UK SMART GOVERNMENT 2019 DATA-DRIVEN TRANSFORMATION

RESEARCH REPORT | APRIL 2019

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Modern governments across Europe must orchestrate an evolving array of services and functions required to support millions of people, often with a pressure to “do more with less” and under the glare of public scrutiny. The pressure to harness technology to transform is as evident in government as it is in any modern organisation, although the complexity and reach of government is arguably more significant. Ongoing uncertainties around Brexit are likely adding to the challenge of transforming operational models and efficiency.

Following “Smart Government – the Big Balancing Act” released in early 2018, this research explores the progress government departments in the UK are making in using data and digital technology to transform operations and outcomes highlighting how foundations, such as data infrastructure and operating paradigms need to evolve over the next five years in order that modern government can more effectively meet its transformation objectives and serve everyone. This report is part of a larger study across Europe, which includes UK, Germany, France, Spain, Italy and the Netherlands and discusses the viewpoints of over 100 IT leaders in UK Central Government, exploring the implications for government departments moving forwards.

THE OUTCOMES AGENDA IN THE UK

› The outcomes most likely to be seen as “extremely important” in digital transformation activities are improving citizen outcomes (59%), efficiency and speed of delivery (57%), managing existing and emerging security threats (55%) and improving agility and the ability to respond (49%)

› 83% say improving the citizen experience is important in building trust in Government

› The citizen outcomes seen as most important in how technology investment is prioritised and online services are delivered in the UK are:

• Time efficient (citizens can find what they need as quickly as possible): 49%

• Reliable access (no downtime, uninterrupted connectivity and mobile optimised): 43%

• Simple (fewest online steps, including saving online sessions, pre-populated forms and smooth experience across channels): 42%

• Highly functional (delivers services citizens need when they need them): 41%

› Only 11% are extremely satisfied with digital transformation progress so far, although 72% describe themselves as satisfied

DIGITISATION DILEMMAS

› 76% say they have a responsibility to make full use of available technology to deliver the best possible service to citizens

› Only one in seven (14%) say they are able to very effectively measure the impact of technology investment in terms of impact on citizen outcomes although 51% say they can do this quite effectively

› The barriers that are slowing digitisation of citizen services and process automation are investment in data infrastructure (89%), investment in applications (80%), legacy processes and lack of agility (78%) and lack of digital skills and experience (77%)

› Two thirds (67%) think legacy infrastructure is holding up their digital transformation progress

This report discusses the viewpoints of over 100 IT leaders in UK Central Government

EXECUTIVE SUMMARY

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DATA AND THE OUTCOMES AGENDA

› 83% recognise that they can transform citizen outcomes with better use of data

› Government IT leaders see their department could be making more or better use of data and analytics to deliver cost savings / get more value from limited budgets (54%), to improve citizen outcomes (53%) and to inform real-time decision making (42%)

› The areas where improvement is most needed to enhance service delivery are data infrastructure (87%), the ability to consolidate and visualise data (80%) and the ability to leverage data to improve service delivery (79%)

› Just 9% are very confident that their current data infrastructure enables their department to meet its transformation objectives. 48% are quite confident. Confidence is lowest in the UK. Current data infrastructure is seen to compromise department performance and service delivery in a number of ways - implications include reduced operational agility (85%), increased operational costs (83%), challenges with compliance and governance (82%) and decreased ability to meet citizen expectations (80%)

SECURITY AND AGILITY IN UK GOVERNMENT

› Looking at cybersecurity threats, over the next two years, 52% expect malicious threats to increase whilst 17% think inadvertent / human error threats will increase. 53% see external threats increasing and 24% see internal threats rising in this timeframe

› Factors impacting confidence in managing future security threats include legacy infrastucture and outdated operating systems (44%), the IT function lacking in cybersecurity resource / skills (40%), data on multiple devices in disparate locations (39%) and difficulty in keeping up with the speed of hackers’ new approaches (35%)

› 75% say their department has sacrificed performance or tolerated performance degradation in technology to have enhanced security, the highest in all the countries surveyed. 62% think investment in infrastructure security is not keeping up with security threats.

› On average, 49% of IT projects are considered to fully meet expectations and be delivered within time and within budget. Key reasons why Government technology projects may not deliver maximum value are unrealistic expectations about what technology can deliver (50%), budgetary constraints (49%), integration and complexity issues (49%) and skills issues (46%)

› Agile is used extensively across Government departments in 15% of cases although it is being used in places / tested for 37%. A further 42% plan to adopt more agile approaches in the next one to two years. There are four key challenges in adopting a more agile approach in IT departments. These are lack of agile skills / experience (45%), employee commitment (42%) and leadership / sponsorship (42%)

EXECUTIVE SUMMARY CONT.

38% 10,000+ employees

2% Less than 100 employees

22% 100-999 employees

38% 1000-9999 employees

UK SAMPLE BREAKDOWN BY

DEPARTMENT SIZE

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FUTURE-PROOFING DATA INFRASTRUCTURE IN UK GOVERNMENT

› Half (49%) plan to overhaul their data infrastructure to better support their department’s strategic objectives within the next two years (21% say in the next 12 months). A number of factors are accelerating the need for departments to overhaul their data infrastructure – these include Government requirements to be “cloud first” (51%), public scrutiny and increased citizen expectations (50%), need for increased collaboration and the move to a “connected” Government (43%) and increased volumes of data (43%)

› A number of technologies / trends are expected to transform service delivery by Government departments over the next five years – particularly mobile / online-first economy (76%), biometric monitoring (63%), open source data (68%), and cashless society (63%) followed by AI / machine learning (60%) and surveillance technology (60%)

› 72% say they need to be creative in how they use technology so they can do more with less and 68% say it is difficult to balance security, speed and innovation in their technology choices. 74% think that Governments in Europe can learn from each other in how they procure and use technology

The research highlights that government departments continue to grapple with outdated technology infrastructures, shrinking budgets and long established, inefficient processes. The appetite to become more citizen-centric and outcome-focused is clear to see and there has been progress with transformation efforts but the foundations are shaky and until data infrastructures, leadership and skills issues are properly addressed, stereotypes of being ‘big and slow’ will linger and the vision of a smart government for all will remain just a vision.

EXECUTIVE SUMMARY CONT.

RESEARCH METHODOLOGY

This report is based on research among 101 IT leaders in UK Central Government departments conducted during January / February 2019. This follows Smart Government UK research conducted in 2017. This research is part of a wider European study consisting of over 450 interviews and covering the UK, Germany, France, Spain, Italy and the Netherlands.

The research was managed by Insight Avenue, an

UK SAMPLE BREAKDOWN

BY DIGITAL TRANSFORMATION

STATUS

34% Digital followers Under developed digital vision, emerging digital culture and processes

37% Digital enthusiasts

Many advanced digital features in parts

of organisation, but under-developed digital

co-ordination, digital culture in silos

11% Digital novices Experimental and immature digital culture, limited digital initiatives and governance

18% Digital masters

Overarching digital vision, many digital initiatives, strong

digital governance and integrated digital culture

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Digital transformation is sometimes regarded as the “holy grail” for organisations, delivering the ultimate in ROI and an enviable end-point boasting the shiniest of new technologies. Many organisations, both public and private sector, are now recognising that digital transformation is an ongoing process with ever-moving goalposts as strategic objectives shift and technology evolves. Importantly, it encompasses mindset and culture and ideally extends to government as a whole rather than single processes and departments.

Understanding the most important outcomes in digital transformation activities provides an insight into where government departments are at in terms of energy and resource. Figure 1 shows the outcomes most likely to be seen as “extremely important” in digital transformation over the next twelve months are improving citizen outcomes (59%), efficiency and speed of delivery (57%), managing existing and emerging security threats (55%) and improving agility and the ability to respond (49%).

Improving citizen outcomes

% SAYING “EXTREMELY IMPORTANT”

59%

57%

55%

49%

46%

44%

40%

39%

34%

Efficiency and speed of delivery

Managing existing/emerging security threats

Improving agility/ability to respond

Operational cost savings

Empowering employees with digital skills and technology

Increasing uptake of online Government services

Improving governance and compliance

Collaboration/more connected Government

THE OUTCOMES AGENDA IN THE UK

FIGURE 1: OUTCOMES CONSIDERED “EXTREMELY IMPORTANT” IN DIGITAL TRANSFORMATION ACTIVITIES OVER THE NEXT 12 MONTHS

Digital transformation is sometimes regarded as the “holy grail” for organisations

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WHAT ARE CITIZEN OUTCOMES?

To govern is to serve, and just as customer centricity has become a corporate mantra so improving citizen outcomes is the driving force for digital transformation activity in government departments. This is, however, not the only priority for government – alongside this, are imperatives to improve efficiency, manage security threats and be increasingly agile. This is the challenge, and the opportunity, for government departments to truly transform.

According to the 2019 Edelman Trust Barometer, only 42% of UK citizens trust the Government – there is a similar picture in many other European countries.1 83% of IT leaders say improving the citizen experience is important in building trust in Government. Figure 2 shows the citizen outcomes that seen as most important in how technology investment is prioritised and online services are delivered in the UK.

In summary, the top four citizen outcomes for UK government departments are that services are:

› Time efficient (citizens can find what they need as quickly as possible)

› Reliable access (no downtime, uninterrupted connectivity and mobile optimised)

› Simple (fewest online steps, including, pre-populated forms and smooth experience across channels)

› Highly functional (delivers services citizens need when they need them)

UK Government has been hailed as one of the most digitally advanced in the world, but has lost its top spot in the latest UN e-Government Survey, falling into fourth position behind Denmark, Australia and South Korea.2 Currently, only 11% of UK departments say they are extremely satisfied with digital transformation progress so far, although 72% describe themselves as satisfied, suggesting there has been progress in unprecedented political circumstances but there is clearly still more to do.

1. https://www.edelman.com/sites/g/files/aatuss191/files/2019-02/2019_Edelman_Trust_Barometer_Global_Report_2.pdf 2. https://publicadministration.un.org/egovkb/en-us/Resources/E-Government-Survey-in-Media/ID/1943/UK-slips-in-UN-e-Government-Survey

Time efficient (Citizens can find what they need as quickly as possible)

49%

43%

42%

41%

38%

34%

24%

23%

3%

Reliable access (no downtime, uninterrupted connectivity and mobile optimised)

Simple (fewest online steps including saving online sessions, pre-populated forms and smooth experience across different channels

Highly functional (delivers services citizens need when they need them)

Empowering/sense of control (enabling citizens to search for answers, ask for help, keeping them updated)

Highly relevant/individualised (citizens are treated as individuals and offered highly relevant information based on their specific preferences/needs)

Proactive (anticipating citizen needs, provides timely communications, as well as flagging any citizen mistakes on forms)

Engaging (interesting/enjoyable to use for citizens e.g. gamification)

None of the above

FIGURE 2: MOST IMPORTANT CITIZEN OUTCOMES IN HOW INVESTMENT IS PRIORITISED AND ONLINE SERVICES ARE DELIVERED

83% of IT leaders say improving the citizen experience is important in building trust in Government

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The pace of technology advancement is startling and navigating ongoing developments with technologies such as AI, IoT and blockchain and how these can be applied in the delivery of public services within compliance, cost and procurement constraints is an ongoing challenge for IT leaders in governments across Europe. Three quarters (76%) believe they have a responsibility to make full use of available technology to deliver the best possible service to citizens so there is clear appetite to harness technology as part of an outcome-focused approach. The DVLA whose digital interfaces such as road tax payment and ownership registration is a good example of a department leading the way in providing accessible, convenient and citizen-focused services. Its digital unit model now being adopted by many other countries including the US, Singapore, Argentina and Australia.3

Citizens increasingly expect governments to deliver the fast, seamless service they experience from the private sector. Figure 3 shows that one in seven (14%) say they are able to very effectively measure the impact of technology investment in terms of impact on citizen outcomes although 51% say they can do this quite effectively. Understanding what citizen outcomes any investment is designed to deliver against is a critical first step here.

DIGITISATION DILEMMAS

WHAT IS HOLDING UP DIGITISATION?

The main hindrances to digitising citizen services and process automation are investment in data infrastructure (89%), investment in applications (80%), legacy processes and lack of agility (78%) and lack of digital skills and experience (77%), as shown in Figure 4. Infrastructure may not be the poster child of transformation but without strong and scalable foundations, whizzy citizen-focused applications will fail to deliver on their promise and the impact of technology investment on citizen outcomes will be underwhelming at best. Overall, two thirds (67%) think legacy infrastructure is holding up their digital transformation progress, something that is unsustainable under the glare of public scrutiny.

Not only are government departments being thwarted by legacy infrastructure but, alongside this, legacy processes and a lack of agility are also hampering progress. Quick technology fixes are not the answer here, as the problem is embedded in the fabric of government departments and requires leaders to recognise, collaborate and address functional and cultural shortcomings. Obstacles that the UK’s Government Digital Service (GDS) have encountered in pursuing ‘government as a platform’ are testament to these deeper challenges.

3. https://www.globalgovernmentforum.com/the-rise-and-fall-of-gds-lessons-for-digital-government/

Investment in data infrastructure

89%

80%

78%

77%

72%

71%

73%

Investment in applications

Legacy processes and lack of agility

Lack of digital skills and experience

Lack of digital leadership and vision

Culture/reluctance to change

Lack of collaboration/connectedness with other departments or agencies

FIGURE 4: BARRIERS TO DIGITISING CITIZEN SERVICES AND AUTOMATING PROCESSES

FIGURE 3: ABILITY TO MEASURE IMPACT OF TECH INVESTMENT ON CITIZEN OUTCOMES

1% Don’t know

14% Very effectively

8% Not at all effectively

26% Not particularly effectively

51% Quite effectively

% SAYING “SIGNIFICANT OR MODERATE BARRIER”

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HOW ARE DATA INFRASTRUCTURE SHORTCOMINGS UNDERMINING THE OUTCOMES AGENDA?

Data infrastructure continues to undermine the value and reach of data across government departments. Just 9% are very confident that their current data infrastructure enables their department to meet its transformation objectives. 48% say they are quite confident, but confidence is lower in the UK than in other countries in the study. Whilst government departments have been adopting more shared applications and centralised technologies, they are still grappling with redundant systems and managing the overhead costs to support them.

As such, department performance and service delivery is being compromised by data infrastructure shortcomings in many ways, as shown in Figure 6. These include reduced operational agility (85%), increased operational costs (83%), challenges with compliance and governance (82%) and decreased ability to meet citizen expectations (80%) – the very areas that digital transformation should be enhancing.

Making better use of data is both a requirement and a driver of digital transformation and 83% of IT leaders recognise that they can transform citizen outcomes with better use of data. The challenge of a digital-first approach quickly becomes how to use all the data available effectively.

Specifically, the key areas where IT leaders feel their department could be making more or better use of data and analytics are to deliver cost savings or get more value from limited budgets (54%), to improve citizen outcomes (53%) and to inform real-time decision making (42%), as shown in Figure 5. Getting data and analytics right can have an impact on key operational and policy mandates whilst improving citizen outcomes.

There are, however, several areas that IT leaders think need to be improved to positively impact service delivery by their department ranging from data infrastructure (87%), the ability to consolidate and visualise data (80%) and the ability to leverage data to improve service delivery (79%). As the government continues to open up its data, visualisations and dashboards are vital as a way of getting quick insights into patterns that can help inform decisions and drive efficiencies.

DATA AND THE OUTCOMES AGENDA

To deliver operational cost saving/get more value for limited budgets

54%

53%

85%

42%

83%

40%

82%

80%

80%

78%

75%

67%

78%

34%

28%

35%

To improve citizen outcomes

Reduced operational agility

To inform real-time decision making

Increased operational costs

To inform development of new services

Challenges with compliance and governance

Reduced efficiency

Decreased ability to meet citizen expectations

Limited opportunities for digital innovation

Increased exposure to cybersecurity attacks

Increased downtime/reduced service reliability

Difficulty accessing mission critical data when and where needed

To enable evidence-based policy

To foster more experimental and innovative practices

To break down departmental silos and foster collaboration across Government

FIGURE 5: TOP AREAS WHERE DEPARTMENT COULD BE MAKING MORE OR BETTER USE OF DATA AND ANALYTICS

FIGURE 6: HOW DATA INFRASTRUCTURE SHORTCOMINGS COMPROMISE DEPARTMENT’S PERFORMANCE AND SERVICE DELIVERY

FACTORS RANKED IN TOP THREE

% SAYING “TO A GREAT EXTENT OR SOME EXTENT”

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WHAT MAKES CYBER-RESILIENCE DIFFICULT?

In the wake of the WannaCry attack and a range of high profile threats, there is a growing focus on cyber-resilience in central government. The threat landscape is constantly mutating and over the next two years, in the UK 52% of IT leaders expect malicious threats to increase whilst 17% think inadvertent or human error threats will increase. 53% see external threats increasing and 24% see internal threats rising in this timeframe.

Many of the factors that are impacting confidence in managing these future security threats are internal – processes, skills and again, infrastructure. These factors include legacy infrastucture and outdated operating systems (44%), the IT function lacking in cybersecurity resource / skills (40%), data on multiple devices in disparate locations (39%) and difficulty in keeping up with the speed of hackers’ new approaches (35%). In 2018, the key factor was difficulty keeping up with the speed of hackers’ new approaches – this year, other operational shortcomings are coming to the fore which make cyber-resilience more difficult to achieve. Almost two thirds (62%) believe that investment in infrastructure security is not keeping up with security threats.

Three-quarters say their department has sacrificed performance or tolerated performance degradation in technology to have enhanced security, the highest of all the countries surveyed and higher than in 2018. Does technology performance always have to take a hit to ensure information security or is it the case that the challenge lies at the infrastructure level?

SECURITY AND AGILITY IN UK GOVERNMENT

62% believe that investment in infrastructure security is not keeping up with security threats

Legacy infrastructure/outdated operating systems

44%

40%

39%

35%

34%

29%

27%

24%

24%

18%

6%

Our IT function is lacking cybersecurity resource and skills

Our data is on multiple devices in disparate locations

Difficulty in keeping up with the speed of hackers’ new approaches

New technologies introducing new risks (e.g. drones/telematics)

Our department/employees are not well educated on the threat

Investment in cybersecurity is lacking

Public scrutiny and need for transparency

Difficulty identifying the source/cause of a breach

There is not a consistent approach across Government departments

Don’t know

FIGURE 7: FACTORS IMPACTING CONFIDENCE IN MANAGING FUTURE SECURITY THREATS

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WHAT PROGRESS IS GOVERNMENT MAKING WITH AGILE IT?

On average, almost half (49%) of IT projects are considered to fully meet expectations and be delivered within time and within budget. This figure was 54% in 2018. Key reasons why Government technology projects may not deliver maximum value are unrealistic expectations about what technology can deliver (50%), budgetary constraints (49%), integration and complexity issues (49%) and skills issues (46%). In a hype-driven digital world, under the glare of public scrutiny and with many stakeholders involved, expectations can end up eroding the more useful objective of meaningful, and measurable, outcomes. Big and slow are often synonymous with government processes, but there is evident momentum towards agile.

Agile is used extensively across Government departments in 15% of cases although it is being used in places / tested for 37%. A further 42% plan to adopt more agile approaches in the next one to two years. Key challenges in adopting a more agile approach in IT departments include a lack of agile skills/ experience (45%), employee commitment (42%) and leadership /sponsorship (42%). These barriers, as in 2018, highlight the fact that agile is as much something you are, as something you do and suggest that knowledge and skills sharing and a reduction in back-end complexity across departments may be a good starting point in enabling value to be delivered sooner.

Big and slow are often synonymous with government processes, but there is evident momentum towards agile

Lack of agile skills/experience

45%

42%

42%

37%

37%

28%

5%

5%

Leadership/sponsorship

Employee commitment

Legacy of outdated procurement practices

Collaboration across departments/cultural transformation

Measuring results/evaluation

Not sure where to start

Other

FIGURE 8: CHALLENGES IN ADOPTING A MORE AGILE APPROACH IN IT

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Organisations cannot create value out of data without the proper data infrastructures. Half of UK central government departments plan to overhaul their data infrastructure to better support their department’s strategic objectives within the next two years (21% say in the next 12 months). Various factors are accelerating the need for departments to overhaul their data infrastructure, as shown in Figure 9. In the UK, these include Government requirements to be “cloud first” (51%), public scrutiny and increased citizen expectations (50%), need for increased collaboration and the move to a “connected” Government (43%) and increased volumes of data (43%).

Looking specifically at the technologies most expected to transform departments in central government over the next five years, Figure 10 shows the mobile / online-first economy (76%), biometric monitoring (63%), open source data (68%), cashless society (63%) are considered particularly significant, followed by AI / machine learning (60%) and surveillance technology (60%). Many of these technologies are data-intensive and big data-producing and may overwhelm already creaking data infrastructures. It is encouraging that government departments are readying themselves for this “hot” data environment by overhauling their data infrastructures.

Although 68% say it is difficult to balance security, speed and innovation in their technology choices there is an appetite to adapt and learn from others. Just as the study last year showed an appetite to learn from the private sector, this year 74% think that governments in Europe can learn from each other in how they procure and use technology. The challenges governments face differ from the private sector but they are increasingly global – political uncertainties, climate change, job displacement, demographic shifts, globalisation of commerce are unifying challenges.

Furthermore, 72% say they need to be creative in how they use technology so they can do more with less. Current infrastructures are not only inhibiting the ability to do more with data, but they are also inhibiting innovative thinking about how to deliver better citizen outcomes. Data is as important as our energy and transport networks and should be treated as such – investing in the skills and technologies to get the most out of data enables it to become an engine for efficiency and innovation. Financial, operational and technical challenges are unavoidable with any Brexit scenario, and now more than ever, remaining outcomes-focused is vital to maintain transformation momentum.

FUTURE-PROOFING DATA INFRASTRUCTURE IN UK GOVERNMENT

Mobile/online-first economy

76%

63%

63%

63%

60%

60%

49%

44%

42%

36%

Cashless society

Open source data

Biometric monitoring

AI/machine learning

Surveillance technology (drones/cameras/telematics)

IoT

Blockchain

Robotic process automation

Automated vehicles

FIGURE 10: TECH MOST EXPECTED TO TRANSFORM DEPARTMENTS IN NEXT FIVE YEARS

Government mandates or requirements to be cloud first

51%

50%

43%

43%

42%

23%

22%

1%

4%

Public scrutiny and increased citizen expectations

Need for increased collaboration/move to a ‘connected Government’

Increased volumes of data

Evolving security threats

Internet of Things (IoT) and more connected devices

Adoption of/readiness for AI and other disruptive technologies

Other

None of the above

FIGURE 9: FACTORS ACCELERATING NEED TO OVERHAUL DATA INFRASTRUCTURE

% SAYING “TO A GREAT EXTENT OR SOME EXTENT”

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