GovTech in the European Union is a fast-paced landscape, and it’s rapidly changing.
Like many established economies, it represents the fundamental desire to use technology to the maximum in the public sector – innovating it, modernising it, making governance more efficient for both administrators and citizens.
But on top of this, the GovTech sector in Europe must weave itself into the unique political structures on this continent, carefully approaching that balance between national and international efforts that permeate many levels of politics. Doing this takes a distinctive approach, and while much progress has been made on this front in the last few decades, there remains much more to do, according to the European Commission.
Its science and knowledge service – the Joint Research Centre (JRC) – issued two new reports in March of this year. One – titled GovTech Practices in the EU – offers “a glimpse into the European GovTech ecosystem, its governance and best practices.” The other is titled Scoping GovTech Dynamics in the EU and is intended to provide evidence-based scientific support as Europe continues to evolve its GovTech policy.
Mariya Gabriel (Bulgaria, EPP) was first appointed to the European Commission in 2017 and is now responsible for Innovation and Research.
“The rapid development of technologies such as Artificial Intelligence, Internet of Things, and Blockchain are adding a new dynamic to public sector transformation,” said European Commissioners Mariya Gabriel and Johannes Hahn in a joint statement as the reports were released.
“These emerging technologies are offering great opportunities for transforming the ways public administrations interact with citizens and deliver key public services, while making the public sector more resilient and more inclusive. At the same time, however, these emerging technologies come with a new set of risks and challenges.”
Johannes Hahn (EPP, Austria) has been the European Commissioner for Budget and Administration since December 2019.
The report documents the positives, negatives, and most notable trends in EU GovTech at present – providing a unique indicator of where the bloc is moving to next.
Here are the main points:
“Bottlenecks” rampant in the GovTech ecosystem.
There has been progress on numerous levels, and it’s enough to continue fuelling the “emerging landscape” of government technologies in Europe, but barriers remain, the Practices report warned.
The development of a productive GovTech ecosystem is “facing significant roadblocks that need to be addressed,” it said.
“These barriers relate to the way the market is structured, the challenges created by public sector procedures, and cultural barriers related to a lack of shared language and common understanding between public and private sector actors.”
Venture capital was one of the main issues mentioned, because while it’s considered a vital component of the GovTech market, its structure will inevitably create barriers.
Founders of venture capital projects in the GovTech space are frequently pressured to develop their business aggressively, with further funding and eventual acquisitions and mergers a common goal.
This doesn’t marry well with what’s needed in GovTech, the Practices report suggested, because with GovTech, the market is regularly limited to a single customer.
“If a solution is aimed at the defence sector, there can only be one ministry of defence per country,” the JRC said.
“Since GovTech space growth remains limited to customised services that a company can offer a state, it is the service around the existing product that needs to be customised to diffuse the product to other countries, states, or municipalities.”
“In the European market, we found that this customisation of the service most often requires changing the language, as well as adapting to different regulatory contexts.”
This “regulatory contexts” issue points towards another key stumbling block in European GovTech – cross-border variation. It’s a common theme in European politics, where activity gets caught in a tug-of-war between national and international priorities.
GovTech is no exception. The Practices report has indicated that even though the groundwork has been laid in Europe for seamless cross-border activity; in practice, it doesn’t always turn out like that.
“While underlying rules of public procurement are harmonised across the EU, there are still significant differences in the actual implementation,” it said.
“For a start-up that wants to sell its products or services to different EU countries, this practically translates into a necessity of understanding legal intricacies of procurement of 27 countries and their sub-national administrations.”
“The challenge of following regulatory requirements in multiple jurisdictions can limit selling GovTech solutions across borders, even inside the Single Market. It therefore limits the de facto s of the market and possible contracts,” the JRC warned.
In the meantime, other bottlenecks that centre observed include a procurement process hampered by bureaucracy and lack of capacity, an over-reliance on legacy software which inhibits creativity, and the dominance of large-scale systems integrators.
No ‘one size fits all’ when it comes to GovTech
A much as many might like there to be a single template for perfecting a GovTech programme in Europe, the JRC has said that this simply does not exist.
It was one of the key “lessons learned” that were laid out in the Practices report. “There is no one-size-fits-all formula for creating a successful GovTech programme.”
They “come in all shapes and sizes,” the report indicated.
“Some programmes focus on improvements of innovation creation, some on mission support, others are interested in market creation, and others are only interested in applying the outcomes of acceleration programmes.”
Because of this variety, it was impossible to use the same structure very every single attempt at tech innovation, the report concluded, but that did not mean that there weren’t trends to focus on.
For example, “most successful GovTech programmes value a close relationship with executive power, and draw their legitimacy from direct political mandates,” the report said.
“With politicians as sponsors of programmes and drivers of change, GovTech programmes engage successfully with national bureaucracies. Proximity to political power attract and shortens distance with stakeholders, while focusing on results and securing high prioritisation.”
Another example given was the ultimate focus of individual GovTech programmes.
Historically, these have been more narrowly defined – focusing on issues like redundancy, simplification of a given administrative procedure, a better user experience, or economic growth.
But the most recent case studies have shown a re-focusing in this area. As a result, any efforts to innovate on the tech side are now being done with a “wider public value” in mind. This means that issues like sustainability, a circular economy, citizens centricity, public health or education are instead at the epicentre of focus.
The report indicated that this train of thought could lead to more interest in GovTech projects from larger groups of stakeholders. But it cautioned that a broader outlook “should not come at the expense of clearly defined goals.”
Other notable trends observed in the current EU GovTech ecosystem include:
- A majority of programmes begin with small teams behind them, and are then scaled over time to match its needs and/or success.
- A majority of GovTech programmes were launched by “persistent individuals and policy entrepreneurs.” Many of these had either seen notable examples beyond Europe and wished to recreate them, or had come from the private sector with a wealth of knowledge they felt would be beneficial.
- It is essential to provide “the right funding at the right stage” for GovTech solutions in the EU. In other words, whenever private sector resources are unavailable to support a programme, public sector funds need to be ready to replace them.
The Commission’s key recommendations for setting up a GovTech programme
While the Practices report offered and oversight of the ecosystem, the Dynamics report focused instead on evidence-based advice.
As the European Commission works to support GovTech initiatives throughout the bloc, it needs to ensure “that we have the right evidence about what works, what does not, and which trends we need to respond to.”
Mario Campolargo has over 30 years’ experience with the European Commission, much of it dedicated to emerging technologies.
These are the words of the Commission’s Director General for Informatics, Mario Campolargo, and the Director General of the JRC Stephen Quest.
“The European Commission will provide scientific evidence for policy on digital transformation of government in general and GovTech in particular. This report, and its twin report on guidelines for establishing GovTech programmes, is a first step in this direction,” they said.
The Dynamics report analyses procurement processes, as well as empirical evidence from interviews with start-ups, founders and GovTech programmes. From this, it has issued recommendations in three categories of policy and practice – setting out what it thinks public bodies should bear in mind when moving to innovate its tech capacity.
Setting goals
When setting goals, the JRC has said that bodies should “revisit and redefine” their GovTech objectives when setting up a new programme. It warned that such programmes needed to broaden their focus from simple, private-sector-style economic gains. Instead, they should succeed and develop based on the merits of what they offer in the public sphere.
At the same time, it advises against involving stakeholders in a GovTech programme who have competing goals – often in a financial sense – saying that this can hamper efforts. Sometimes, this conflict can mean that the stakeholders with the “largest purses” will dominate the decision-making process, the JRC said.
Lastly, the centre recommended that public bodies craft their policies to foster “public innovation creation”.
Implementing a programme
Start-ups and small-medium enterprises (SMEs) regularly desire a slice of the GovTech market share, but they are frequently locked out by bigger competitors, or lack of experience in solutions, the report said.
The JRC warns against this, urging public bodies to be mindful of start-ups and SMEs as valid avenues for collaboration. So they are now advocating a “show, don’t tell,” approach.
What does this mean?
Typically, firms are required to showcase a record of previous experiences as proof that they can implement a particular GovTech programme. This can, and often does, exclude smaller competitors who, despite their expertise, have no past examples to put forwards.
Instead, firms should be asked to show prototypes, and their potential, as grounds for winning a contract, the JRC said, “so that governments can decide based on additional evidence that a start-up is likely to perform to the quality standards requested and is able to deliver on its promises.”
The centre also wants to see increased guidance on procurement, incentives for implementation and open-ended RFP processes.
Analysis
The recommendations in this area are all to do with diversification. The JRC wants to see GovTech approaches that branch out from the traditional goals of return on investment, instead suggesting that it might be useful to “expand the expected outcomes towards a value-driven approach.”
Meanwhile, it also wants to see risk diversified, and the creation of public value through fostering innovation without financial investments.
“The outcome would be a programme to support the creation of a GovTech ecosystem following best practices from existing examples,” it said.
Future Outlook
Ultimately, the rollout out GovTech solutions across Europe will require a much more fluid response than has previously been seen, the Dynamics report concluded.
In a statement accompanying the document, German Federal State Secretary and Federal Government Commissioner for IT Dr Markus Richter called for a greater focus on “agility, creativity and experimentation,” and he warned that these things might not mix well with the Europe’s current modes of governance.
“The challenge here is that democratic governments, in Europe and beyond, are not set up to act innovatively or swiftly,” he said, noting that much of Europe’s political structure was “Weberian”: maximum transparency ensured through hierarchical decision-making and formalised procedures.
“This means that one of the biggest challenges for governments today is to reconcile the principles of good, reliable public management (bureaucracy) with the need for greater agility and creativity as critical ingredients for public innovation.”
“One very promising approach to this challenge is greater cooperation between governments and those much better equipped to produce innovation: the private sector, specifically young and technology-driven companies that have out-of-the-box and disruptive thinking in their DNA.”
Richter welcomed the new European platforms and hubs focused on GovTech innovation – saying that it would provide a unique, Europe-centric perspective, and provide “strong examples” of good practice within the fledging industry.
