• Opinion
  • April 12, 2019
  • 10 minutes
  • 2

How to build digital government

Opinion: Digital transformation is needed across all government work

This piece was written by Aare Laponin. For more like this, see our digital government newsfeed.


Many governments that have realised the importance of digital society and the digital economy are today still just dealing with automation of their existing bureaucratic legacy.

One after another, they bring in keywords like once-only, one-stop-shop, simplifications, interoperability and open data.

In reality, bureaucrats are struggling to execute the vision, IT markets are effectively pumping money from budgets, and citizens and businesses face basic services with low-usability, form-based submission and unpredictable response time.

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This approach to building digital governments needs to change. It is not enough to open public data (with due regard to personal privacy, of course) or provide interoperability capacity for the public sector.

Instead, it is necessary to open the whole process of public service delivery. In the next few minutes of reading, I will try to describe the reasoning and direction for building a sustainable and effective e-government.

First of all, there is the issue of complexity.

To put it simply, a government is an arrangement to finance a certain set of legitimate initiatives, which bring benefit in the long term but would never get sufficient attention from “short-sighted” market forces seeking to profit here and now.

A government is an organisation that delivers services for businesses and citizens. The core service of its regulatory role for all markets is basically paperwork: take information in as input and make decisions as an output.

We start with automating a simple general ledger and end up automating the whole universe

To keep things manageable, the structure is organised according to functional principles: public finance is managed in a Ministry of Finance, social affairs in a Ministry of Social Affairs, legislation is drafted by a Ministry of Justice, and so on.

But what was simple on paper is not that simple in the digital world.

Let’s look at an example.

Public financial management is one of the most important concerns of any government. If you cannot budget your activities and properly finance operations, you will collapse.

It might seem a pretty straightforward task to build up a public finance IT system and achieve objectives like cost-efficiency and transparency.

Automation of public financial management typically starts with internal processes to capture all events, accounts and monitor performance. The next phase is to develop a self-service portal for external customers of, for example, the Ministry of Finance to reduce the paper burden and improve transparency.

Then, you suddenly discover that there are too many portals around, so you make a single window for your service delivery, which requires internal integration and interoperability of different processes behind that window.

You thus become a little bit like Amazon, consolidating all internal and external processes, and you proudly call yourself a platform.

But in an era in which everything is becoming digital, we are also trying to implement the once-only principle: once information is created, it should be seamlessly reusable by all concerned parties.

This is when you discover that even the platform for public financial management is not the be-all and end-all — and has critical weaknesses.

Amongst OECD countries, the tax-to-GDP ratio in 2017 was 34.2%. This effectively means that the public finance system, as a purchaser for a third of the economy in those countries, can create an effective acquisition and purchasing process that influences many businesses and the whole economy.

Social contributions in the OECD countries in average are around 10% of GDP. That means again that the public finance system can influence efficiency and effectiveness of the design of the social care environment.

In this way, we have a public financial ecosystem containing the domain’s core platform (budget, treasury, procurement, budget execution, national accounting) and many other related areas.

Transformation and growth in one place may become a catalyser for much broader transformation across the economy.

Here is an ecosystem around public finance in the public sector:

Figure 1 – sub-set of well-known ecosystems in a digital government

In the context of modernisation, public finance is concerned with raising efficiency and effectiveness of public budget money allocations. This concern cannot fully be globally addressed without modernisation of the following adjacent systems:

  • Public finance management ecosystem includes budgeting of all public funds, revenue management for those funds, and accountability.
  • Business ecosystem is the main engine for public revenues, where decrease in cost of administrative compliance will positively influence public revenues. Combined public funds are amongst the biggest purchasing powers in a country.
  • Social care and health are probably the biggest single area of expenditures in a public sector. Solving bottlenecks in an efficient manner in this sector improves the quality of life in society, and mitigation of risks positively influences public revenue.
  • Justice ecosystem includes all law enforcement and justice organisations. In OECD countries, it is a considerable share of public expenditures in most of jurisdictions.
  • Public transportation capable of providing optimal mobility with lower toxic ecological impact is probably the most important every-day public instrument on a personal level for everyone. Public finance introducing modern payment channels and facilitating end-to-end connectivity for all different transport options may ensure better social inclusion through improved mobility.
  • Construction contributes a remarkable share of GDP in the majority of developing countries. In small countries with relatively high ratio of governmental presence, efficient public finance will again initiate increase in transparency and efficiency even in this sector.

It is evident that modernisation in the digital age has great potential when you don’t only look at one narrow domain, but consider improvements across this much wider ecosystem.

But this task is extremely complex. We start with automation of a simple general ledger in accounting, and end up with automating the whole universe.

The second issue is that today governments transform themselves. As I mentioned, a government is an arrangement to compensate what markets are not able to deliver.

Digital government at the end of the day is a software, and software development is not core governmental competence. Government is not even capable of buying it. Just look around and you’ll see.

So the issue here is that a government does not have and never will have competencies to build a proper digital world of public service delivery.

Government work needs to be completely rearranged using digital era technology

To overcome those issues, the whole of government work needs to be completely rearranged using technology advancements of the digital era.

Instead of automating existing public administration, we must instead take current services as a baseline and design a new functional structure of e-government considering the following:

  1. There should be no redundant business processes at all.
  2. Whenever possible, service delivery should be organised using a two-side market mechanism, where demand and supply-side capabilities are all provided by open market and the government is responsible only for developing a platform as set of interfaces and policies.
  3. The role of the government is also to facilitate actors in those markets, ensure high quality user experience and manage risks. — Aare Laponin 

(Picture credit: Unsplash)

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