Towards digital government: to reform or transform?

Andrew Montgomery, Partner, BearingPoint

To reform or to transform? That is the question that must be considered by those tasked with modernising government administrations and the services they deliver.
1. Reform: “make changes in something, especially an institution or practice, in order to improve it.”
2. Transform: “make a marked change in the form, nature or appearance of.”

The fourth industrial revolution that we are now part of has provided new opportunities for organisations to leverage digital technologies and reinvent their business models. Companies like AirBnB, Uber and Amazon have built their success on the ability to deliver services based on new, digitally-enabled platform models. Largely free from the baggage of legacy organisation structures, systems and ways of working, they have quickly established highly successful businesses in a competitive market.

Within the public sector, it is well understood that the drivers for change are different. But objectives such as service improvement, operational effectiveness and organisational agility should be common for any high-performing company or government administration. Citizens’ expectations of public services are higher based on their interactions with other organisations across the economy. So the question is whether government administrations should continue to attempt to reform the way things have always been done or take a transformational approach and look to build something new.

What is this digital revolution all about?

The world has not suddenly gone digital. That happened in the 70s and 80s when computers arrived in our offices and homes. Calculators replaced pens and paper, digital watches replaced analogue ones and people bought CDs instead of vinyl. Data has been stored and processed digitally for decades. As has happened in all previous industrial revolutions, advances and innovations in technology have replaced and automated manual ways of doing things.
However, we all recognise the increased impact and importance of technology on our daily lives in the last few decades, especially:

• the power of technology, including mobile capability, is much greater and the pace of technological change significantly faster;

• there are new online pathways and channels through which we can all interact, offering much greater personalisation of services;

• the number of providers of information, the types of content and associated volumes have all increased exponentially;

• there are new players in the market, offering new value added services to consumers and businesses; and

• there are more debates and implications for the privacy and security of data.

Advancements in the areas of social, mobile, analytics and cloud technologies have clearly enabled new business models and ways of working. But while the term ‘digital’ is now liberally used to describe a very broad range of technologies and processes, it could be argued that in many cases it is just a rebranding of what has gone before: online services, eGovernment, web presence etc. Cloud as a model for consuming ICT services is not that different from the way individual departments in a large organisation originally used and were charged for accessing their company’s mainframe, for example.

What is the real difference then?

The fundamental difference is that the principles upon which companies and government administrations were built have changed dramatically. Traditionally, organisations were built from the ground up and were built for stability and rigidity. It was about acquiring and owning your own assets and delivering your own products and services to your own customers, controlling all aspects of a linear supply chain and implementing an enterprise resource planning system to link all your data, processes and transactions tightly together.

In today’s digital economy, these traditional principles do not need to be followed to build a successful and effective organisation. Companies like AirBnB, Uber and Amazon recognised this and the associated opportunity to develop new business models based on new principles – building from the ‘sky (cloud) down’. They designed their business for agility and flexibility from the start and focussed on generating value from sources external to their organisation. They provide outcomes and experiences over services and products and facilitate interactions across a network of stakeholders, with the customer at the centre.

These new business models are developing at different rates in different industries. The drivers for government organisations to move in this direction are not as strong as in other, faster moving sectors. But these models are starting to be considered and applied to deliver public services in areas such health, transportation, utilities and regulation, for example. It is also interesting to consider what an overall business model for the public service would look like if it had developed as a digitally native organisation – what could be termed ‘Government 4.0’ – and where ‘platform’ approaches could be applied.

What does that mean for the modernisation of current government administrations?

Making significant structural change to the way the public service is structured and delivers services should be considered in three waves of progress. These have different objectives, but all reflect the opportunity to take advantage of both new digital technologies and digital principles for improvement and modernisation.


1. Operational efficiency:

The focus here is internal to the organisation. The core business model does not change but the emphasis is on reforming the way things are done: improving processes, introducing new ways of working, reducing silos, eliminating waste and implementing new systems. Technology is used to increase productivity, automate manual processes and analyse data to drive operational efficiencies. A culture of continuous improvement becomes business as usual. The Financial Services Ombudsman for example has successfully adopted this approach. They are currently half way through a multi-year transformation programme to implement the recommendations from the strategic and operational review conducted by BearingPoint. The process and operational changes implemented to date have enabled them to provide a faster, more efficient and effective service to both consumers and providers. Procedural changes which focused on the needs of service users have resulted in tangible improvements to overall service user satisfaction levels and in many cases, the timelines for resolving disputes.

2. Digitalisation of customer interfaces:

The focus moves externally to the organisation. The core business model may not fundamentally change however interactions with customers – be they citizens or businesses – are transformed and new channels are introduced. The emphasis is on service improvement, with the customer at the centre and providing a consistent experience across all channels. The Passport Office’s recent launch of its online passport renewals service, supported by BearingPoint, is an excellent example.

3. Reinvention of business models and value chains:

The focus is on implementing new business models, either in part or for all of the organisation, or from a cross-government perspective. The emphasis is on real transformation – that is on structuring government administrations and delivering existing and new services in fundamentally different ways. Platform and digital business model principles are applied. Examples include smart cities, connected cars, shared ICT and eHealth.

In the private sector, the high performing organisations are those that have successfully built new businesses on these new business models and value chains. Others in their industries are realising that simply reforming their existing businesses will not work or be done quickly enough. They are establishing new, transformed businesses to compete and succeed.

Reform or transform? Both.

Government needs to strike a balance – reform can be a long and frustrating experience for all concerned when it just delivers incremental change and marginal improvement, and momentum can be lost. When a step change is required in the way a government administration is structured and delivers its services, then a transformational approach based on reinventing the business model and value chain is needed.

Experience from a number of industry sectors is showing that using platform business models, digital principles and technologies is enabling organisations to achieve these transformational outcomes much quicker than ever before.

BearingPoint’s capability and experience in public sector transformation in Ireland includes advising on and delivering major business and technology change projects for a wide range of government departments and agencies. The firm is recognised internationally for its thought leadership and innovation in designing and delivering new business models and solutions. These enable public and private sector organisations to succeed and grow in today’s digital economy.
Andrew is Partner at BearingPoint and leads the firm’s public services and digital and strategy practices.

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