Innovation and changeDigital TransformationGovernment digital transformation: saving costs through effective digital change

Government digital transformation: saving costs through effective digital change

Government digital transformation is helping the public sector to cut costs while delivering meaningful change, transforming the relationship between citizen and state

Effective digital transformation has become a hot topic within government in recent years, hailed as a means of improving cost efficiencies, streamlining internal processes and creating smoother interactions between different departments. Government digital transformation is also seen as a way of creating a more ‘citizen-centric’, responsive model of democracy, one that prioritises levels of service and emphasises the satisfaction of constituents in their day-to-day dealings with the state.

The adoption and implementation of innovative digital practices – many of which have already proved successful within the private sector – also presents an opportunity to generate data that offers greater insights about how people use public sector services. These insights can then be used to improve the services themselves in a virtuous circle that in turn leads to greater cost efficiencies.

The department behind the UK government’s digital push is Government Digital Service (GDS). Launched in 2011, it has spearheaded the Government Transformation Strategy – which, after a series of delays, was not launched in earnest until 2017 – with the goal of making more than 100 services available digitally by 2020, with a projected user base of 25 million people. One of the main challenges facing the Government Transformation Strategy is a shortage of digital technology skills within government itself. To address this, 3,000 civil servants will be trained through the GDS digital academy each year.

As part of its remit to build greater cost efficiencies, GDS is keen to adopt competitive, cost-saving practices more commonly seen in the private sector than in government, favouring “shorter, more flexible relationships with a wider variety of suppliers”. There are also cost-saving opportunities in re-procurement and insourcing. For example, the DVLA was quoted a fee of £26m by one prospective supplier for two projects – it decided to complete the projects in-house instead, at a total cost of less than £5m. Addressing the aforementioned skills shortage is inevitably a crucial component in replicating these kinds of savings elsewhere. (It should be noted that the GDS is not without its critics. A March 2017 National Audit Office report found that GDS’ major transformation programmes “have had only mixed success” and that there are “widespread views across government that GDS has struggled to adapt to its changing role”.)

The size and reach of the government makes digital transformation an enormous task, but equally enormous are the benefits that can be gained by implementing it effectively. The 2016-2020 operating budget for GDS is £455m, and it has set an ambitious target of saving £3.5bn by 2020 through digital transformation. The Institute for Government estimates that initiatives such as, for example, a single online birth registry platform that links efficiently with the Child Benefit Office and the NHS could result in savings of between £1.3bn and £2bn by 2020. Globally, McKinsey predicts that the digital transformation of governments could generate more than $1trn annually.

Drivers of government digital transformation

There are several factors behind the push for government digital transformation. From a user perspective, consumers have become accustomed to being able to order a takeaway, book a holiday or buy car insurance online with ease and in a matter of seconds. It is inevitable that as citizens, those same people expect a similarly seamless and convenient experience from their interactions with public sector technology, whether they are paying taxes, applying for benefits or renewing a passport. Four out of five adults in the UK make use of the internet every day, with two thirds having used the internet to complete online transactions with the government. The increasing ubiquity of digital technology means that number is only likely to rise, and there is an opportunity in harnessing the economies of scale that will result from this increased uptake in the use of public sector technology platforms.

In economic terms, the drive towards greater efficiencies and financial savings across all parts of the public sector has been one of the defining characteristics of the government’s focus on austerity. Using public sector technology to reduce costs and streamline unwieldy operating practices is a central pillar of that strategy. And more broadly, one of the defining characteristics of the ‘information age’ is a shift towards the openness of data and widespread, instantaneous access to the instruments of democracy through social media and online petitions. This means that those in authority are more accountable to the electorate than ever before. Using technology to, in the government’s own words, “transform the relationship between citizen and state”, is a direct response to this. As Ben Gummer MP put it when launching the Government Transformation Strategy last year, “people are expressing their wish for a more responsive state at the ballot box. It is a call that demands a reply; indeed, if we wish modern democracy to flourish, it is imperative we respond.”

Digital transformation in action

The sprawling HMRC is one government department that has put digital transformation at the heart of its operations. Its focus has been to move away from siloed legacy systems that were developed to implement transactions in batches, to an approach that makes it possible to process huge swathes of data in real time. According to Kristian Miller, HMRC’s head of IT strategy, this enables the department to “gain more customer insight to help us maximise compliance, increase efficiency and improve the experience of our customers”.

HMRC has also made steps in implementing the possibilities offered by robotic process automation (RPA). Not only does automation improve the speed, accuracy and efficiency of HMRC’s services, it also frees up civil servants within the department to devote more time to customer-facing interactions, leading to increased satisfaction among employees and customers alike.

Another department at the vanguard of public sector technology is the DVLA, which has embraced the potential represented by the Internet of Things. In 2017 it launched its first Alexa skill on the Amazon store, which enables users to check when their road tax and MOT are due by reciting their vehicle registration number into the speech-recognition device. So far it has been used by more than 10,000 drivers to check the status of more than 60,000 vehicles. The Alexa skill was developed by the DVLA in-house, as have all of the department’s IT functions since 2015, which has lowered IT costs by around 40%.

Similarly, successful have been online self-service platforms launched across the public sector, allowing users to complete tasks as varied as applying for a Carer’s Allowance, registering for Lasting Power of Attorney, booking a prison visit and registering to vote. The Crown Commercial Service (CCS) estimates that self-service platforms such as these resulted in savings of £7.3m in their first two years of operation (2013-2014). The GOV.UK Verify system, an automated self-service platform which enables users to prove their identity when interacting with government departments online, has saved the taxpayer £36.5m according to the CCS. Future goals for the Government Transformation Strategy include 90% of passport applications being made online by 2020, and for the 2021 National Census to receive 75% of its responses online. Savings in administrative and operational costs will inevitably result if these targets are met.

In a speech delivered at the LSE in January, Civil Service chief John Manzoni highlighted the extent to which digital transformation is having a profound effect on the way the Civil Service operates, with radical knock-on effects across all branches of government. “We’re making fundamental changes through innovative services such as Universal Credit and the Personal Tax Account, where the end-to-end process of delivery is being transformed, as well as the interface with the customer,” Manzoni said. “Or the biggest courts reform programme in the world, introducing virtual hearings and digitising the entire end-to-end process.”

These kinds of change are leading to greater cost efficiencies across the Civil Service, Manzoni believes: “In all of these cases, changes beneath the surface show themselves in changes to physical locations: fewer, more efficient courtrooms, fewer tax offices, and fewer, bigger, service centres hosting the back offices.”

Smart cities, sensors and savings

Looking beyond the UK, there are key lessons in how digital transformation is being implemented by governments elsewhere in effective and imaginative ways. Singapore, for example, has become a world leader in the adoption of smart technologies, from GPS-coordinated public transport and health consultations delivered by video conferencing, to an app that provides an overview of municipal services such as street-cleaning.

These kinds of technology are already being put to use closer to home. The £16m MK:Smart project, launched by Milton Keynes Council in 2013, was a three-year initiative that aimed to investigate how a greater understanding of data aggregated from environmental sensors and public- and private-sector sources could improve services in the areas of transport, energy and water. Although the project has come to an end, the insights gained have formed the foundation of ongoing projects such as the MK Health Map, which provides an overview of the state of residents’ health in different parts of the city; the MK Insight platform, “a one-stop-shop for sharing documents, information and data” between the council and constituents; and MotionMap, a smartphone app which uses data from sensors placed around the city to provide real-time information about local public transport and traffic.

It is clear that the most cost-effective approach to government digital transformation will be one that combines a willingness to embrace bold innovation – of the kind demonstrated by the MK:Smart project – with a somewhat more prosaic focus on the everyday. Whilst there are real savings to be made from inventive ideas such as virtual court hearings or Internet of Things-based self-service platforms such as Alexa, there are also significant efficiencies to be gained from more modest, less eye-catching initiatives. The electronic publication of official papers by the House of Commons, for example, helped spending on printing fall from £11.8m in 2011/12 to £7.7m in 2014/15.

Crucially, government digital transformation should be seen not just as a means of improving cost efficiencies with the side-benefit of making things more convenient for the user; the two outcomes are integral to one another. In order for it to be truly effective, digital transformation must take an approach that prioritises interoperability and collaboration, not just within departments and between different government agencies, but between the citizen and the state as well.

Greater, more meaningful efficiencies will only emerge from harnessing technology to better understand and address people’s needs – digital transformation of the government is, after all, just one component in the digital transformation of society itself.

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