Part 2: How constraints shape efficiency
This is a two-part series taking a closer look at some of the opportunities and challenges of digitizing manual processes, using DOGE’s recommendation to streamline the US federal government’s retirement process as a practical example. In Part 1, we considered the difficulties previous administrations have faced trying to digitize the retirement process and why this time might be different. In Part 2, we explore some of the challenges that may be encountered when digitizing this type of process. We look beyond the technology to explore the organisational constraints that shape existing processes—and why addressing them is often the key to improving efficiency.
The Efficiency Trap
There’s a trap that regularly catches digitization and other efficiency-driving programs. An organisation spots what looks like obvious inefficiencies – in this case, paper forms, manual processes, filing cabinets full of documents – and launches a program to fix it. The business case looks clean. The timeline looks reasonable.
The solution itself is perfectly deliverable – the requirements are well within the system specifications. The business supports the change—they’ve spent years frustrated by the limitations of the existing process. Yet, when it comes time to execute, all manner of issues, challenges and roadblocks arise.
What’s going on? Often those old “inefficient” processes aren’t as inefficient as they first appear. In fact, existing processes have usually been optimised, over time, around the existing organisational constraints. Those constraints aren’t always well understood, in fact they are frequently hidden and hard to map.
Here’s an important thing to remember – realising those efficiency gains in your business usually require you to fix, or appropriately address the underlying system constraints.
No doubt, given the historical difficulties the US federal government’s employee retirement process has a range of system constraints. From the outside, four (and a bit) constraints jump out at me. Let’s take a closer look.
Challenge 1: The document storage contract trap
The first constraint – that really needs to be worked through at the beginning of the program – is the existing document storage contract. These contracts are notoriously messy: long terms, hefty break fees, and per-document handling charges for moving or transferring records. The break costs alone can negate the cost efficiencies you’re seeking to realise. I’ve seen contracts where exiting early still requires paying out the full remaining term.
Getting this right requires careful planning of how, and when, you exit existing arrangements, and what storage looks like on the other side. It may not be as simple as making everything digital. For example, regulatory requirements may mean some hard copy records must be retained regardless or you may determine not to digitize the existing archive. Either scenario would mean, you’re not replacing one storage process with another – you’re managing two.
It’s no coincidence that the document storage industry is actively positioning to profit from exactly this kind of transition.
Challenge 2: The form is more than a form
Digitising a form sounds easy. Sometimes it is – a basic intake form feeding into a CRM can be a genuine quick win. The federal retirement form is not that sort of a form. What appears to be an outdated paper form is actually the front end of a complex, multi-agency process for collecting, validating and reconciling evidence.
Completing a retirement application requires information from several different sources. Employees provide personal details and supporting documentation. The agency they work for contributes employment information. Additional evidence may come from historical records or third-party documents that exist only in paper form. Finally, the Office of Personnel Management (OPM) must cross-reference all of this against its own records before a claim can be assessed.
This is where the real complexity lies. The challenge isn’t designing a digital interface—it’s creating a process that seamlessly collects information that sits across multiple organisations, systems and formats. Agencies maintain records differently, some of the supporting information exists outside structured databases, and critical information such as identity, service history and entitlements must be verified across multiple sources. A digital form can streamline data input, but collecting supporting information and evidentiary data that sits across multiple organisations and databases is a much more complicated design.
Each design decision has implications for cost, delivery complexity and user experience. Choices made early in the program can shape the architecture of the entire solution, and reversing them later is often expensive. That’s why effective digitisation starts with understanding how the process actually works in practice. User research—engaging with employees, agency staff and OPM case workers—isn’t simply a nice-to-have; it’s essential to designing a process that can be successfully digitised.
The “and a bit” – incomplete data collection
One of the biggest bottlenecks in the existing process is chasing outstanding information. This makes sense given we are dealing with a complex data collection process. Workers can reportedly spend months pursuing a single missing agency signature. As part of efforts to streamline and improve the data collection process, the program will also need to consider how to address scenarios dealing with incomplete information. Done well, the knowledge the program builds about the process can streamline collection and non-compliance processes. Handled in isolation, there’s a risk the process becomes more inefficient.
Challenge 3: Bureaucratic complexity
It’s tempting, in any transformation program, to treat existing bureaucratic rules as noise – legacy overhead to be swept away – to “start from scratch”. This is a mistake.
Those rules have been put in place for a reason, before you can dismiss them, you need to understand what is driving them. Failure to do so will create all sorts of headaches (and costs) later down the track.
In this case, the key rules appear to govern two things: what information and evidence is required to establish entitlement to benefits (covered in above), and how benefits are calculated.
The benefits calculation is genuinely complex. Federal retirement rules are the product of decades of legislation, amendments, and agency-specific provisions. Under the current system, calculations can take between one hour and two days. Getting this right digitally requires rigorous analysis, extensive edge-case testing, and – critically – a design that can absorb future rule changes without needing to be rebuilt from scratch.
Challenge 4: The legacy archive problem
We touched on this problem with the storage contract. A major challenge with the digitization process is the archive itself. There are 2 related problems here:
- Does the new process require digitization of hard copy records and if so, how will that be achieved? This will be further complicated if those hard copy records must be maintained after digitization.
- What should be done with the existing archive?
We know that much of the database has been digitised. As of 2014, approximately 85% of applications could be processed using already-digitized records. No doubt, the percentage has increased in the subsequent period. The remaining applications require physical retrieval from the OPM physical archive.
We also know digitizing the archive is expensive. In 2019, OPM ran out of funding to digitize the remaining hard copy archive.
Figuring out the appropriate solution here – will likely be a pragmatic decision. Based on both the newly designed form and information collection process and the costs associated with digitizing the remaining database compared to the ongoing costs of storage. Just like back in 2019, it is possible that the perfect “digitization” solution is not the pragmatic one.
The real lesson
Back in early 2025 DOGE raised the prospect of addressing inefficiencies with the federal government employee retirement process. Four decades of failed attempts and more than $100 million spent suggest the retirement process isn’t fundamentally a technology problem. It’s a systems problem.
Successful digitisation isn’t about replacing paper with software. It’s about understanding the constraints that shaped the existing process—and deciding which of those constraints need to be redesigned, which need to be managed, and which simply have to be accepted.
The organisations that succeed don’t ignore complexity. They make it visible, work through it deliberately, and build solutions around the realities of how the business actually operates.
Published by Aidan McShane on 12th July 2026