Commission of Audit: Digital disruption needed (business as usual not an option)

This article is by Marie Johnson, managing director and chief digital officer of the Centre for Digital Business. Johnson has previously led the strategy and implementation of significant reform programs to the digital machinery of the Australian Government, such as the Business Entry Point, the introduction of the Australian Business Number and the Access Card. Johnson also led Microsoft’s Public Services and eGovernment initiatives worldwide. Johnson was named one of Australia’s 100 Women of Influence in October 2013 by the Australian Financial Review. Johnson’s full biography is available online. This article originally appeared on Johnson’s LinkedIn profile and is replicated here with permission.

analysis Last Thursday 1 May, the Australian Government released the report of the National Commission of Audit – ahead of the Federal Budget tomorrow (Tuesday 13 May). The Report – Towards Responsible Government – examined the Commonwealth’s finances and provided “advice and recommendations on what should be done to ensure that spending is placed on a sustainable long-term footing”.

The Report calls out that “business as usual” is not an option for Australia.

The Report signaled a real transformation agenda – and an urgency to act. From a government service delivery and administration perspective, the NCOA Report presented a service delivery transformation agenda characterised by digital first; chief digital officer; egovernment; cloud; innovation in payments; closing down duplicated government service delivery networks and arrangements; and leveraging the national economic capabilities as part of the delivery and transformation of public services.

This is a transformation agenda that I have been advocating for many years, and outlined in an article published in January “Before this Decade is OUT… What if the “Giants of the Web” Designed Government Service Delivery” (PDF). In this article, I talk about red tape, breakthrough innovation, and point to the billions to be saved by digitising government.
What does this transformation agenda mean exactly?

To restate the NCOA Report – this is not business as usual. It will require the re-thinking of problems, the re-thinking of solutions – and a fundamental re-imagining of what is meant by “public service”.

For a start, this is not a technology transformation – although transforming how technology is leveraged is part of the DNA of this historic paradigm shift. This is a transformation of the 60 to 100 year old traditional operating model of government into a digital operating model, a platform of engagement for the decades ahead. his is about looking at government as a digital enterprise or a digital platform and the capabilities needed for agile and data driven digital operations.

This will require leaders to look across the economy for capabilities – capabilities that can connect to and support the digital operating model of government. These capabilities will not be operated by government.

This new digital operating model cannot be a bottom-up, agency by agency approach. The digital operating model will be defined by a digital capability architecture – a “town plan” if you like. The digital capability architecture will describe the digital capabilities of digital government – the people, processes, and principles. This digital capability architecture will be a blueprint for the whole-of-government digital platform – and how this platform connects to other digital platforms across the economy.

There will be “new” capabilities postulated and aggressively implemented. “New” capabilities such as data analytics and predictive analytics; and innovative payment capabilities such as targeted, quarantined or micro payments. Importantly, standards will be the foundation of the digital government operating model – data standards; reference frameworks; interface standards and an API architecture that enables government digital services to mesh with the digital services of other providers.

These standards will not take years to develop – but will be the digital standards now in use across the economy. These digital standards are the mechanism by which all paper artefacts are eliminated from government administration – internal to the administration and in service delivery to clients.

The elimination of paper correspondence and forms is essential to driving out costs and red tape – because with every paper form there are horrendous costly manual processes. Everything must be digitised.

Credentials issued by banks or Australia Post (as mentioned in the NCOA Report), for example, must be accepted as online authentication to government services. Standards already define the assurance framework for these credentials – and government must participate in this digital assurance framework. I will be writing further about the digital capability architecture of government.

It will be the role of the Chief Digital Officer to oversee the bringing together of the digital operating model of government – that enables “public services” to be delivered through and across other platforms. This is not a CIO role. The CDO will have accountability for the client experience and hard ROI – the two measures go hand-in-hand.

Why is ROI so important?
As the NCOA Report notes, only 12% of Commonwealth spending is categorised as agency and departmental spending (although this is still $50 billion). The remaining 88% is classified as “administered” payments – ie payments to people or to the states and territories. It is fairly straight forward to cut spending – although recent PWC commentary noted that new and even more aggressive thinking was required in this area.

The PWC commentary on the NCOA Report was excellent. PWC noted that, in looking at similar challenges in the UK, “… one UK public service leader commented that ‘after years of 5 per cent year on year reductions, it is simpler to tackle a 20 per cent challenge than the next 5 per cent. It requires us to do different things rather than just do things differently’.”

From my perspective, the issue with the 12% spent on agency and departmental operations, is that the transformation required to achieve the very substantial benefits and significant reductions in costs of operations cannot be gained on a business as usual approach – and nor can it be gained on an agency by agency approach.

That is, to achieve savings against the 12% component of Commonwealth expenditure goes far beyond cost cutting – it is fundamentally about transformation. And the time frame for this transformation is a big factor in this ROI – a slow and sluggish timeframe will lose momentum, and this is the greatest risk.

We have all heard various commentators state that “digital” is just part of business. However, “digital” is not part of “business as usual” as the charts on what digital disruption look like show.

The chart for digital disruption in government would show an intersection between rising costs; drastically reduced budget; softening revenue projections; changing demographics; system rigidity; and changing risk patterns. Facing such a digital disruption in government, on this basis, the National Commission of Audit correctly asks – who can deliver government services better and more efficiently?

“To be unconnected, is to fall behind”
In the digital era, we must never forget or lose sight of the disconnected and disadvantaged – and we need to keep front of mind the impact of being “unconnected”.

The McKinsey Global Institute (MGI) recently published a report which explored the global flows in a digital age: “Global flows in a digital age: How trade, finance, people, and data connect the world economy”. The MGI report found that “Global flows are creating new degrees of connectedness among economies — and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.”

Whilst the MGI report was from a global perspective, there are insights to be gained from this report as Australia embarks upon this historic transformation of government administration and service delivery.

In the digital age we must apply new thinking to uplift all citizens and communities – in Australia there are many remote and disadvantaged communities without the basic connectivity we all expect as essential to everyday life. Different entrepreneurial approaches and new thinking might mean that these communities don’t need to wait years for the National Broadband Network in order to also benefit from the digital transformation of government.

This transformation of government administration and services must be for the benefit of all Australians.

Public Entrepreneurialism to Deliver “Not Business as Usual”
What does it take to deliver on a digital transformation agenda that the NCOA has explicitly described as “not business as usual”? As we transition from a 60 to 100 year old operating model of government, a fundamental re-imagining of what is meant by “public service” is needed. To deliver “not business as usual” calls for a new approach – inspired by a cadre of “public entrepreneurs” from all sectors of the economy.

Image credit: Office of Treasurer Joe Hockey