UK Digital Transformation Strategy

The end of the beginning?

Alan W. Brown
Executive Director, Surrey CoDE

alan.w.brown@surrey.ac.uk

14th March 2017

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Background
Over the last few weeks we have seen the release of a flurry of new
documents aimed at stimulating the digital economy and accelerating
adoption of digital technologies across UK government itself. Fuelled by
the drive for job growth and increased UK productivity, the impact and
influence of the digital economy is more and more viewed as critical to
future prosperity in a time of growing uncertainty. Whether it is
encouraging new digital businesses to grow or helping traditional
businesses to transform in a digitally-enabled world, creating the
conditions for the UK to be at the forefront of digital economy activities
is now at the top of the Government’s agenda. And it is seen by
businesses as essential to their future survival.

Creating the conditions for the UK

to be at the forefront of digital
economy activities is now at the top
of the Government’s agenda

Broadly, the digital economy is concerned with the adoption of new

digital technologies, particularly Information and Communication
Technologies (ICT), and the subsequent reengineering of the digitally-
delivered products, services, and business practices that are enabled
by these new capabilities. This breadth underlies much of the evolution
of current business activity and investment in a digital age. In fact, the
European Commission goes as far as to call the digital economy “the
single most important driver of innovation, competitiveness and
growth” [1].

Consequently, it is essential that UK government understands and

participates in the digital economy in support of all its citizens, and in
the broader national interest. The positive view of the UK as a digitally-
connected place to live and carry out business must be balanced with
the risks that, as William Gibson stated, “the future is here, but not
evenly distributed”. The accelerated pace of change is already
stretching us as individuals, and redefining many aspects of our society.
New technology advances bring to the forefront questions concerning

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job insecurity due to adoption of digital solutions for increasing
efficiency and flexibility, inequalities due to lack of consistent
availability and fair access to basic social services through digital
channels, out-of-date approaches to overseeing ethical and legal
standards enforcement for digitised services, ineffective governance
for protecting the most vulnerable in our communities from malicious or
unforeseen dangers online, etc.

In fact, these concerns are exacerbated with the most recent trends
and directions, pulling at the core of established business and cultural
norms. Three areas are illustrative:

 Automation, Artificial Intelligence (AI) and Machine Learning (ML).

The immense computing power that is being brought online through
ever more reliable high- speed Internet infrastructure is now being
utilised to analyse large amounts of data being generated by all
sorts of digitally-enabled devices. The sophisticated algorithms being
developed are “trained” by this data to look for regularly occurring
patterns that could be replaced with simplified automated
approaches, and for anomalies that may identify deviant or
divergent activities requiring further investigation. Such systems are
compelling in their speed of analysis and their ability to predict
actions with increasing accuracy. Hence, they begin to augment,
and often to replace, human interpretation when applied to
domains such as financial management, healthcare, legal services,
and many more.

 Industrial strategy, manufacturing output, and productivity. The UK

government has turned its attention toward the broader concerns
that surround the competitiveness of UK industry, and announced
that it will produce an industrial strategy to galvanize action in this
area. Currently emerging, the focus areas are seen in the selection
of a number of key domains in which the UK must invest to gain or
retain a leadership position, a reshaping of the relationship between
research investigations and industrial practice, and the
development of the skills necessary to retune the workforce to be
more effective, productive, and engaged in driving the UK forwards.
However, even the very notion of “productivity” in a digital era must
now be redefined, to say nothing of the reforming job markets due
to increased automation, and the re-skilling of the workforce [2].

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 Brexit and on-going macro-level uncertainty. Today, any strategic
activity must be positioned within the reshaping of UK society and a
world that is undergoing widespread political change. As the UK
comes to terms with the implications of Brexit, the only certainty
appears to be that we must prepare for uncertainty and ambiguity
for some period of time. We must expect changes will occur in our
working and living conditions, and become more accustomed to
dealing with that change. That means that we will need faster ways
to carry out analysis of emerging situations and their potential
impact, to implement changes in complex, ambiguous
circumstances, to measure the impact of change and offer a
balanced assessment of the status of alternatives, and to apply the
lessons learned from sub-optimal actions to improve our on-going
execution.

Even the very notion of

“productivity” in a digital era must
now be redefined

Highlighting these three areas reinforces the view that flexibility and
speed of action will be essential future attributes. The importance of ICT
and other technological advances, therefore, will drive the UK
government and businesses to embed digital technologies within their
operational model to speed up existing practices, and at the same
time force us toward reimagining the kinds of products and services
that will be necessary in a digitally-connected world. Hence, this raises
the importance of digital economy concerns as a foundation for future
industrial competitiveness. For the UK this will be particularly important
as it seeks to address the economic and societal risks that emerge, and
as it exploits the digital technologies that underscore the essential
alignment between the UK government, businesses, and individuals.

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Digital Reboot
Recognising the importance of the digital economy to the UK, the UK
Government has been active for a number years in various digitization, e-
commerce, and online service delivery efforts. While much of this activity has
been focused on opening up existing government services to online
channels, there has also been targeted work to redefine the business model
of government. The “New Public Management” reforms of the 1980s and
beyond helped reshape government service delivery to be more
decentralised and customer-centric [3]. With the maturing of Internet-based
technologies in the late 1990s, and its significant impact on business and
society, governments around the world began migrating back office services
to managed data centres to improve service delivery efficiency. This was
followed by newly-designed digital service delivery for customer-facing
activities driven by growing pressure from citizens, residents, and businesses
for easier access to government-owned data and processes. The arrival of
“Digital Public Management” [4] exposed the challenges and opportunities
for digitally-delivered government service, and led to major initiatives such as
the UK Government Digital Service (GDS), a model that has been copied in
the USA, Australia, and elsewhere.

Early successes by GDS were based around the broad theme of “digital-by-
default” – a rallying cry to expose services and data via the web, and to
move to digital channels for delivery wherever possible. This had the impact
of galvanizing disparate efforts and communities toward the need for online
access to services, and for new design approaches for optimizing customer
experience through these channels. However, it also had the limitation that
services were frequently exposed to web interfaces without due
consideration for the suitability of those processes for digital delivery. It has
been argued that the resulting digitization activities focused too much on
presentation of existing services rather than questioning the validity or value
that the service provided in a digital world [5]. A more fundamental shift in
government digital service delivery was required.

Discussion within and across government has resulted in a series of new digital
government initiatives. Three documents form the heart of this “reboot” for
digital transformation in the UK: The UK Digital Strategy [6], the UK government
transformation strategy [7], and the Digital Economy Bill [8].

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UK Digital Strategy
At the beginning of March 2017 the Department of Culture, Media and Sport
(DCMS) issued an updated UK Digital Strategy with the goal of ensuring that
the UK delivers a “world-leading digital economy that works for everyone”.
The strategy focuses on four key areas:
 Expanding and speeding up digital connectivity with the technology
infrastructure and data management capabilities needed to connect
businesses and homes across the UK.
 Making citizens and businesses safer and less vulnerable online.
 Encouraging more new digital businesses and the digital transformation of
existing businesses.
 Reconfiguring government services to take more advantage of digital
technologies and new digital business models.

Through this combination of initiatives, DCMS aims to push the UK to capitalize

on perceived leadership positions it holds through its advanced research at
several world-ranked universities, digital infrastructure investments in 5G future
mobile technology, emerging Artificial Intelligence (AI) and Machine
Learning (ML) capabilities, and digital business hubs in London, Cambridge,
Manchester, and elsewhere. The successes seen in these areas are early
indications of how the UK could establish dominant positions in a future
digitally-driven world. However, the UK is naturally fearful that any such
success may be short-lived. The UK may be caught between three
challengers: the ability for centres such as Silicon Valley to spin new ideas
with the ecosystem of university research, large Venture Capital funding pots,
and the growth channels offered by US-based software platform providers;
the enormous talent pools offered by China and India with increasing skills
and productivity for massive scaling in short time periods; and the economic
and regulatory uncertainty of Brexit driving European organizations to create
centres in mainland Europe, and delaying foreign investment in existing UK
facilities.

The UK Digital Strategy is an attempt to address these concerns. The digital

infrastructure investments and the business skills investment aim to “reduce
the friction” of working in the UK. Businesses based here need to feel that they
can start faster, find new partners and skills necessary to grow, and get better
support to manage their business when connecting with customers around
the world. For citizens of the UK, the importance is to ensure that the benefits
to UK society are equitable and evenly distributed.

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Government Transformation Strategy
The newly-refreshed Government Transformation Strategy (GTS) is focused on
digital transformation across the UK Government over the coming years. To a
large extent, this document signals the next phase of the Government’s
digital journey with its explicit aim to “look beyond channel shift” to broad
business transformation in government, and its broadening of scope from
central government to embracing local government issues.

Although short on specifics, the GTS is quite an important re-statement of the

government’s goals and directions for digital transformation. The initial phase,
dominated by the “digital-by-default” mantra and embodied in the 25
demonstrator projects, was aimed largely at replacing costly high volume
citizen transactions with their online cheaper equivalents. The vast potential
savings that were calculated for the initial programme, claimed to be in
excess of £3B, largely were based on the shift from manual processing due to
paper-based activities and call centres, to self-service and automated
processing online. Additionally, the overarching “Gov.UK” portal to online
government services has been an important entry point for citizens to access
online capabilities, and the showcase for digital service design across
government agencies.

Reviews of the first phase of government digital transformation are on-going.

The key successes the Government Digital Service (GDS) have achieved to
date are widely seen to have been in the focus on service consumers
through the adoption of design thinking techniques, the core digital design
concepts that have introduced agile approaches in software delivery across
government, and the re-examination of large contracts to ensure that such
agreements for IT capabilities are appropriate and offer sufficient flexibility,
innovation, and value (e.g., [9], [10]). The result is a vibrant dialogue that GDS
has opened with the various government agencies on their strategies for the
digital economy. However, it is widely acknowledged that perhaps no more
than half of the 25 demonstrators have resulted in working systems that
achieve their intended goals. Furthermore, the focus on web-enabling
existing government services has been a useful starting point, but has largely
avoided the need to redesign or eliminate services in the context of
digitization. The National Audit Office (NAO) review of GDS progress is
promised for later in Spring 2017.

Addressing these concerns, this refreshed GTS broadens the focus of the work
of GDS is several important ways:

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 Build on the design thinking approaches to take a more extensive look at
user-facing services to improve customer experiences interacting with
government services.
 Work more closely with government departments and agencies to look at
deeper business transformation enabled by digitally-delivered services.
 Turn attention to local government, and the opportunity to take the
learning from the initial successes in central government agencies to the
over 400 local government councils who deliver citizen-facing services.
 Consolidate commonly delivered services into shared components that
are reused as necessary across different departments and agencies rather
than being rebuilt each time.

This last point is particularly worth highlighting. In fact, the re-architecting of

government services to create a common core set of capabilities, often
called “Government-as-a-Platform”, is now prominently highlighted as one of
the differentiating aspects of the government strategy reboot.

For citizens of the UK, the

importance is to ensure that the
benefits to UK society are equitable
and evenly distributed

UK Digital Economy Bill

Underlying the UK’s digital strategies and aspirations is a legal framework
embodied in the Digital Economy Bill currently finding its way through the
House of Lords (having previously passed through the House of Commons).
The basis of this Bill is a set of standards and regulations covering several
aspects of digital infrastructure, connectivity, privacy, and online behaviours.
While this Bill includes many individual pieces of legislation, the key unifying
theme is that the UK digital economy must be based on ways of working that
facilitate connectivity and transparency, while not overwhelming individuals’
rights. This is a difficult balance to strike, made more difficult by the dynamic
nature of the threats and challenges we face in a digital age, the speed of
technology evolutions, and the lack of meaningful boundaries for
technologies that are able to operate independently of jurisdictions, cross

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traditional business silos, and stretch interpretations of existing laws toward
and beyond breaking point.

The details of the standards and regulations within the Digital Economy Bill
cannot easy be summarised, and for those affected by them, they should be
closely reviewed. However, broadly the critical reactions have focused on
the implications of the Bill for data sharing and for personal data rights [11].
Openness drives collaboration and innovation, yet can lead to manipulation
and abuse. Government’s ability to understand, arbitrate, and regulate is
being severely tested. Recent investments in a Nation Cyber Security Centre
based in London will help. However, this critical element of digital economy
impact will remain a challenging area.

Commentary
The future prosperity of the UK and its role in the world is intimately linked to
the government’s ability to understand, support, and accelerate the creation
of a thriving digital economy. However, it must do so in the knowledge that
digital technology adoption may bring as much disruption as earlier industrial
revolutions with regard to social upheaval, redefinition of jobs, and a growing
gap between those advantaged and disadvantaged by on-going changes
[12]. Striking a balance between enabling the state-of-the-art to grow rapidly
and managing the controlled evolution of the state-of-the-practice will be a
struggle occupying much UK government time over the coming years.

The recently-announced initiative to focus much of this effort in the UK

around a broad industrial strategy is cause for optimism. The enabling ICT
advances supporting the digital economy will be organized in support of
critical domains for advanced research, leadership in modern engineering
practice, creation of new businesses, and ultimately the improvement of the
UK’s overall productivity. The challenges for the digital economy will be to
coordinate efforts that simultaneously encourage UK businesses to:

 Open up, creating new business opportunities for all sectors, and ensuring
larger businesses use digital technologies to develop the ecosystems that
support massive job growth.
 Join up, solidifying the advanced research excellence in the UK by
accelerating the delivery of new ideas into practice where the benefits of
commercial success can be recognized.

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 Smarten up, adopting practices and principles that support rapid
evolution of UK business and society in the context of unpredictable
change and increasing ambiguity.

The final commentary is necessarily a reminder that many individuals fear the
future of a digital economy as a dystopian vision where personal control,
responsibility, and trust are replaced by the nightmare of automatons
deciding on what is right and wrong based on a hidden collective
intelligence directed by big business and the State. It is our responsibility to
refute this, and to work diligently toward a different vision where the digital
economy offers a better place for us all to live and work.

Endnotes
1. European Commission Growth Strategy, https://ec.europa.eu/growth/sectors/digital-
economy/importance_en
2. B. Chakravorti, The Missing Political Debate Over the Digital Economy, HBR, October 2016.
https://hbr.org/2016/10/the-missing-political-debate-over-the-digital-economy
3. K. McLaughlin et al. (eds), “New Public Management: Current trends and future
prospects, Routledge, 2002.
4. P. Dunleavy et al, “New Public Management is Dead – Long Live Digital Public
Management”, J Public Adm Res Theory (2006) 16 (3): 467-494
5. A.W.Brown, J. Fishenden and M. Thompson, “Digitizing Government: Understanding and
implementing new digital business models”, Palgrave McMillan, 2014.
6. The UK Digital Strategy, https://www.gov.uk/government/news/digital-strategy-to-make-
britain-the-best-place-in-the-world-to-start-and-grow-a-digital-business
7. Government Transformation Strategy,
https://www.gov.uk/government/publications/government-transformation-strategy-2017-
to-2020
8. UK Digital Economy Bill,
https://www.publications.parliament.uk/pa/cm201617/cmselect/cmbis/87/8702.htm
9. https://blog.idoxgroup.com/2015/09/28/the-government-digital-service-successes-
turmoil-and-the-focus-for-the-future/
10. http://www.computerweekly.com/news/450402787/GDS-strategy-aims-to-take-digital-
transformation-further
11. http://www.huffingtonpost.co.uk/louise-haigh-mp/digital-economy-bill_b_12534464.html
12. K. Schwab, The 4th Industrial Revolution, Portfolio Penguin, 2017.

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About the Author
Alan W. Brown is Professor of Innovation and Entrepreneurship at
the University of Surrey’s Business School. He has over 25 years of
experience in commercial high tech companies leading R&D
teams, building cutting-edge solutions, and driving innovation in
software delivery. He is the founder and director of the Surrey
‘Centre for the Digital Economy’ (CoDE). His most recent book is
‘Digitizing Government: Understanding and implementing new
business models’.

About CoDE
Surrey Centre for the Digital Economy (CoDE) has been recently
established as part of the University of Surrey’s Business School.
CoDE brings together world class research into 5G mobile,
Internet of Things, Cyber Security, Business Platforms, and Agile
Development. CoDE provides a vital bridge between business,
large and small, to harness the commercial power of innovation
and to make management education more relevant to the
digital economy. See: www.SurreyCoDE.org for more details.

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