Will digitalization replace services provided today by the public sector? Will those alternative services, provided by private business, only be available to, or chosen by, higher-income families? These questions were posed by a senior executive from the public sector during our recent Gartner Symposium/ITxpo conferences. They are fascinating questions, particularly coming from a leader in the public sector, and the answers will undoubtedly be influenced by where you sit on the political spectrum. Let me try to remain politically impartial as I outline the situation.
Digitalization Leading to Transportation as a Service for Some, Not All
Born-digital services such as Uber, Lyft and Zipcar have captured the imagination of consumers in this increasingly sharing-based economy, creating a significant change in the usage of, and spending on, transportation in urban areas. They are augmenting public services, leading to what could be described as “transportation as a service.” BlaBlaCar.com takes this concept several steps further by providing shared rides between cities in several European countries, replacing mass public transportation.
These services are only available to the digital consumer, excluding those without access to smart devices. Transportation as a service undeniably increases the choices available to digital consumers, but will these new methods ultimately deprive public services of funding to the point where they are no longer sustainable for the millions of people who rely upon them? Is this simply another step in the already long journey of privatization that we have taken, where the metaphorical “have’s” travel above ground and those who “have not” travel below? Or can the public sector compete — and thrive — by leveraging digitalization to transform the efficiency, service and cost of the transport it provides to offer new options that are fit for purpose in the new digital industrial economy?
Digital Evolution or Revolution
Imagine other areas of public sector services that could be replaced or radically augmented by digitalized services. Robots that care for the elderly in retirement. Communities ”policed” by smart surveillance devices and drones. Education that is delivered in-home via devices and supported by communities based on topic, not geography. All delivered at a price point far lower than those services are provided by the public sector today. In some countries, these examples don’t sound farfetched at all. In fact, they are either here already or on the verge of adoption.
In other areas such as Canada, Western Europe, Japan and Australia, this digitalized future in which the private delivery of public services occurs is revolutionary. But this may be exactly what is happening in the digital industrial economy.
Forces Combine
The ability to provide a service at scale is increasing in the digital economy, and digital consumers are increasingly able to use these services, provided they have the financial means. The last point is crucial. Alternative services to those provided by the public sector will be increasingly available to a larger number of people who can pay, leaving a less-than-certain future for the services provided by governments for those who cannot.
On the flip side, maybe private services will be able to offer services – such as schools – at a lower price point than public services in areas of scale, such as in densely populated cities or where digitalization eliminates the need for physical infrastructure, which could provide a greater level of service to everyone.
This shift could happen quickly due to the accelerating digitalization of businesses, a rapid increase in sophistication of the digital consumer and the compounding likely, slower digitalization of the public sector. Digitalization will place huge pressure on governments and leaders in the public sector to change faster than at any other time in modern history. Politicians and civil service leaders must face the inevitable; embrace digitalization or risk governing an increasingly fractured society.