How Digital Transformation Is Impacting the Public Sector

When I started working on this blog article, I was not sure from which point of view it would make sense. I myself have worked for the public sector for many years and its structures are well known to me. With the advent of digitalization, private sector companies have changed, sometimes (too) slowly but steadily and recently with increasing commitment and larger investments.

In the public sector, on the other hand, this process of change can only be perceived to a very limited extent. This not only has consequences for public sector organizations, but also has a negative impact on private sector companies.

Why is digital transformation so difficult for the public sector?

Well, if we look at the conditions that are necessary for successful digital transformation, we can quickly see why it is more complicated to implement these in the public sector.

Rarely, for example, does an “entrepreneurial vision” exist. This is partly because the objectives are very complex and sometimes contain conflicting sub-objectives.

Additionally, the public sector is subject to changing goals and programming due to the cyclical process of one political party entering power and another leaving. While elections often bring with them a demand for change, there is a resulting lack of long-term planning through which step-by-step adjustments would be made and implemented. Deriving a digital transformation concept in this environment is obviously challenging since agencies are constantly forced to start over from scratch: There’s never a chance to improve on processes that are existing.

From the employee perspective, there can also be conflicting views on who the customer is and, as a result, which processes and procedures are most important. If we think, for example, of unemployment agencies, the employees there must often ask themselves how to prioritize because supporting the job seeker and at the same time meeting the requirements of the district and/or city (which is the employer) can end up in a real dilemma.

In addition, there is an aspect that is by no means reserved for the public sector: corporate culture. We know that change management works better when there is the willingness and insight to understand constant change as something inherent in the system. However, in many organizations, bureaucracy and a “we’ve always done it this way” resistance undermines any approach to innovation. But innovation can only come about with a willingness to change in the first place. In this respect, the public sector has a well-deserved reputation for holding on to tradition with particular intensity.

Slow-moving Public Sector Digital Transformation Impacts the Private Sector

However, the insufficient ability of the public sector to open up with full commitment to digitization also has far-reaching negative effects on the private sector:

For instance, making Germany attractive as a business location and for investors requires that the administration become less bureaucratic. This is especially true for industries that have not yet recognized Germany as a choice location.

Furthermore, it hampers companies if they are unable to use administrative services that are relevant to them and require a high level of compliance, or if they can only do so at great expense instead of gaining easy access through digitization.

Young companies and start-ups in particular, which need capital for both start-up and growth, also need digitally competent and modern working partners on the public sector side that can offer support without complicated processes.

Is the Private Sector a Model for the Public Sector?

Digitization of the private sector has already had a significant impact on the public sector. Positive changes are emerging in many areas. Measures to digitize the administration are already underway with a wide range of projects. For example, rethinking processes from the point of view of the administration and developing these in a disruptive manner with all the possibilities of digitization is currently being considered. The public sector is also focusing on networking with the private sector.

For the public sector, digital transformation means loosening adoption of traditional or, to put it more sharply, outdated ways of thinking and working. Just as the private sector has long been working with innovative forms of cooperation, such as think tanks or incubators, so too must the public sector. Incidentally, this is possible without having to take any particular risks since economic failure of the administration is generally not a possibility.

The question of digital transformation in the public sector is quite exciting, especially in view of the shortage of skilled workers in the IT market. After all, the transformation cannot take place without appropriate specialist skills. So, the growing demand for digital experts will increase, making the public sector a direct competitor to the private sector in the battle for the best technology specialists.

Nevertheless, the private and public sectors certainly have very different methods of implementing “their” digital transformations, and the path of public administrations is certainly not an easy one. And so I quote Paul Whimpenny, Contributor, CIO, who paraphrased George Orwell: “All digital transformations are equal, but some are more equal than others!”