Brexit should speed up digital transformation, not slow it down
Peter Dunn, director UK Public Sector at Rimini Street, argues advocates of digital transformation should be urging a faster and more ambitious approach
If the recent upheaval in British politics has taught us anything it is that the words of the former Prime Minister, Harold Wilson, are something of an under-statement. “A week is a long time in politics” seems out-dated given the daily changes we saw in political leadership as a result of the EU Referendum. If this has shown us one thing adversity is great for focusing minds and though it is unsettling, swift change can happen even in the most established institutions.
The concern is that while Brexit has forced change in the leadership of the country it has also meant that the critical policy document on the government’s digital strategy has been stalled. Originally postponed because of the Brexit vote, it is now unclear when the document will appear or if it will appear at all, given the Ministerial musical chairs with Matt Hancock MP taking Ed Vaizey’s job and a new Minister for the Cabinet Office in Ben Gummer.
Now more than ever we have to re-double our focus on digitising and improving citizen services – this will set the stage for establishing the UK as a global leader in digital public services. Digital transformation will save money for British taxpayers, but more importantly it will dramatically improve the way citizens use public services. We are already forging a path in areas such as open data, but digitising our public services could create business opportunities for UK companies around the world. There should be no suggestion that change in government personnel and policy decision makers signal a slowdown in progress.
Never been a better opportunity
The current political environment is the ideal time to accelerate the transition. Not surprisingly, the public sector has a vast and complicated array of processes, established over many years, supported by a huge IT infrastructure that is built on layer upon layer of different generations of technology. The thought of unpicking all of these components, particularly in an environment that SOCITM freely admits is “conservative” , is no small challenge.
Nonetheless, advocates of digital transformation should be urging a faster and more ambitious approach. And there is an imminent catalyst for change – the number of government IT contracts that will be up for renewal in the course of this Parliament. It is difficult to know exactly how many are under scrutiny, but this is precisely the opportunity for local and central government to take back control of their IT relationships. I would say this is the crucial start point for the government’s digital strategy.
Let’s face it, the public sector has had a turbulent relationship with IT vendors for many years. In June, the KnowledgeBus IT Margins Benchmarking study estimated that local authorities were being over-charged by up to 11 times for IT purchases. The Infrastructure and Projects Authority’s annual report highlighted that of a total 143 projects, 44 are categorised as amber-red – and red means those projects “appear to be unachievable.” ICT projects have a total life cost of £15.8bn, with only two having a positive rating, five rated amber-green and 11 amber. This comes at a time of already constrained government spending, coupled with estimates that Brexit will shrink overall UK IT spending to 1.7% for the rest of the year.
In this context it is critical for the public sector to negotiate favourable contracts to balance the need for savings against investment in digital transformation, because we have some huge targets to achieve by 2020. Local authorities must be fiscally independent to achieve the former Chancellor’s aim of the “devolution revolution.” Unprotected departments must save £20bn and the NHS £22bn. The positive news is that we have already seen from the Government Digital Service (GDS) that its transformation efforts have contributed significant savings to the public purse.
What, then, should be the desired outcome for negotiations on contracts and how could it help digitisation of public services? And how should vendors help their customers address this?
The Scale of the Challenge
In a recent survey by Northgate of 2,100 civil servants, 74% admitted they did not understand the government’s vision of Government-as-a-Platform (GaaP). Furthermore, only 7% believed their organisations would achieve their digital goals. A separate survey by Civica and SOLACE points out the probable cause of this confusion. In its “Invigorating the Public Sector Revolution” report, only 7% of middle managers and below felt the public sector was an empowering environment. Academics and industry experts have always said that successful digital transformation is 100% reliant on creating an atmosphere where employees are empowered, as the vision of a digitally-enabled workplace depends on open and collaborative sharing of information and ideas. Of further concern is that the same report found that 34% of respondents thought leaders needed to alter the entire organisational structure to affect change and another third felt that the public sector was being held back by the lack of a clear vision. Buying more or newer IT systems will not solve these issues.
This lies at the heart of the trickiest task the public sector must address if it is to be successful in transformation. There is a complex combination of factors at play – behaviours, processes and infrastructure – which require attention. If public sector is to be successful there are four priorities to ensure these factors do not hinder digital transformation. It is my view that when renegotiating contracts, public sector executives should be asking vendors how they will help to address these priorities:
1. Leadership confidence: digital transformation is daunting, especially if you are not a digital or data native. Leaders within the public sector require the right support from organisations such as the GDS to lay out a clear, attainable strategy that has the flexibility to evolve rapidly with the needs of citizens. Vendors, with their experience of operating business applications, should be offering honest feedback on what is and is not feasible, so that leaders are confident about the decisions they are making.
2. Empowering employees: once they’ve laid out a clear vision and strategy, the most important thing leaders can do is to step aside and encourage employees throughout their organisations to experiment with the possibilities of digital services. Above all leaders must give employees permission to fail – something that is foreign to the public sector. Without this acceptance, teams will not be empowered to innovate and this is critical to successful digital transformation. Again vendors should be held to account for how they are training and supporting employees as they adopt new technologies, not just simply implementing applications and walking away.
3. Managing IT real estates more efficiently to enable innovation: It has been estimated that 89% of budgets are spent “keeping the lights on,” whereas only 11% is left over for business transformation. Clearly there is an imbalance, but some CIOs are increasingly resisting the mandatory evolution vendors are demanding in order to maintain their existing business applications. (Our data suggests that 65% of customer issues are not even covered in existing support contracts, because they contain customised code). The question becomes how do you support those applications if you refuse to follow the vendor’s upgrade path in an effort to shift IT budgets from maintenance to business transformation? In terms of on-going support, organisations can turn to in-house resources or use third party vendors. This means CIOs can avoid costly upgrades and divert resources to business priorities. The reality should be that vendors help customers to move to a hybrid IT model, where existing on premise applications are managed efficiently alongside innovative cloud applications. If CIOs can reduce what they spend on keeping the lights on they will have the innovation agility to free up resources for digital transformation.
4. Data protection vs service delivery: the biggest dilemma for every government entity is ensuring citizen data is protected, but of course one of the greatest potential benefits of digital services is the ability to collate, share and analyse vast pools of citizen data. There is already much being done to work out the balance between data privacy and understanding citizens, so that service delivery can be improved. It will take time to find a solution acceptable to the general public, but in the meantime, government IT departments can audit and maintain their existing IT infrastructures to ensure security is built into their architectures from the ground up. Again vendors should be working alongside their customers to ensure the integrity of applications is built in from the design phase and regularly monitored, because cyber threats evolve so rapidly.
Despite all the challenges, this is probably the most exciting time there has ever been to be in the public sector. Over the next ten years departments and local authorities will lay the foundations for an integrated, digitally-focused public service that will be unrecognisable compared to today’s environment. The UK has shown that even at times of unexpected change, it can continue to operate and make important decisions quickly. This must be the approach with digital transformation. We cannot wait for the Wachter Report or a re-working of the government’s digital strategy. We must allow departments and authorities to act now, otherwise we will never hit the financial and service targets that have been laid out.
Peter Dunn is Director, UK Public Sector at Rimini Street
Peter Dunn has more than 25 years’ experience working in the public sector industry, including central government, healthcare, local government, housing, police and higher education. He heads up Rimini Street’s public sector sales team working with a wide variety of central and local government organisations.