What’s holding back the digital transformation of local authorities?

A complex mix of issues is impeding the digital transformation of council services nationwide. Barriers to innovation include legal constraints, skills shortages, fiscal limitations and deeply embedded legacy tech
Birmingham Town Hall

In town halls across the land, local and regional leaders are grappling with a conundrum. Few of them doubt the power of a digital transformation to make council services more accessible and cost-efficient, but several limiting factors are combining to hinder progress.

Amit Shanker is an expert in data analytics who has worked for blue-chip firms including Microsoft, HSBC and real-estate giant JLL. In January, he joined the London Borough of Newham as deputy CEO and chief digital officer, having led a business transformation project at the Financial Conduct Authority. 

He points out that local authorities have a long list of stakeholders to keep happy, from their employees and the communities they serve to central government and the media. They must also satisfy a whole set of legal and procedural requirements. Businesses, meanwhile, can usually focus their efforts on satisfying customers and shareholders.

“Statutory obligations mandate that a public body continues to discharge its services even while redesigning these as part of a digital transformation,” Shanker points out. “With councils under increased fiscal pressure after central funding reductions, they’re being expected to do more with less. Value for money must be demonstrated.”

A key factor that’s frustrating councils’ transformation ambitions is that the digital skills they require are in great demand and therefore don’t come cheap. While businesses are prepared to pay a premium for these, Shanker suggests that the public sector tends to hire people on temporary contracts for such work, which often turns out to be a false economy.

Working in a newly created role, Shanker has already identified some quick wins, such as straightforward ways to make the council’s systems more user-friendly for staff. His medium-term plan is to modernise the tech stack and, in the longer run, he envisages making extensive use of the internet of things and digital twins. 

He accepts that there is much work to do to build a smarter Newham. Public-private partnerships will be required in certain areas to achieve this outcome.

“Unlike businesses, public sector organisations undertaking digital transformations would benefit from an ROI horizon of five, 10, or 15 years, which provides a more convincing impetus to invest up front,” Shanker says.

The digitalisation of services

Many people working on digital transformation projects in the public sector agree that, while there’s no shortage of ambition, they are often hampered by so-called software lock-in. This is where the initial cost (and disruption) incurred by replacing deeply embedded legacy tech would be so great as to be prohibitive, given the funding constraints that councils are working under. 

Despite this, there have been some success stories in recent years. Take Swindon Borough Council, for instance. The authority’s collaboration with cloud provider Amazon Web Services (AWS) in 2021 to harness the power of artificial intelligence has drastically improved its response to fly-tipping around the town. The average clear-up time has been cut from more than 10 days down to four.

Anyone who spots illegally dumped refuse can pinpoint its location for the council using a map on its website, describe the contents and upload photos. The AI system analyses this report to determine what kind of vehicle will be required to remove the load. It helps the council to manage its resources so that rubbish appearing to contain hazardous materials is prioritised.

Quoted in an AWS blog post, Sarah Talbot, leader of the council’s emerging technologies team, said she thought that the project’s success had changed attitudes among the wider workforce. 

“They can see the value of the work – and that our focus and drivers are around helping with real issues in tangible new ways,” she explained.

The public sector is dogged by a combination of constraints that have historically frustrated ambitious digital transformation efforts

Nonetheless, the digital transformation of the nation’s public services has generally been “patchy” to date. So says Simon McNair, head of the UK public sector business of Iron Mountain, an S&P 500 company specialising in enterprise information management systems. His firm has been working with numerous local authorities in England and Scotland, including Birmingham City Council and the City of Edinburgh Council.

“Digital transformation in public bodies is often behind where it is in private organisations,” McNair says, although he adds that the gap is not always as wide as people might imagine. 

McNair believes that local authorities should focus the limited resources they have on digital transformation where cost-saving potential or the opportunity to improve the citizen experience is greatest. 

“The public sector is dogged by a combination of financial and cultural constraints, which have historically frustrated ambitious digital transformation efforts,” he says. “These include the challenge of legacy paper, which is costly to review and then digitise or destroy.”

Dealing with the legacy fallout

Adam Walther is head of digital and transformation matters at Woking Borough Council, which has been under “significant financial strain”. The fact that money is tight, he says, is even more reason for the authority to digitally transform itself, given the cost-efficiencies that could accrue from doing so. 

Walther estimates that only 10% of local government organisations are being truly innovative in this respect. The software lock-in problem is stifling creativity, forcing “services to be designed around legislation at best – and around archaic software provision at worst”.

The pooling of resources across the sector could help to mitigate this and other problems. It’s something that the Department for Levelling Up, Housing and Communities is attempting to coordinate, according to Walther. 

“We’re still duplicating the same processes 350 times for each council, whereas centralised digital teams working on behalf of the whole sector could radically reduce cost and improve delivery,” he says.

The transformation parameters are much the same for aspects such as the provision of parking, leisure space and bin collections, but they couldn’t be more different when it comes to the council services that cover sensitive areas such as housing and social care, Walther notes. Investment and implementation here are subject to tighter regulatory constraints, while the needs of vulnerable residents – children and homeless people, for instance – must take priority.

“A common mistake is to view these groups as ‘customers’, which implies choice on their part,” he says. “If you don’t have the means to pay privately for social care, say, the council is your only option. You are therefore a user, not a customer.”

This forces local authorities to pull in “contradictory directions” on digital transformation, argues Walther, who believes that the outsourcing of complex council services to third parties “has mostly failed”. 

Looking ahead, Walther believes that local authorities should prioritise providing “excellent services that are online by default”. But he adds: “We’re having to be more open and honest about finances and service delivery than ever before.”