Government Digital Transformation: From Systems of Record to Systems of Innovation

Updated October 2021

Government and the Digital Cyclone of Change

How can governments harness the power of digital, while mitigating risks?  We identified 11 digital mindset changes, and 11 change implications in a previous post.

Government digital transformation is about transformation and transformation of this nature requires organizational change management. In fact it needs change management on steroids.

Many observers see governments as digital transformation laggards, organizations burdened by old technology and high operating costs, and with high levels of change resistance. Yet, many governments have been at the forefront of technology innovation. Don’t forget that governments have the strength of policy and regulation. And, governments have massive amounts of data.

Government Digital Transformation Strategy
Government Digital Transformation SWOT Analysis

What is Government’s Role in Digital Transformation?

Governments who leverage strengths and mitigate weakness can harness the smart government digital opportunity of sustained growth and citizen wellbeing.

Policy, regulation and data can help governments modify the threats of economic disruption that can generate social upheaval. This includes regulation to manage the impact of:

  • The sharing and gig economies – that threaten to change the nature of employment.
  • Industry 4.0 technologies of automation, artificial intelligence and 3D printing – that threaten outsourcing and low-cost manufacturing industries
  • The “war for talent” that threatens low skilled jobs everywhere

A successful government digital transformation strategy also requires technology as an enabling platform for modernization from “systems of record” to “systems of innovation”.
Government Systems
People, processes and technology are required components of government digital transformation strategy but many governments hit a technology gap when attempting modernization.

  • For more detail on government digital transformation challenges take a look at this blog

Why do Governments Need Digital Transformations?

Simply put, digital transformation in the public sector is required in order to evolve the systems of government from simple record keeping to innovative systems that enable the delivery of sustainable development and citizen wellbeing.

Software Generations
There are numerous different definitions of enterprise software generations. We’ve tried to make sense of this and have taken a government-centric perspective to define them as such:

  • Systems of Record: core information systems that are government-centric, storing tombstone information, transactions and, ideally, providing the “single version of the truth”
  • Systems of Engagement: information systems designed for two-way communications within government as well as with citizens, businesses and other stakeholders
  • Systems of Intelligence: information systems designed to make sense of information flow
  • Systems of Innovation: information systems designed for breakthrough governance improvements

Each phase relies on previous phases. For example, a System of Intelligence leveraging machine learning technology to augment government processes cannot be effective without accurate data from Systems of Record. That’s not to say that dependent phases need to be ready before embarking on more advanced computing. Government technologies differ among systems and in such a case a good government digital transformation strategy would be to experiment with more advanced phases to motivate upgrades in dependent systems. Some phases are enabled by replacing technology deployment methods.

Government Technology Benchmark

Technological capability to enable a government digital transformation strategy can be analyzed. (It’s a service that we provide.) This includes benchmarking core enterprise technologies and deployment methods.

Systems of Record

  • Government Resource Planning: Core financial, procurement, human resources and performance management functions can be supported by Government Resource Planning (GRP) software, like the FreeBalance Accountability Suite. Core government financial functionality is often called: Integrated Financial Management Information Systems (IFMIS). The success of more advanced technology phases is dependent on GRP systems with:
    • Common metadata, workflow, and controls to ensure a single version of the truth, accuracy and compliance
    • Modern open systems, with web-native platforms, to integrate and support new technologies
  • eGovernment: eGovernment provides online government information and transaction services. These services tend to be one-way in nature and built based on the structure of government organizations. eGovernment systems rely on effective GRP back-office systems to complete transactions. eGovernment is a preliminary stage towards Open Government.
  • Shared Services: Shared services is a consolidation approach. Many governments share non-technology services to better leverage resources. Technology shared services is a preliminary phase of cloud computing, often called “private cloud”. Technology shared services can include:
    • Data centre consolidation to save IT costs
    • Software portfolio management to reduce maintenance costs
    • IT personnel consolidation to improve
  • Records Management: Governments run on records. Government documents and transaction records like invoices are stored, archived and destroyed using records management systems. These systems handle physical and electronic records. Like GRP, records management technology is vital for digital government modernization.

Systems of Engagement

  • Smart Government: Smart government and smart city technologies leverage GRP transaction data, records management “unstructured” data, software logs, Internet of Things (IoT) devices and email, text and social media feeds. There is much excitement about the promise of ‘smart’ government but smart government pilots cannot scale successfully without an effective underlying GRP.
  • Open Government: Open government, consisting of open data transparency and engagement technologies, represents the next phase of eGovernment – which has not lived up to the promise. That’s because most initiatives were based on leveraging technology to provide existing services, by mimicking those services. Government silos were generally preserved. Outreach attempts had underwhelming results because communications were primarily one way: from government to citizens. This changes when data is made open, and when engagement is two-way. Open data relies on accurate back-office GRP and records management systems.
  • Cloud Computing: Cloud computing is a technology deployment method. Many government shared services implementations, using some cloud-enablers like virtualization, have had mixed results. Legacy technologies, particularly legacy ERP with significant customization, complicate “private cloud” implementations. These systems can’t keep up with Public Financial Management (PFM) reform. Many governments have numerous ERP instances with different sets of customized code and now need to rethink their technology to leverage cloud advantages of cost, elasticity and reliability. This rethink includes determining where to use “public cloud” infrastructures.
  • Collaborative GRP: GRP systems and subsystems were originally developed to improve transaction processing. Collaborative technologies operated separately but there is a need for collaboration in context. Users need access to knowledge systems, to policies and procedures, and to “just-in-time” learning systems. Users need to interact with colleagues to complete transactions. And, the scope of transaction collaboration increases with open government mechanisms. For example, the workflow of a vendor question during an eProcurement cycle benefits from front and back-office integration.

Systems of Intelligence

  • Augmented Government: Use of cognitive and machine learning technologies to accelerate processes is the emerging “smart” opportunity in the public sector. This includes support of chatbots for citizen interaction, conversational user interfaces for citizen services, and Robotic Process Automation (RPA) to assist public servants. Augmented government automates routine and low-value tasks, enabling public servants to focus on high-value tasks to improve citizen services. Accuracy of Systems of Record big data is critical to machine learning enablement.
  • Trusted Government: The outcome of transparency, open government, efficiency and improved decision-making is increased trust. Governments who provide a 360 degree view demonstrate value for taxpayer money.
  • Hyper-converged: Organizations achieve IT economies scale through advanced software deployment through hyper-converged infrastructures. This is the next generation of cloud computing that promises unparalleled flexibility and management, through software-defined networks.
  • Intelligent GRP: Intelligent GRP provides big data analytics for decision-makers. The combination of back-office GRP structured information, records management unstructured information, and external data sources like commodity prices. Intelligent GRP also leverages activity feeds such as software log files, emails, IoT updates and social media feeds. Patterns are analyzed, augmented by machine learning, and presented to decision-makers using advanced visualization.

Systems of Innovation

  • Agile Government: Agility in government is enabled through process and product enhancements. Public servants leverage processes like Design Thinking, Problem-Driven Iterative Adaptation (PDIA), Lean, Scrum, Kanban and DevOps to improve innovation. Collaborative software tools, integrated within GRP systems, enable public servants to manage innovation processes. Performance tracking in core GRP systems are necessary to support agility.
  • Extended Relationship Management: ‘XRM’ is a concept whose promise has remained unfulfilled. XRM extends back-office GRP functionality across networks of stakeholders. Government records, engagement and intelligence is deployed to external parties: citizens, businesses, civil society, academic institutions, etc. For example, businesses who sell to governments, and pay taxes, are provided with integrated IT services. These services can include integrated access to:
    • relevant government statistical data for decision-making
    • budget planning information to help forecast government opportunities
    • integrated financial software for payroll, tax planning, cash management and budgeting
    • central bank forecasts and foreign-exchange hedging mechanism
  • Sustainable Development: Government performance planning is transforming thanks to the introduction of the 17 Sustainable Development Goals (SDGs). The SDGs help government focus on policy and regulatory interventions for equitable and environmentally sustainable growth. The challenge for governments is program planning, implementation and results planning coordinated across Ministries, Departments, and Agencies. Many SDGs require extending coordination to sub-national governments, other national governments and international organizations. GRP systems, therefore, need advanced program and performance classification structures. External data used in Intelligent GRP is necessary for governments to adjust program planning and execution to what works.
  • Composed GRP: The shift away from monolithic proprietary systems is a fundamental trend in the enterprise software market. Market consolidation has enabled a few large software firms to own the legacy and monolithic space. Proprietary monolithic systems impede progress and governments are saddled with high operating costs. Any “progressive activation” to take advantage of innovative technologies is difficult in proprietary systems with limited openness. The market has seen a shift from monolithic to service-oriented systems. However, many so-called “Service-Oriented Architectures (SOAs)” are really just monolithic systems with improved integration functionality. Governments need open systems that progressively activate. This is achieved when enterprise software supports service-orientation through components. Open components facilitate integration with functions from different systems. A “composed GRP” consists of assembled Commercial-Off-The-Shelf (COTS) technology components, extended by government configuration, integration and customization for comprehensive functionality. Composed GRP supports reform and agility. This means that core GRP functionality, such as financial systems used as Systems of Records, needs to leverage component-based SOAs.

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