Where public sector leads the way, digital society and economy will follow

Digital technology alone isn’t enough to drive transformation. Skilled IT professionals are needed to deploy and mainstream it across public sector organisations.

Public sector leaders across Central Europe have been dealing with an unprecedented series of challenges, significant geopolitical and economic volatility in recent years, as well as some unique opportunities for growth and resilience. 

The war in Ukraine has had a tragic human cost, and its impact continues to reverberate across societies and economies in the region and beyond. Major disruption to supply chains, which started with the pandemic, remains high and inflation is fueling a cost-of-living crisis. Managing risk, bolstering resilience and navigating pressure on public budgets have become the most immediate and urgent priorities. Every day brings more questions than answers, but the need to address long-term societal and economic issues remains, even as new ones emerge.  

When EU Commissioner Margrethe Vestager was asked if Europe’s digital aspirations are still on track, she replied “If anything, they’ll be accelerated. Neither the digital transition nor fighting climate change can stop.” And I couldn’t agree more.  

Our Digital Futures Index, a data-led exploration of digital development in Europe, established that more digitally advanced countries are greener, more productive, innovative and competitive. Central Europe experienced a spur of technology adoption and digital transformation during the Covid-19 pandemic. It proved the value of digitisation in helping make economies and organizations stronger. And this has continued in recent years. By further advancing digitisation, we will be better equipped to respond to the opportunities and uncertainties of the present, and to build the new capabilities and solutions we need to tackle those of tomorrow.  

The Digital Futures Index showed that public sector digitisation plays a catalyst role, not only improving the resiliency, agility and efficiency of the ‘business of government’, but also creating the conditions for broader digital economic growth and greater digital inclusion. Gaining a deeper understanding of why and how this happens will help leaders make more informed policy and investment decisions. With that in mind, I wanted to share some additional insights from the Digital Futures Index on public sector digitisation and why it is a ‘force multiplier’.  

Digitising public services triggers a spiral of progress 

The Index shows that investment in ICT, cloud, IoT, and AI is a major driver of digital progress and, as a result, of economic and societal benefits. When that investment is used to fuel digitisation of government and the public sector, it delivers outsized gains for a country. 

In particular, there is a very strong correlation with greater productivity (as measured by contribution to GDP per hour worked). Digitised public services are more efficient as well as more convenient for citizens. Estonia, a globally-recognised leader in e-government, has published some fascinating insights which illustrate the point: E-voting is 20x cheaper than regular voting, for example, filling personal tax returns now takes just minutes rather than hours, and registering a new business is 14x faster. 

Malta has become one of the most advanced countries in the world when it comes to delivering digital public services. Key to its successful transformation has been an agile cloud-first strategy developed by the Malta Information Technology Agency (MITA), the information and communications technology agency which supports the whole of the Maltese government. With security baked into the very heart of the government’s digital platform, new services can be quickly rolled out knowing that users and sensitive data will be kept safe. Cybersecurity has become a key priority for governments, and provides an essential foundation for accelerated digitisation. 

The Index also showed that higher levels of digital interaction with government encourages greater participation in the digital economy amongst citizens, creating a virtuous cycle of expanding digital skills and creating more demand for digital services.  

Digitising public services is very strongly associated with greater productivity, innovation, lower air pollution and higher average salaries. 

Digital technology alone isn’t enough to drive transformation. Skilled IT professionals are needed to deploy and mainstream it across public sector organisations. The Index showed that having more ICT specialists in the workforce further boosts the benefits of digitisation. No wonder we see the role of Chief Technology Officer being elevated from the backroom to the boardroom – even, in some cases, reporting directly into the Prime Minister. Digitisation is no longer a ‘side project’ but core to building a platform for the future, with data becoming a key asset on government balance sheets. 

The public sector drives digital innovation  

Our data-led exploration found that innovation, contrary to what some may believe, isn’t the result of a few lone geniuses – it’s actually a product of a connected ecosystem: encompassing business, the digital sector, digital infrastructure, start-ups, talent and the public sector itself. Importantly, the public sector isn’t just a bit part in this innovation mix – it’s a major catalyst: From delivering ‘lighthouse’ projects that blaze a trail for others, encouraging private-sector digital infrastructure investment and advancing the country’s technical skills base, or through launching open data initiatives and cultivating a diverse local ICT supplier base, for example (and so the list goes on).  

A great illustration is the Maltese government’s approach to proof-of-concept projects, which help unlock innovation that can be used both for public services and by businesses. One project, for example, saw the Ministry of Tourism and Consumer Protection team up with MITA and Microsoft to run a hackathon to explore the use of AI and satellite imagery to spot waste and litter to help keep the island clean. These technologies have a wide range of other important potential applications for Malta, including managing the impact of climate change on agriculture and carbon offsetting programs. 

A key takeaway from the Digital Futures Index is that policy and investment choices require a holistic approach, factoring in how the public sector fuels broader innovation that drives economic growth.

Planting digital seeds to create a greener society 

The Digital Futures Index found a staggering range of correlations between different areas of digital development and sustainability, which underscores the importance of twinning digitisation and green strategies as part of national recovery initiatives.  

Of all the correlations we found, investment in digital technology and the digital skills of the general population had the strongest positive relationships with environmental outcomes. And here, again, the public sector plays a key role in both. 

Our analysis suggests that investing in digital technology and skills should be a top priority for advancing sustainability. 

One correlation I found particularly interesting was between the use of digital public services and lower air pollution. More people accessing services remotely vs in-person means less traffic on the roads, especially in congested city centers. The Polish Government has even taken things one step further – it’s digitised the environmental grant service that citizens can apply for to fund home improvements to increase energy efficiency and reduce air pollution. A greener, faster and more efficient way to, well, go greener!

It’s also noteworthy that having the right, supportive policies and regulations in place that make it easy to set up and run digital platforms to deliver services to citizens is very strongly associated with how well a country rates on environmental management.  

There are many strategic directions and tactical engagements public sector leaders may decide to pursue based on trends, local and regional requirements and dynamics, as well as national strengths and weaknesses they aspire to explore. However, one key direction stands out as prevalent and common: Investing in designing and digitising government services, including shaping and architecting the resilient cloud infrastructure to enable them, is key for efficient, fast and strategically aligned outcomes. Doing so will help catalyze innovation, stimulate growth and advance solutions to some of the most pressing economic and societal challenges we face.   

Where the public sector leads, society and the digital economy will follow.  

This article is part of Digital Future of CEE, a regional discussion series, powered by Emerging Europe, Microsoft and PwC.

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