GovTech - the $400bn ‘local’ market

By Apala Bhattacharya

Interview with Dr Tanya Filer, head of the Digital State project at the Bennett Institute of Public Policy.

The globe has gone GovTech mad. It’s said to be a $400 billion industry. Thailand has a strategy to launch a new GovTech industry. Singapore has a dedicated GovTech agency. International organisations like the D7 bring together the best GovTech nations in the world.

But all is not as it seems. “There’s a risk of techno universalism: the idea that the same technological solution can solve problems the world over,” says Tanya Filer, head of the Digital State Project at Cambridge University. “History has taught us it doesn’t tend to be the case.”

Filer researches this field in the brand new Bennett Institute of Public Policy. She tells GovInsider about how, like politics, all GovTech is local.

Culturally different GovTech

Filer cites three examples of how GovTech is shaped by local issues. First, Israel has prioritised building local innovation.“One thing that I think they are doing very well is thinking about the local implications of GovTech,” she explains. The country started pooling public funding into the Digital Innovation Fund to finance startups as they undertook public sector challenges. The state plays a key role in the financing of these startups which is later paid back to the government through royalties.

Today startups are an intrinsic part of innovation in the public sector instead of solely developing technological solutions for a specific sector, explains Filer. Known as the startup nation, Israel has the highest number of startups per capita in the world. Digital Israel, the country’s digital government agency tenders problems to startups in the country instead of asking them to develop a pre-defined solution.

Second, Argentina has used tech to better engage citizens. The country’s Network Party was created to introduce direct democracy into the parliamentary system. It would use an open source platform where citizens inform their MPs on how to vote in the legislature if elected. This adopts the delegate model of representation, where people are elected as mouthpieces of citizens, rather than the more traditional model of an elected representative as a trustee - which was first set out by the English philosopher Edmund Burke.

“Now why did that project emerge in Argentina rather than elsewhere?” asks Filer. The party was set up in 2012, when the country was taken over by civil unrest over corruption in the incumbent government. More than half a million people protested in front of the Presidential palace to remove President Fernandez from power.

Third, Britain is using tech to tackle economic challenges through the GovTech Catalyst. “There's an emphasis on creating or helping to create startups that might also be able to contribute to economic growth,” explains Filer. The programme seeks to address challenges that the UK is facing such as productivity, she adds.

The GovTech Catalyst programme tenders problems such as healthy ageing, future of mobility as well as clean growth, among others. Any public sector organisation in the country can submit a challenge to which businesses and academic institutions then pitch solutions. Funding is available for each round of the challenge. Recently, it tendered a problem to solve how firefighting crew can be tracked inside buildings with minimal visibility to improve firefighters’ operations and safety. A share of US$1.62 million is available for an immediately deployable solution.

An innovation ecosystem

The emergence of GovTech is a sign that governments are becoming creatively more open, says Filer. Historically, governments around the world were characterised as strongholds of bureaucracies. “So actually think it's a positive sign of a certain openness to creativity within pockets of government,” says Filer. Government is increasingly working with private sector and other stakeholders to apply emerging technologies in solving public policy challenges.

Universities, for one, play a large role in the primary research of technology. But in the application of GovTech, researchers from non-tech backgrounds must also be included to apply emerging technologies to issues such as health and urbanisation. “For example, public policy research is crucial for helping startups to understand the kinds of challenges that they might help to solve,” Filer explains. Universities are also a common sharing space for the ecosystem.

The University of Cambridge has set up a new interdisciplinary institute to bring together academics from various disciplines in tackling policy issues. The Bennett Institute for Public Policy has been set up by the University of Cambridge to bring together academics from various disciplines in tackling urban issues.
“Our ambition is to be a space where disciplines can come to help to address some of the greatest challenges of public policy this century, of course, technology is at the heart of that,” she says.

Future of GovTech

Part of Filer’s research includes understanding how the GovTech industry is changing. As the ecosystem matures, she identifies three ways in which GovTech can be improved.

First, the GovTech ecosystem should have patient investors, explains Filer. Government sales cycles can often be very long, she adds. “The availability of patient financing, I think, will also be a crucial factor in determining whether or not the ecosystem matures,” she explains. For example, the Digital Innovation Fund in Israel provides grants depending on the stage of development. This can be later paid back through royalties to the government.

Second, procurement in the public sector must also change, she adds. Governments should tender more challenges and problems instead of solutions. While still a slow moving process, tendering problems improves the government’s openness to new solutions and technology, says Filer. “I think one example of this is governments learning to tender, not just solutions, but challenges, which means that asking startups to come up with solutions to some of the problems that they are facing.”

Lastly, startups and the private sector need to better understand and empathise with the challenges that government face, says Filer. Building GovTech platforms for the public sector is one such way of appealing to regulators as well as providing a tool for public officials to see how solutions will interact in the public sphere.

For example, Bird, a mobility company providing electric scooters set up a gov-tech platform in response to problems with e-scooters being left all over cities and causing problems for public officials. The platform includes data dashboards to report on pain points in the city, a geo-fencing tag to inform riders where they can and can’t park e-scooters as well as a community mode to let users report incidents.

All GovTech may need to be local in context. But this academic in Britain is analysing trends emerging right across the world. It may be a tough market to crack but $400 billion is certainly worth it.