makers also reported the AI use cases that were considered important for their organization in the next 12 months, including:
Microsoft commissioned Forrester Consulting to interview 20 representatives at 16 organizations and conduct a Total Economic Impact™ (TEI) study to better understand the benefits, costs, and risks associated with the investment in Microsoft Azure OpenAI Service. 2 In the full TEI study, Forrester found that an industry-agnostic composite organization would see risk-adjusted financial benefits ranging between $45.9 million and $197.4 million over three years.
Projected efficiency gain in content generation by Year 3*
10% to 60%
*For the composite organization presented in the full TEI study
This abstract will focus on the government sector’s use of Microsoft Azure OpenAI Service and its value to their organizations.
As part of the broader TEI study, Forrester interviewed representatives with direct experience implementing Azure OpenAI Service at government agencies:
Prior to using Microsoft Azure OpenAI Service, the interviewees from government organizations attempted to service high volumes of constituents and documents with internally developed or human-powered solutions. As a result, technology gaps led to operational inefficiencies and inconsistent data analysis that impacted the internal employees’ abilities to service the public effectively.
Interviewees noted Microsoft Azure OpenAI Service enabled their public sector organizations to develop custom AI applications that use Microsoft’s underlying AI infrastructure. This strategy allowed AI to impact as many applications, business processes, and employees as possible while still being accessible and manageable for AI developers. The interviewees’ government organizations used Azure OpenAI Service to build AI solutions to meet their specific needs:
Projected improvement in chatbot resolution rate by Year 3*
10% to 50%
*For the composite organization presented in the full TEI study
The interviewees’ organizations adopted Azure OpenAI Service to overcome various challenges in their legacy environments, including:
The results of the investment for the interviewees’ organizations include:
Optimized spend. Interviewees at government organizations cited examples of how their use of Microsoft Azure OpenAI Service proved critical in reducing operational expenses.
Azure OpenAI Service enabled the interviewees’ organizations to redistribute spending to focus on higher-value activities. The AI lead supporting government agencies noted: “Our government has the mandate to improve access to [public service]. Right now, we have people on the ground whose job it is to disseminate information about specific [government programs]. These people are doing this work voluntarily, not dedicated to this role. By having chatbots on people’s phones, we probably only need 10% of the effort, which means these people can return to their main responsibilities.”
Increased operational efficiencies. Interviewees noted that Azure OpenAI Service expedited internal processes and automated certain tasks to provide operational efficiencies in a few different areas including providing support to the general public and constituents.
“Depending on the case, we are saving as much as 80% of our time by having the Azure OpenAI Service review our documents.”
AI team member, government agency
Improved service delivery. Interviewees noted that ultimately, refocusing organizational efforts to reduce administrative burdens and providing operational efficiencies resulted in enhanced service delivery in terms of both timelines and quality.
“[Our use of Azure OpenAI Service] allows us to ensure that public money is spent correctly. This is important because this means we can use that money for other [public good].”
AI team member, government agency
For more information, download the full study: “The Projected Total Economic Impact™ Of Azure OpenAI Service In Reinventing Customer And Constituent Engagement,” a commissioned study conducted by Forrester Consulting on behalf of Microsoft, July 2024.
While the value story above is based on two interviews, Forrester interviewed 20 total representatives at 16 organizations with experience using Microsoft Azure OpenAI Service and combined the results into a three-year financial analysis for a composite organization. Projected quantified benefits include:
∙Better engagement with prospective service users driven by 10% to 20% increase in top of funnel prospects and 20% to 40% improvement in conversion rate.
∙Better engagement with current and existing service users driven by 20% to 30% reduction in churn due to better user experience.
∙Content generation time savings of 30% to 60%.
∙Improved deflection rates of 20% to 50% in contact center calls requiring a human support agent.
Readers should be aware of the following:
This study is commissioned by Microsoft and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in Microsoft Azure OpenAI Service.
Microsoft reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
Microsoft provided the customer names for the interviews but did not participate in the interviews.
1 Source: The State of AI In The Public Sector, 2023, Forrester Research, Inc., June 3, 2024.
Forrester provides independent and objective research-based consulting to help leaders deliver key transformation outcomes. Fueled by our customer-obsessed research, Forrester’s seasoned consultants partner with leaders to execute on their priorities using a unique engagement model that tailors to diverse needs and ensures lasting impact. For more information, visit forrester.com/consulting.
© Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies.
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