by Rob Whiteman, CEO, CIPFA
With the UK government worth an estimated £10.2 trillion, financial technology will be revolutionary – but getting it right begins with culture.
The public sector is ripe with opportunity for technological transformation. On the delivery side, it can enhance the interactions of both businesses and the public with government by connecting disjointed and complex public services. It can increase transparency and support our democracy in new and exciting ways. On the financial side of government, the potential is just as revolutionary, and already around the world it is reshaping how the public sector raises and spends money.
While for the public and businesses this revolution means many services are delivered digitally, there is more to it than websites and apps. Auditors will be able to create stronger links between spending and performance in ways which provide an integrated public audit perspective that will better inform public debate, and in the future they will use artificial intelligence to relieve themselves from many of their mundane tasks to focus on interpretation and strategy. Meanwhile blockchain could lead to much more efficient, secure and resilient systems of exchange than we have currently, increasing the difficulty of fraud and introducing smart contracts into government.
The impact of any of these technologies can be magnified just through the pure scale of the public sector. The UK government is worth an estimated £10.2 trillion, and in the fiscal year ending in 2018, total public spending, including central government and local authorities, was £800.4 billion. There are strong drivers to ensure that the government is getting value for money in its spending, with taxpayers wanting to know that the public sector is operating as efficiently as possible.
However, too often such large technological projects in government are followed through with poor implementation. These range from the NHS patient record system in September 2013, which was abandoned at a cost to the taxpayer of over £10 billion, to the IT scheme designed to integrate the Department for Transport’s human resources and financial services, which rather than saving the taxpayer £57 million as expected, ended up costing £81 million.
Technology projects have often fallen victim to over-optimism, where they fail to meet deadlines, do not gain buy-in from the user, or suffer from poor contracting processes or mismanagement. Yet technology is essential to the transformation of finance in government, and will be crucial to creating efficiencies in stretched public finances that are facing challenges such as an aging population. History tells us that introducing a new technology is only the beginning, with expanding the culture and capability or organisations integral to the success of these large projects in government.
Finance’s role in public sector transformation, an insight by CIPFA and Eduserve, shows most organisations need a clearer vision for the future. A successful digital transformation depends on a combination of effective leadership, wider organisation engagement, insightful risk management, and a joint approach to create change. However, the research found only 58 per cent of public service organisations in the UK have a digital strategy, which is a concerning figure, as strong governance is essential to reaching the full potential offered by new technology.
There must be a shift in the public sector from a culture of digital management to one of leadership. CIPFA and Eduserve put forward eight tips on how to prepare for a successful digital programme: aligning your corporate and digital strategy, building digital foundations, redefining the IT strategy, having a digital plan, building a business case, creating employee buy-in and communications, changing culture and behaviours, and building skills, capacity and risks for sustainability.
By following these steps we can build organisations prepared and able to use new technologies, and overcome some of the significant challenges posed to our public finances which are often using legacy IT systems. Finance professionals, whether directly leading digital programmes or supporting others, should have an understanding the digital journey and its implications for the organisations as a whole and the finance teams in particular. That is a critical skill for the future.
You can read the full insight for free on our website.