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The public sector must accelerate digital transformation – or risk losing sovereignty and trust

The private sector’s digital transformation has clearly outpaced that of the public sector. Pictured here is a cluster of buildings with corporate offices.

The private sector’s digital transformation has clearly outpaced that of the public sector. Image: Unsplash/Sean Pollock

Antonio Neri
President and Chief Executive Officer, Hewlett Packard Enterprise
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The Digital Economy

This article is part of: World Economic Forum Annual Meeting
  • The private sector’s digital transformation has clearly outpaced that of the public sector.
  • The public sector must rapidly develop the ability to leverage growing volumes of data to add meaningful value.
  • The global public sector must treat data as a sovereign resource; if these bodies relinquish control of their data, they will struggle for roles and relevance.

When I last wrote for Agenda, the world was responding to COVID-19's physical distancing mandates by becoming more virtually connected, strengthening our digital infrastructures to reconnect people to schools, businesses and one another. The pandemic served as a catalyst, making digital transformation not just a priority but an imperative for enterprises.

Yet, as we come together this year in Davos, the private sector’s digital transformation has clearly outpaced that of the public sector. Even prior to the pandemic, when Deloitte surveyed 1,200 government officials spanning over 70 countries, nearly 70% said their digital capabilities lagged behind the private sector. Last year, Accenture reported that although 75% of public service leaders around the world agreed that technology architecture was becoming critical to overall organizational success, most believed outdated technology was holding them back. Adding to the challenge is a lack of digital and technology skills: by 2023, McKinsey estimates that more than 8.6 million people across the EU-28 public sector won't have these necessary skills.

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Across both the public and private spheres, inaction inhibits the ability to deliver outcomes for stakeholders; delayed digital modernization of organizations – whether the result of a talent gap or slow adoption of new technologies – results in missed opportunities. The future belongs to the fast, and organizations with resilient, future-ready digital foundations are pulling away from the rest, while those that lack digital transformation expertise and rely on legacy technologies are falling further behind.

Accelerating data-first modernization

Two years ago, I noted we were entering the “Age of Insight”, an era focused on deriving value from the massive quantities of data created every day. Leading businesses are now fueling the Age of Insight by securing the tools and skills to quickly extract value from data. Following their lead, the public sector must rapidly develop the ability to leverage growing volumes of data to add meaningful value.

Today, public sector data is commonly spread across silos and trapped in legacy systems – a problem many private sector organizations also face. Governments need to capitalize on data that is increasingly distributed, without centralizing all of that data. Modern edge-to-cloud platforms can enable any organization to shift from simply capturing data to quickly extracting value from it, better serving customers or citizens in the process. The capability to derive value from data can and should lie with data generators themselves.

Just as enterprises must view data as a critical asset – one that I think will eventually be tracked as an asset on corporate balance sheets – the global public sector must treat data as a sovereign resource. If these bodies relinquish control of their data, they will struggle for roles and relevance. Without mastery of their own digital destinies, public sector entities will be unable to drive digital transformation for their constituents, ceding sovereignty and trust to private companies – and undermining overall trust in state authorities.

While the public sector's digital transformation challenges are as well-documented as they are nationally varied, there's little question that governments can generate powerful outcomes when they properly connect and leverage data. Faced with mounting local impacts from the global pandemic, all 50 US state governments developed and rapidly deployed public-facing COVID-19 dashboards to track health and emergency response data. Despite ongoing debates over pandemic policies, real-time data and insights enabled citizens, health workers and officials to thoughtfully plan for daily life and work. In this case, the public sector digital transformation was fast due to exigent circumstances, and the socioeconomic value of state-scale data gathering was profound.

The EU’s Gaia-X initiative is also embracing this approach by building the next generation of trusted industrial data infrastructure to drive adoption of cloud services and data spaces, in Europe and beyond. Federating decentralized clouds will open up new opportunities to share data insights, creating and delivering innovative public sector services.

Deriving value from data is essential to enabling governments to advance their policy goals –everything from improving healthcare and strengthening defense to advancing education and safeguarding the environment. To deliver the data-driven societal benefits and rich digital experiences citizens now demand, the public sector must step up its pace and abilities to control the creation of value using public data.

Closing the digital transformation divide

Rather than competing in a zero-sum game, the public and private sectors can succeed – and do better – by working together, focusing on three key priorities:

1. Technology: Adopt solutions that can securely share data insights and can flexibly scale up and down to respond to changing conditions and demand. Look for a cloud experience that can provide agility and drive innovation no matter where data is generated – while also controlling risk and ensuring compliance with data protection.

2. Culture: Embrace a digital culture that emphasizes an agile approach. Although technology is a necessary element in digital transformation, it is not sufficient; the public sector must also build the culture to make proper use of new platforms. Leaders must be involved from the beginning for buy-in.

3. Skills: Hire and develop talent capable of facilitating digital transformation. The public sector must explore creative new ways to recruit, retain, and train a workforce with the critical technology skills to drive its digital innovation.

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Cooperation and partnership from the private sector will be key to successfully accelerating public sector digital transformations, enabling governments to not only bridge their digital skills gaps but also adopt modern, practical and fiscally responsible solutions that capitalize on ever-growing volumes of data. Business leaders can serve as trusted collaborators, helping enhance governments’ technology capacity-building efforts and accelerate data-driven innovation.

History at a turning point

In keeping with the theme of this year's Annual Meeting, “History at a Turning Point,” we must use this historic moment to embrace the philosophy of collective insight and help both the public and private sectors see the value in partnering to drive public sector digital transformation. Collaborations of this type ultimately improve overall digital ecosystems, benefitting long-term private sector growth, and opening new development opportunities for both parties.

The last two years have crystallized digital transformation as imperative for public and private sector entities, enabling them to remain relevant while meeting the needs of customers, citizens and stakeholders. The World Economic Forum is particularly well-positioned to bring these sectors together, and we are committed to our role as a trusted partner in bridging the digital transformation divide.

Working together, I am confident that we can help governments maximize the value of their data, rather than ceding control of it, empowering them to better serve their citizens while strengthening sovereignty. The result has the tremendous potential to unlock opportunity and prosperity for both industry and society.

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