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Accelerating the digital transformation of government

The Australian government recently announced the establishment of a Digital Transformation Office, to advance the national e-Government agenda. At the time, the Prime Minister and Communications Minister said the DTO would operate “more like a start-up”, bringing together developers, researchers and designers to put customer needs and user experience front and centre. The idea of public services being as well-designed and easy to use as AirBnB or goCatch sounds attractive, but just how feasible is it to create a digital start-up inside government?

Supporters point to the UK’s government Digital Service, a unit established inside the UK Cabinet Office in 2011 to implement the government’s “digital by default” strategy. Denmark’s MindLab and Agency for Digitisation have been around for even longer, and have helped make Denmark a world leader in digital government. Although the U.S. is behind in this space, it is quickly catching up. Last year, it established the U.S. Digital Service and this year it launched 18F, a new digital government consulting unit inside the General Services Administration.

There are now more than a dozen similar digital government offices around the world. BCG has looked at the initiatives in the UK, USA and Denmark, as well as similar efforts by e-government leaders such as South Korea, Estonia and Singapore; hi-tech countries such as Finland, Norway and Israel; as well as innovators like the United Arab Emirates, New Zealand and Malaysia. When we look at what is happening overseas, it is clear that governments need to consider five building blocks to create the right conditions for a successful “digital office”.

  1. Leadership. Without an obvious, visible and vocal champion who “gets it” and is willing to sponsor, nurture, lead, fight for and protect the agenda amongst the competing priorities of government, progress on e-government will always be slower and more incremental. The UK had a senior minister in Francis Maude leading the charge, NSW has Dominic Perrottet and Denmark’s Prime Minister led their agenda. The champion must come from the most senior levels of government and have digital as one of their top three priorities.
  2. Location. In most countries, the digital office is positioned close to the centre of government in a central agency like Finance, Treasury or cabinet. Some countries like Singapore locate their offices in the information and communications portfolios, while others opt for shared services units such as US General Services Administration and New Zealand’s Internal Affairs department. The best place for the office is wherever the strongest political champion happens to be.
  3. Talent. While the support and proximity of decision makers is important, lets face it; the main benefit of setting up a digital office like the DTO is to build and cultivate a high-performing team that can attract talented people into the public sector who are unlikely to have joined otherwise. In the private sector, internal start-up ventures are usually placed away from the core and as close to the new skills and talent pools as possible. Start-ups tend to cluster in incubators and innovation precincts because there are synergies in co-location. Digital talent wants to be near other talent because they inspire, support and feed off each other. The beaches, alleys, valleys and corridors of digital competition and collaboration breed a culture of disruptive innovation that is extremely difficult to manufacture inside a large, existing organisation. One of the most influential factors in attracting good people is the leader. Most governments have brought in entrepreneurial leaders from outside. For example, Estonia’s government CIO Taavi Kotka was previously a software developer and web entrepreneur and Mike Bracken, executive director of digital in the UK Cabinet Office, has a background in digital disruption at The Guardian. The US Digital Service is staffed with former executives from Google and Microsoft, and in Singapore senior executives came from backgrounds in the IT sector. Their appointments are more than symbolic as their leadership ultimately drives the internal culture.
  4. Culture. Certain characteristics of start-ups and attacker business models make them fundamentally different to conventional organisations. Sure, they wear different clothes, but it takes more than jeans and t-shirts to drive innovation. At their core, they also have different ways of working, different techniques, a different language and skills. They don’t start by building a team then working out what to do. Instead, they start with the user-need then build a team around it. They use ethnographic research to discover customer needs. They do more than just define policies and standards, they design, build and run. They commission and partner and collaborate. They use design thinking and agile development methods. They deploy alphas and betas and build minimum viable product rather than perfect solutions. They release early, and release often. They are also more open and collaborative about adopting the mantras of open standards, open source and open government. The UK GDS runs a blog about its progress and activities and openly reports data on service costs and volumes. They publicly track their progress against targets, and publish the source code on GitHub for other governments to use. This kind of openness, transparency and sharing is unusual in government and utterly refreshing.
  5. Agenda. Governments that have made the most progress have set highly ambitious targets. Denmark’s goal is to get rid of all paper forms and letters. But they are also very strategic in their focus. The digital office cannot be a panacea for all the ills of government IT or an opportunistic dumping ground for stalled whole-of-government initiatives from the “too hard basket”. A common starting point is to improve access to government information. The UK GDS chose to address user frustrations associated with searching for information about government, by consolidating the myriad of government websites and redundant pages into a new gov.uk portal. The portal features a consistent look and feel, simpler language, and better design. This is often followed by expanding the range of payments and transactional e-services available, and redesigning them end-to-end in a low-touch or no-touch model.

Digital identity and assurance is another key focus. Although there is a public perception that easier access to digital services is less secure and more susceptible to fraud, the reverse is true. Smarter analytics in the back-end are better at picking up potential fraudulent activity using algorithms and behavioural triggers. Despite varying cultural attitudes to privacy, there is clearly a role for government to facilitate the development of identity services and trust frameworks to grease the wheels of the digital economy. New Zealand’s Ministry of Internal Affairs digital team is developing an authentication service known as RealMe which will be open to the private and public sector, and Sweden’s BankID model allows people to access government services using their existing banking credentials.

Last but not least, digital offices usually play a central role in leading government data initiatives. Making government data sets available to the public through centralised portals like data.gov improve transparency and have the potential to create economic value. But the bigger opportunity is to use data and analytics platforms to optimise policy, program and service design. For example, using input and outcomes data in areas like education, health and social services to determine the most effective interventions and areas of over- and under-servicing.

Australia is hardly a laggard. Last year we ranked second in the world in the UN E-Government development index and notwithstanding the high-profile of the GDS, in many ways Australia has been more successful in moving services online and tackling the challenge of digital identity in the absence of a unique citizen identifier. Despite recent criticisms about the usability of Department of Human Service’s ExpressPlus apps, it is hard to find examples of any other country with real-time transactional mobile apps for welfare payments. Similarly, the myGov service — which recently won the Human Services CIO Gary Sterrenberg an award from ITNews — now provides secure online access, secure electronic correspondence and tell-us-once services for more than 6 million people.

The DTO is an exciting development — not because of what it is likely to achieve in the short term — but because of what it may lead to in the long term. It has the potential to be the digital disruptor that recasts the future of how government works. Rather than just digitising paper forms and letters, we should embrace the chance to build a new and truly digital government. Don’t get me wrong, fixing the front-end of government is a good thing. It’s better for citizens and it’s good for taxpayers, but it is still largely change at the periphery, not the core. The DTO could be the best opportunity we have had in a long time, to reset and ‘re-imagine’ the business model of government for the digital age. But we must hurry. Technology continues to evolve and user expectations are constantly increasing. We need to accelerate the pace of digital transformation across the Australian economy, including the public sector, because it is the key to unlocking productivity growth and increasing our global competitiveness.

Author Bio

Miguel Carrasco

Miguel Carrasco is partner and managing director in the Canberra office of The Boston Consulting Group. He is also a senior advisor to the Centre for Public Impact.