Economic benefits in using electronic data processing in the administration and services in the Finnish cities

The objective of this study was to find whether the use of IT has given any economical advantage in municipal administration and service production in Finland. The study was concentrated on the development of personnel costs that, on the one hand, is the largest cost group in municipal administration and, on the other hand, may bring the largest economic benefits through the use of IT. The research material consisted of a wide range of reports on IT investments and use, and was collected from Finnish cities during 1980s. Financial investment in each city was proportioned to the operational costs and the number of users was proportioned to all personnel. Averages and growth rates for the whole of the 1980s were calculated using the material. Information about the status of cross section year 1990 was also used. Annual change indices were calculated for several years to describe the development of personnel costs in each city. The amount of costs in marks were proportioned both to the total amount of operation costs and population of the cities. The economic collapse that took place in the turn of 1980s and 1990s allowed the change indices to be divided into two natural groups: 1987-1990 and 1990-1992. On the basis of the tests it can be seen that there is no close connection between financial investments and growth of personnel costs. However, a clear connection exists between the extent of the use of IT and the reduction in the growth rate of personnel costs. The bigger the share of personnel with the opportunity to use IT, the more it is possible to reduce the growth of personnel costs.