How Digital Transformation Drives Public Sector Innovation

If you look back at many of the original information technology systems developed by state and federal governments over the last 50 years, you will find many examples where innovation was fostered in the public sector.

Examples of digital innovation in the public sector:

• Tax and accounting systems to track the budget of state and federal governments
• Social security, which helped millions of Americans receive pensions
• Medicare, which provides federal health insurance and medical care for people 65 or older

These examples of digital innovation were some of the most complex systems of the times, with cutting edge IT systems.

While these systems served us well in the past, we have deferred too long in critical maintenance and updates, and now many systems urgently need modernization.

Today, public sector organizations are lagging behind in their digital innovation, often using legacy software systems that no longer serve their constituents effectively, while private-sector companies like Apple and Google have leapt ahead in innovation.

While the public sector has many innovation success stories, failure is very common and often is a source of hesitation for agencies considering an IT investment.

Part of the issue is that large-scale tech initiatives simply don’t work. While many commercial and consumer sector companies have adjusted by using Agile models to smaller scoped sprints and modules, government IT is still trying to do ‘big bang’ large-scale IT projects. 

What is Agile development?

Agile is a software development framework that outlines the requirements for conducting discovery and solutions improvements and collaborating across teams or with customers or end users. Agile software development strategies focus heavily on flexible planning, continuous improvement and the foresight of potential problems well before they arise.

Questions to Ask to Understand Public Sector Challenges:

1. Why is the public sector behind the curve on digital innovation?

Although essential, innovation is especially challenging in the public sector. Procurement and long budget cycles are one of the biggest challenges for government entities who are seeking to innovate.

The desire to have fixed price cost and certainty in budgets seem to be limiting agencies that want to adopt Agile models.

There are efforts in states like Texas, and creative models like Code for America that are trying to introduce these Agile models into the government culture and procurement cycles, but the barriers have been difficult to overcome.

2. Why is now the time to innovate in the public sector?

A number of pressures are converging to bring the issue to a boil with in the public sector. Here is a closer look:

• Increasing expectations from citizens: In today’s fast-paced, digital society, citizens have come to expect the same high levels of service and responsiveness from the government that they do from private entities such as Amazon or Uber. They also don’t want to pay more in taxes for this privilege. Therefore, leaders in public sector organizations are undergoing pressure and increased expectations to meet constituent demands, while also reducing costs and improving efficiency.
• Shorter technology lifespans: Technology also now has a shorter lifespan. Where agencies once expected phone systems to last for 25-30 years, today a five-year-old mobile phone seems antique. Similarly, the first residential utility meters were built to last the life of a house, but first-generation smart meters had a lifespan of ten years. This acceleration means replacing technology more often, along with finding new ways to recover the costs of those investments.
• More security threats: Security threats to government systems are accelerating as well, and agencies must act to harden legacy systems that provide vital services like water and power—or election monitoring. A cybersecurity project becomes another opportunity to modernize with more resilient technology and platforms.

The reality is that government simply must become more efficient.

Leveraging modern technology and private-sector innovation is the most effective way to get there—and will ensure government systems can meet the needs of the people they serve.

3. How can the public sector innovate to serve its citizens more efficiently?

A significant portion of the public sector’s budget is funded by citizens through tax dollars. As a result, there is a government duty to be prudent and put every dollar to its most transparent, effective and efficient use.

By taking a more agile, strategic approach to upgrading their systems, along with leveraging the advances of the private sector, government can modernize their systems to drive efficiencies and do far more with less.

More importantly, government can reclaim its place as an IT innovator, delivering better services and greater responsiveness and transparency to the public. 

6 Ways the Public Sector can Accelerate their Innovation Initiatives:

1. Design systems from the outside facing in

Rather than making changes based on the way your organization has always been organized, modernize based on the way citizens engage with government.

Example of designing systems from the outside:

For example, someone starting a new business may need to visit multiple agencies in person: the state comptroller and the IRS for tax purposes, the secretary of state’s office to register a business name, and possibly to the department of licensing and regulations to apply for permits.

Instead of simply updating the technology around this cumbersome process—and expecting citizens to figure it out—modernization could be about reimagining the system to make it easier and faster for business owners.

Of course, this means agencies and various levels of governments need to work better together and appropriately share their data and systems.

2. Engage customers and clients the way they want to be engaged

As consumers, Americans are accustomed to shopping online, banking via secure mobile apps and enjoying retail experiences personalized by machine learning.

Example of engaging customers and clients the way they want to be engaged:

For example, compare this to waiting in line for hours to renew a driver’s license. Instead of requiring citizens to go in person to take a new photo and answer a few questions, the Department of Motor Vehicles could create a mobile platform for taking photos.

This would reduce the need to open new offices, while offloading considerable compute and resource needs to the technology right in people’s pockets.

Several agencies have digitized to reduce physical locations and manual processes (think of tax filing – when is the last time you had to go to a tax office in person?), while others remain largely unchanged in decades.

3. Innovate the procurement and budget models to accommodate Agile

Large-scale IT projects should be broken down into much smaller phases incorporating concepts like Minimal Viable Product.

This approach will deliver more immediate business value as you build toward the bigger systems. Find ways to leverage Agile in a fixed budget model that governments must live within.

In the triple constraints of Project Management (Budget, Schedule and Scope), flex on scope as a means to manage the overall risk and expectations.

By following this approach, agencies will be more successful in the project delivery and have the flexibility to adjust to the changing constituent requirements and technology capabilities.

4. Look to leading-edge private sector solutions

In state and local governments, IT leaders must often prove that new technology has been successfully implemented in several other agencies or departments before winning approval to adopt it.

Instead, government should widen its perspective to consider proven, leading-edge solutions developed by commercial and consumer sectors, instead of replicating solutions from other public sector peers.

Many of today’s most innovative business models and processes in the private sector take advantage of powerful combinations of emerging and disruptive technologies.

Example of leading-edge private sector solutions:

Take for example Amazon’s checkout-free grocery store. The concept was first incubated five years ago with the simple question: “What can we do to improve on convenience?”

5. Adopt market solutions instead of custom solutions

Where possible, agencies should adopt ERP, CRM, financial and HR solutions from the market instead of reinventing the wheel.

This approach frees agencies from the trap of maintaining costly custom solutions or dealing with potential interoperability issues.

It also side-steps the issue of shorter lifecycles by leveraging commercial solutions that are regularly updated with new features, security fixes and updates.

6. Open your platform to the marketplace

Government is extremely data rich, but doesn’t always have the resources to take full advantage of that data. Agencies can leverage the power and resources of the marketplace by making data public as they modernize.

Private-sector companies can then take on the expense of developing applications that deliver additional value to citizens.

Example of how to open your platform to the marketplace:

Consumer traffic applications pull data from government entities, and local and cable weather stations and applications pull data from and The National Oceanic and Atmospheric Administration (NOAA) dataset, which is updated every five minutes.

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Why Digital Innovation is Essential for the Private Sector

While we can’t know the future, we do know that modernization is inevitable.

A more agile and modular approach to change will give government the flexibility to respond to future needs as they arise, as well as the opportunity to learn from project phases as they’re implemented.

It will also allow them to respond to feedback as citizens begin to use those systems.

Our advice: start with an overall assessment of your new systems based on the constituents you serve. Think of modernization not as just a replacement initiative but an opportunity to transform your organization to enhance the service you provide to your constituents.

With that vision in mind, deliver solutions in smaller increments and continuously improve to add value, taking advantage of innovations and practices from the private sector as you go. That approach will ensure you are developing the solutions and processes to truly serve your constituents effectively.