The next era of public sector digital transformation

Cliff notes

  • The next era of public sector digital transformation.
  • Key challenges of public sector digital transformation.
  • Technologies of the present and technologies of the future.
By Jacob Williams
Mar 2018

The next era of public sector digital transformation


The first era of public sector digital transformation across western governments took place following the end of the financial crisis to approximately 2013. Several long term trends forced shifts in public sector attitudes towards technology. These included;


  • Increase in online voter registrations
  • Austerity fiscal policies forcing efficiency
  • Transition to online access to public sector services
  • Redundancy of legacy systems
  • Citizen digital literacy rates


The second era of public sector digital transformation will focus on ‘Digital by Default’ strategies and will extend beyond the basics such as; tax, healthcare appointment setting and business registration. The diffusion of digital across major industries, validation of value creation in the private sector, and the increasing pressures on public services will drive digital transformation into new areas creating seismic changes in the citizen-state experience.


Basic automation


Chatbots are a perfect example on how the public agency can improve interaction with their citizens in a cost effective and consumer friendly manner. This will reduce the workload of employees and reduce human error from doing mundane tasks. North Carolina Innovation centre has been using chatbots for their internal IT help desk as most IT enquiries was recovering passwords and Id’s which allowed them to remove repetitive processes.




Data analytics is an area where AI can have paradigm changing benefits to the public sector, allowing for decision making and response times. The cost of AI has reduced significantly simultaneously access to AI capabilities is no longer concentrated with big tech companies. Today, a new data science graduate can unlock immense value for the public sector using AI.

This allows public officials to conduct tests and experiment at a fractional cost to examine value creation




  • Cincinnati Fire Department has been using data analytics to optimize medical emergency responses. This allows them to address on average 80k medical emergencies a year reducing response time.


Our analyst predict implementing advanced AI systems into the public sector can add a total potential value of $1.2 trillion. Yet severe challenges remain, none bigger than public sector fears concerning the impact on job losses.


  • Reduced cost of AI
  • Easy access to AI Capabilities
  • $1.2trillion potential value creation 


The smart city:


It is expected that there will be more than 24 billion IoT devices by the end of 2020. According to our analysts, $6 billion will flow into IoT solutions and will generate $13 trillion in value by 2025.


The reduction of sensors costs from $2 to $0.40 in 2006, the increasing network bandwidth (5G), the increase of regulations, standards and data availability, and the increased sophistication of data analytics has enabled the utilisation of IoT for both public and private sector.


By the public sector leveraging the power of these devices and the IoT technology, the public sector will create “Smart Cities” where sensors and automations can enhance public services and the everyday life of citizens.


Examples of how IoT can help the public sector:


How far will can the public sector push? Blockchain?


Blockchain is a database technology that uses cryptography to secure data in a distributed ledger. The ledger is secure and transparent which ensures that information on the database is update across all users.


Using a distributed ledger can help the government with a range of activities such as passport issues, documenting of births, deaths, and the digitalisation of assets. Using the blockchain will eliminate fraud and increase transparency between government and the citizens.


Developing countries have had a positive attitude towards blockchain to address the challenges of development. The Honduran government is reportedly working with Factom, a cryptocurrency to secure land title records with blockchain technology. Blockchain can also help the government collect taxes, deliver benefits, issues passport and assure the supply chain of goods and generally ensure the integrity of government records and services.


However, due to the infancy of the technology, we predict the public sector will not consider blockchain implementation until fundamental technical challenges are overcome and value creation is validated through private sector implementation. We predict the next wave of public sector digital transformation will see a paradigm shift from efficient delivery and accessing public sector service to transformational efficiency and productivity gains. The next era of Public sector digital transformation will centre on implementation the of:


  • AI & Automation
  • Smart Cities
  • Cloud Computing
  • Data Science

Key challenges

Of public sector digital transformation

Despite the constant emphasis on the rewards of digital transformation, the public sector faces multiple obstacles in utilising digital.


Public Sector Cuts Vs Digital Cost Savings


One of the main challenges of digital adoption in the public sector is the lack of funding. In the UK, local government funding for digital transformation projects reduced by a total of 43% since 2010 and future cuts planned until at least 2020, enforcing local councils to evaluate digital transformation projects through a cost cutting imperative.


  • In recent cases; the London borough of Hillingdon has taken plan to action by moving its entire council to Google apps. As a result, this has saved the council over £750,000 a year. Rather than investing in expensive technology, Hillingdon has decided to cut this out as it proved too costly to maintain.


  • Worcestershire county council together with OutSystems was able to deliver its first live app within 8 weeks, as part of a bigger digital transformation initiative to take its service online, which the council estimates saved around £1.6m in one year. The council hopes that by continuing on its goal of achieving 100% of services being delivered online, the organisation can achieve genuine channel shift while cutting this clearly and also making interaction easier for citizens.


Top Drivers of Digital Transformation:


  • Cost and Budgetary Pressures


Top Barriers:


  • Insufficient Funding
  • Competing Priorities
  • Security


Talent + Skills:


Furthermore, another major challenge faced by the public sector is a lack of talent and skills to execute successful digital initiatives. This has to lead to a gulf in adoption of digital transformation between the public sector and the private sector. Our experience has shown us that placing the correct managerial experts in the middle of any transformation will result in rewards.


Public sector lacks fundamental skills to execute successful digital transformation projects. Talented developers and data scientist do not end up in local government by first choice.


Public Sector Digital Skills Shortage:


Local councils must be more willing to work with the private sector who have the technical talent to deliver on digital projects to avoid the high possibility of under delivering on expectations.


Cultural Challenge:


Successful innovations have less to do with the technology and more with the cultural infrastructure which underpins it. A gulf in difference exists between Apple, Facebook and Google in comparison to government departments. We believe the biggest public sector cultural challenges are the following:


  • Moving from a traditionally top down structure with hierarchical governance to one that embraces multiple ways of working can be a challenge


  • Allowing people to decide what tools they need to do their job better rather than telling them how to work


  • Allowing a culture of controlled experimentation and failure and reducing the costs of serious mistakes


  • Collaborative and consultative approach between departments, workers citizens and end users


  • Deep implementation of agile, design thinking and lean innovation methodologies across the entire organisation


Public Vs Private


In the public sector, laws and regulations limit the effectiveness of digital innovation policies whereas private sectors are able to freely innovate without any restrain. There are many lesson that the public sector need to learn from the private sector in regards to digital innovation. Most notably, the automation of process. If there’s one problem that that has plunged governments and public-sector entities over time, is paper based processes. Whether it’s processing a tax return or issuing a driving licence, governments can take a look at how the private sector is using technology to automate various processes. The bottom line is that with process automation, governments can save time, money and resources by automating processes that have traditionally been done manually.


For example, Sweden’s social insurance agency began its digitization program by automating five manual processes that made up 60% of its workload and more than 80% of its call center volume. In addition, Denmark also created an algorithm for streamlining the process of new business registration, resulting in more than 98% of tasks in the new business registration process requiring no human interaction. This clearly shows that digital innovation plays integral part in not only in the UK but also in different countries.


Lastly, it is evidently clear that the pros outweighs the cons and that digital innovation should play music in the ears of the public sector bosses however years of research on transformations has shown that the success rate for these efforts is consistently low: less than 30 percent succeed. This year’s results suggest that digital transformations are even more difficult.


Only 16 percent of respondents say their organizations’ digital transformations have successfully improved performance and also equipped them to sustain changes in the long term. An additional 7 percent say that performance improved but that those improvements were not sustained. Furthermore, time-frames play a crucial role.  Public sector budgets are tied with political cycles, which means that new projects must show results quickly for constituents. Gathering political support to invest in digital technologies is a way for public sector organisations to achieve lasting impact.



Technologies of the present and technologies of the future

Digital twins & chatbots

At a market that was value at $113million in 2015, with a predicted growth to reach $994.5 million by 2024, we can say for certainty, chatbots have changed the dynamics of customer interaction in recent years. This is predominantly based on the fact that people are relying more and more on messaging apps, like Facebook messenger, Slack and Telegram. Primarily being used with in the private sector as a way of increasing efficiency and cutting costs, organisations within the public sector have taken a confident step towards adopting this technology as research has reported successful cases of chatbots within local authorities, such as the oxford city council.


What are Chatbots?


Chatbots are essentially a computer programme that have been designed to stimulate conversations with human users, especially over the internet. It would be an understatement if you think that chatbots are a new technology.


The first Chatbot was developed in 1966 in an MIT artificial intelligence laboratory having an ideal purpose of trying to mimic conversations. In todays’ age, Chatbots have become a very big deal. It is now dominantly being used as a new form of storytelling by being available to the customers at the right time, right place and with the right information and most importantly only when they want. Customers have become the centre of attention as they are always one step ahead in terms of adopting to new technology, meaning that firms are constantly needing to innovate.


Welcoming conversational technology has been one of the first steps towards making our businesses future ready as we see computing interfaces being dissolved to chat, voice and gesture interfaces.


The applications of Chatbots have seen to be widespread in different industries. For example, Pharma companies have introduced apps to help patients to track daily medication, get behaviour coaching etc. However, not many have succeeded. This is where they have seen an introduction of bots. Unlike apps, bots can remind people to take medication, follow diets etc., through conversations on a messaging platform. These chatbots act like virtual nurses or personal trainers. This clearly emphasises on the point made earlier on how firms within the private sector are using these technological advances to progress.


However, are the public sector doing the same? A case study was found to show that NHS SBS were launching a mobile payroll app. This allows NHS employees to view their payslips and get answers to pay related queries through a Chabot. It is the first mobile app build in-house by NHS SBS and has been developed with input from staff at Chelsea and Westminster hospital NHS foundation trust. It can provide details to about 400,000 employees working at around 100 organisations that the use the NHS SBS payroll service.


The apps come with no extra costs for the organisations using the payroll service and is free for employees to download.  The main purpose was said to help reduce the number of queries going to payroll teams and HR departments, and to give employees easier access to their payment information. As a result, they have received outstanding feedback. In addition, the NHS business service authority are running a concept project to improve prescribing services through the use of learning technology. This is primarily aimed at improving the processing and payments from approximately 50 billion prescriptions per month.


On the other hand , company’s within the private sector have always been one of the early adopters of technology in many industries and have been very successful on my occasions. For example, hotels such as Marriot International were very successful in adopting this technology. Marriot International’s chatBot is available through Facebook messenger, WeChat and google assistant. It allows Marriot rewards members to research and book travel in more than 4,700 hotels. You can also plan for upcoming trips with suggestions linked from Marriot’s digital magazine Marriot traveller, all while chatting directly with customer engagement centre. Rewards members using Facebook messenger, 44% successfully received assistance related to their stay or reservation and 53% received help with their rewards account.


Marriot clearly believes that the integration on chatbots will improve hospitality and increase customer satisfaction. You can evidently see the implications of Chatbots are nothing but advantageous as they are helping to solve problems that have been ongoing for a very long time in both the public sector and private sectors however many are still complaining due to the problem of not being perfectly compatible.


One of the main complaints that come through Chatbots is the need for more. Customers are not always satisfied with an average customer service. Users always want the best experience. Customers are arguing that it has to be on par with human intellect. If the bot is average, then they would always want it to be better. Realistically, there is no bot that is perfect and will fit perfectly well with any customer satisfaction. Furthermore, chatbot retention has been a real problem.


A problem defined to be so bug that most people don’t even get past the first two messages. According to the CEO of BotAnalytics, the initial drop off is huge: “about 40% of users never get pass the first text and another 25% drop off after the second message. Daily retention rate is at a paltry 1-2% and the monthly retention rates for bots isn’t much better, sitting about 7%”.



Despite the low retention, there have been a few bots such as poncho that have found light and are seeing awesome retention and engagement rates. Similar to most bots, poncho suffered from low engagement however they were able to find a solution to the customers ‘why’ problem. They were able to perfectly differentiate themselves from the rest as users wanted to know about potential upcoming hazards, which they were able to do after doing a lot of digging. As a result, they were able to increase their user retention by 300%. Here you could perfectly see that despite the critiques, chatbots can be used as a perfect tool if it is built for the right purpose.


Lastly, in the age of austerity; finding ways to innovate has become increasingly hard to hard. However, Chatbots have been used as a way of: allocating resources efficiently, increasing efficiency, automation and freeing up councils. For example, the Oxford city council has planned out a 3 month programme to lay the ground for possible development of an application that could be used for the 14 councils involved. Being backed from the ministry of housing and local government digital fraud, has identified 4 service areas for producing a business case: planning advice, highways defect reporting, waste and recycling enquires, and revenues and benefit enquires.


The main aim is to help report issues more easily and freeing council staffroom dealing with enquires. The procurement notice indicates that Oxford has already established some problems in the way of councils adopting chatbots and AI. One of the main reasons is the lack of shared understanding of the technology. Government Chatbots can assist citizens with a variety of tedious tasks, especially those that involve filling out forms and sending in details applications. The future prospects of Chatbot remain bright, especially within healthcare. Online chatbots can help governments create a more approachable image in the eyes of their citizens, and help citizens avail of benefits and assistance they are entitled to. Over time, this can equate to significant improvements in governance and administration.


This is further supported by the Local Government Information Unit (LGIU), 64% of councillors in England believe that digital transformation will have a positive impact on the wellbeing of people in their areas over the next ten years. It strongly supports the increasing influence of artificial intelligence in public sector to streamline service delivery.


Electronic medical Record Digital Twins


Globally each country has electronic health records (EHR’s), digitalised paper logs that provide a full medical history of each individual patient. They replaced the old paper based documentation systems and it was a legal requirement as of 2015 to have fully digitised patient records, due to data protection. EHR’s are present in every healthcare system in the world from the publicly funded NHS in the UK,  to huge private institutions like the United Health Group in the United states. They provide complete healthcare data about what has happened to each patient over at least a period of two decades and are all accessible within the cloud based system.


The question is however, with the advancements of digital software, are EHRs enough? Is a fully fledged digital twin, that can model all of our previous ailments, a possibility that will enable us to assess risk factors and methods of how to improve our overall health? There are many avenues to go down which would enable this, however there is more to it that just digitising human anatomy.


The objective is not to have a digital twin that can run simulations and see what will happen in the future, it is to see if a superficial digital twin medical record is feasible to produce. For example if you have broken your leg, it will display the bone and type of break with information of how to aid healing and encourage bone growth or if you previously had an ear infection it can highlight this via a virtual representation on the humanised digital twin. It is a visual representation of you medical history.


With the current digital software out there, are EMR’s enough? There are digital twins in operation throughout not only healthcare but in most other industries, so Is it time we had one for our own bodies? The question is, what would it take to create a digital twin, luckily, Babylon Health has just released its pilot version of a digital twin, which provides us with an insight of what the future holds.


Babylon teamed up with Bupa and other partners to produce their “digital twin” in July 2018, as part of their patient health check section of the digital GP service they also provide. The first part of the process is to complete a health questionnaire about past illnesses, current excise rates etc, then after completion your digital twin appears.  It is displayed as a transparent human figure, with colourful organ structures, each of which you can click and see the organ health and risk factors for future disease.



It does this via using a large database powered by Babylons “cutting edge AI technology” and uses a deep neural network, created from millions of data samples collected and input by their scientists and doctors to provide up to date, accurate information. They do however stress that the digital twin only provides health information and not a diagnosis, and all information is based statistics and risk factors via the information the patient provides. It covers 20 diseases based as a UK burden, which will be expanded to 80 in the near future. Currently it does not integrate your EMRs with the questionnaire outcome, but judging by their recruitment sight, it will not be long until they find a way to, the numbers of vacancies for AI and machine learning currently on their website, Babylon show no signs of slowing down in regards to advancements in digital twin technology.


In regards to future prospects, Dassault Systèmes, a french software company, has been developing “3-D digital twins” in multiple industries over the past 3 decades with great success and have recently taken their concept into medicine and healthcare. They believe that the foundations for the future have to be laid organ by organ to enable a complete digital twin. They have already developed the “living heart”, which they can complete in silico models on and also complete cardiac research. They believe this is step one if their digital map. They did this via creating software that can turn a 2-D Heart scan from a patient into a full digitised complete model of the human heart.


The model took 2 years to create the Living Heart and contains around 209,000 minute digital tetrahedrons, each having is own cardiac properties from electric pulses to muscular arrangements. The properties encapsulated within the model can be altered to display individual patient requirements via, conditions or devices and uses current EMR data to predict outcomes and so far completely imitate the behavior of a real anatomical heart.  The chief strategy officer for Dassaults Simulia department, Steve Levine, believes a digitally constructed image of every persons EMR and body functions is possible stating that:


“Over time, my medical record could be a digital twin of me”.


His project is driven by personal reasons regarding issues with his own daughters cardiac health, which inspired him to created his daughters data digitally and begin his inspiring branch into healthcare. That inspiration and personal decision to branch into healthcare and create not only a functioning digital replica of the heart but wishing to implement a whole organ by organ system and enable it to help patients globally can only be a positive towards the future of EMR digital twins and a commendable feat.


This, coupled with the fact the food and drug administration have recently signed a 5 year partnership shows that Dassault are edging ever closer to it becoming a reality.


There are numerous other companies striving for success in creating a digital twin with the capability of displaying your EMR.  The Virtual Physiological Human (VPH), which is currently under production at the The Virtual Physiological Human Institute for Integrative Biomedical Research, in Belgium. Using individualised physiology based computer simulations and in future patients EMR They aim to create in-silico models of human health and disease, with its main target being a digital patient for doctors to see their medical records. 


There are of course current limitations amongst development, such as incomplete data sets, access to human tissues to enable complete modelling and data protection issues. But with the process still in the early stages, these issues can be overcome with the right cooperation amongst data providers, cyber security and data protection increases and sharing of big data, All of which are easily feasible would enable progression. With many other big name companies currently researching digital twins, such as IBM, Microsoft, oracle, and numerous others, amongst them also are Academic centres such as Imperial college in London and MIT in the United states, all of which are continuously pushing the boundaries of digital science via many mechanisms such as deep learning, AI and importantly Cloud computing, amongst many others. Which will eventually enable a fully fledged EMR digital twin becoming a possibility in the near future.

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