Across the 22 national recovery and resilience plans submitted by EU member states and adopted by the European Council so far, almost a quarter of funds are dedicated to digital transition. IDC estimates that these plans will drive roughly €150 billion in digital investments across the EU in the next five years. The public sector, including healthcare and government, is expected to account for 31% of this investment. Investment trajectories and sectoral distribution will vary across member states. Germany, for instance, has earmarked 37% of its digital investment for public sector, compared to 26% in Italy.
Given the pressure to speed up digital transformation in the public sector, this isn't surprising.
The pandemic has highlighted the urgency of modernizing government processes and digital infrastructure. As governments rolled out support and recovery measures, the need to develop new or adapt existing programs translated into additional, complex back-office processes and digital services. These processes and services often lacked the flexibility or capabilities required to respond to user or process requirements effectively and quickly.
The need for more effective data sharing across departments and the private sector, coupled with the shift to remote working, challenged the usability, scalability, and efficacy of existing tools and processes. Legacy enterprise applications fail to support all the required capabilities, including access to real-time data from anywhere, collaboration across and within departments, and integration with emerging technologies such as predictive data analytics and AI. Nor can they take advantage of the agility and scalability offered by cloud computing. This has driven the proliferation of extensions to existing applications or the implementation of best-of-breed tools that result in fragmented, siloed processes and data. This ultimately inhibits data-driven policy decisions while increasing system maintenance costs and risks.
IDC's 4Q21 survey of European and Middle Eastern central government officials revealed that reducing operating costs, ensuring more efficient procurement processes, and a resilient digital infrastructure are the top priorities for government departments over the next two years.
Cloud-based next-generation enterprise applications can be instrumental in achieving these priorities. When it comes to procurement, for instance, ERP can help make supply chains more transparent, expedite public tendering with simplified and automated purchase orders from approved requests, and ensure spend compliance and ease of use. In addition, automated invoice processing minimizes workload, reduces errors, and speeds supplier payments. All these measures help ensure more consistent, competitive, fair, and accountable public procurement practices.
A resilient, modern digital infrastructure in government departments needs to be capable of dealing with peak workloads, including large-scale data sharing and analytics that unlock actionable insights. Next-generation ERP systems with a fast-performing, prebuilt analytics data model, embedded machine learning, and a single shared data model across applications can eliminate silos and quickly identify meaningful insights and data anomalies without requiring any coding.
These enhanced capabilities serve as a robust foundation for redesigning existing processes, while standardizing existing best practices. This ensures that back-office personnel shift from purely operations to business partners (building relations across the department, providing decision support) and even enablers of transformation by championing transformation strategies and mitigating risks.
However, to be widely adopted, any modern enterprise software needs to offer capabilities considered critical by end users (see Figure 1). For next-gen financial applications, the IDC survey highlights, effective budget allocation, automation, and enhanced collaboration and access to real-time data are critical capabilities. By partnering with enterprise software providers that offer next-generation cloud-based ERP software, finance directors, HR directors, and other back-office operations executives in governments will benefit from built-in collaborative tools, real-time access to data, and mobile solutions for field workers that will improve the efficiency and effectiveness of public services.
Figure 1: Critical Capabilities Required of Next-Generation Enterprise Applications
Source: IDC-Oracle, Enterprise Application Modernization Government Survey, November 2021
A risk-averse mindset among civil servants means they often fall back on tried and tested legacy processes and systems, even though they are not aligned with industry best practices. This in turn slows down the adoption of modernized enterprise applications, according to the IDC survey. Existing processes may be suboptimal, fragmented, inefficient, and inconsistent across the department. Realizing the benefits of next-generation enterprise applications through process simplification, auditability, and intelligent data analysis requires adapting existing processes, reducing human intervention, and standardizing and automating tasks across and within government departments.
It's also key that next-generation applications are designed and developed with a deep understanding of user needs, including ease of use. Users expect the same ease of use from enterprise IT as they do from consumer tech. Next-generation enterprise software could offer cutting-edge functionality but may see little adoption if it isn't intuitive enough and doesn't make work easier for staff.
From a buyer perspective, government leaders must pre-emptively decide on the software capabilities and extent of customization required. Leaders should institutionalize structured governance processes and best practice guidance on building business cases that enable robust appraisals of options, considering the strategic, economic, commercial, financial, and management requirements.
These measures can help bridge the gap between existing and required enterprise software capabilities in governments and unlock the golden opportunity offered by the European recovery funding to transition to a more intelligent, efficient, and citizen-centric government.