Why Estonia hasn’t built a government digital service

“We do things differently,” admits Siim Sikkut, the Estonian Prime Minister’s Digital Advisor. While most governments are launching in-house digital teams, his country has bucked the trend.

“We outsource the development,” Sikkut explains. “We don’t do that almost ever in-house, but once it’s up and running we take over.”

With services including online voting and digital prescriptions, Estonia is one of the most advanced e-governments on Earth. Sikkut caught up with GovInsider to explain the secrets of the country’s success - and how it plans to keep developing its public services.

The outsourced nation

First, why did they decide to outsource services?

“You cannot really hire programmers on our payroll,” Sikkut explains. The government would have had to compete with companies like Skype - a local behemoth - but it would be contentious to increase salaries and the size of the government workforce.

There were “temptations”, he admits, but “if we can’t compete in pay, we don’t get the best.” So the country makes outsourcing work for them - avoiding the traditional elephant traps by procuring from agile companies, not “vendors who work in classic and cumbersome ways”.

The government has used outsourcing to boost local tech companies. In the past 6 years, the market has grown from 14.2 billion euros to 20.5 billion euros - according to official government statistics - and the country is hailed as an emerging tech hub.

"Government is a playground." 

The country has used approach dubbed “government is a playground,” he says. When companies have a “cool product idea”, they can approach the government to test it out in the public sector.

For example, the nation worked with a firm to protect healthcare and other records by using a Blockchain-type system.

The company now has established global offices and is partnering with multinational telcos and banks. Estonia is a corrective to the belief that more IT development must be done in-house.

As a member of the elite D5 group of digital nations, it is hailed for its online services. And, Sikkut says, another D5 nation is similar: “Korea also does a lot by spending and procuring in.”

Structural secrets

Many nations have central teams to ensure standardization across departments. How does Estonia manage ICT projects?

“We don’t develop top down,” Sikkut says. Each agency has responsibility for procuring services and managing projects. “Every minister is basically the digital minister in their field.”

However, there are carrots and sticks to ensure departments follow the rules. The key method of control is through the budgeting process. The Government CIO controls most of the IT development funding and “if you don’t do it the right way you don’t get the funds.”

Standardization is “easier said than done,” however. Sikkut came to Singapore last week for the government’s Digital Services Exchange and found that many governments face the same problem.

Three potential solutions were discussed: centralized training; shared platforms and metrics; and spending controls to guide behavior.

The vision

Despite Estonia’s success, the country plans to radically overhaul its digital services, Sikkut says.

“We’ve been building digital government for 15 years, but there hasn’t been enough user focus so some things are awesome, some things are lousy,” he says.

"There hasn’t been enough user focus."

Starting in 2017, the country will roll out services that use analytics to predict citizens’ needs. One idea is to automatically pay citizens monthly payments once they reach retirement age.

Second, the country thinks all newborn babies could be registered just with an email confirming their name. The government will then take care of vaccination updates, school registrations, and other notifications.

The third - and the most concrete plan - is to automate all taxation for willing SMEs, pulling in their bank records and issuing a yearly bill. These services rely on data analytics, but the country is already advanced here. Agencies are mandated to share data amongst themselves and there is a rule - Once Only - that government can only ask for data once.

All citizen and company records are digital. Healthcare records are all digital, Sikkut says, and tax filing is also simple. “More than 95 per cent of people spent less than 3 minutes on their tax declaration,” he says.

Privacy concerns

Curiously, privacy - an ongoing issue in many countries - is not proving controversial, he claims.

“The privacy conversation has already happened and is behind us”.

There is a good level of trust in the government because Estonians are proud to have their institutions, Sikkut explains, after over forty years of rule under the Soviet Union. Are politicians rewarded at the ballot box for implementing good digital services? Yes and no, he says.

“They know it is popular, so we enjoy high political support for these reforms. But then again, whether we perform digitally is not a decider in elections - it’s still national security, jobs, growth.” Of course if the government “screws up” then digital services will be a hot topic, he notes.

The benefits of borrowing

The nation is a big fan of taking ideas from other governments, Sikkut says.

For example, its e-residency scheme - a much-publicized way to allow anyone to use the country's digital services online - was borrowed from Finland and adapted.

There is a conscious effort to actively imitate successful projects. Last year, the country’s Prime Minister said that civil servants “should not be afraid to copy” - either from other governments or from the private sector.

The country’s biggest outstanding question is “how to sustain the momentum of innovation,” Sikkut says. “Nobody in the world has a good solution yet.”

Many countries have set up good movements or units, but it is hard to keep pushing agencies to adapt. “We’ve had our experience of that. We started very early and did some amazing things but then the pace slowed down bit by bit,” he explains.

The country decentralised to include public sector agencies, but is now starting to centralise the strategic development to drive through changes.

The Estonian Prime Minister has backed changes to the nation's digital services, so the government should find it easier to drive change than other administrations.

But, as Sikkut notes, the key is not technology itself - it's the culture of the agencies. “We still have to work on how to grease the machinery of government.”

Siim Sikkut will be a keynote speaker at Innovation Labs World on 27 September. Find out more details here.