The COVID-19 pandemic has put national and sub-national governments around the world to the test. Public health systems have been overwhelmed by an exponential increase in patients while governments have had tremendous difficulties in detecting and controlling infections. At the same time, the provision of essential public services such as education or public transport has at times been seriously compromised.
The pandemic has made certain lessons obvious for governments around the world, these being some of the main ones observed by the PublicTech Lab and by the GovTech community in their work with public institutions:
1. Problems faced by governments are increasingly complex and, therefore, the traditional ways of operating are not enough to solve them. Governments now more than ever need to collaborate with innovative companies to find solutions to these challenges.
2. In order to deploy these forms of collaborative action, governments need to be more agile and equip themselves with new capabilities. Otherwise, their actions will not have the expected results or will be too late.
3. The use of technology and carrying out of digital transformations are no longer optional for governments; it is a fundamental requirement. Many governments have seen how the lack of, or deficiency of data has hampered their pandemic management, efforts to deal with its effects, and deployment of strategy strategy. While the most technologically advanced governments managed to move medical consultations, judiciary processes, or social assistance to the digital sphere, many others have had serious difficulties in responding to the basic needs of their citizens.
The arrival of the GovTech ecosystems
In this context, GovTech ecosystems emerge to bring innovative solutions closer to the public sector. They allow collaboration and interaction between companies, governments, investors, international organizations, citizens, and academic entities, so that public institutions have the best tools to solve the complex problems affecting them.
Although these ecosystems had already been developing strongly in recent years, the COVID-19 pandemic has given them a definite boost. According to academic studies such as the recent one by StateUp, the GovTech space is experiencing a clear increase in interest from equity investment entities in the wake of the pandemic. Startups aimed at a better provision of public services such as ElectronicID, OSCity, Munidigital, VU security, Datasketch, Taiger, or Citibeats are already collaborating with cities and providing new high-value digital solutions, such as facial recognition to access public services, artificial intelligence developments for better document management, platforms to manage incidents in cities, active knowledge on citizens through the study of interactions in social networks, or the generation of digital identity based on blockchain for public workers.
There are also pioneer cities that saw the opportunity and invested in their GovTech ecosystems years ago, managing to attract innovative solutions from startups, scale-ups, and digital SMEs to solve their challenges. For example, San Francisco has invested in an accelerator program where teams from the city government work together with innovative companies to solve real problems with specific solutions since 2014. In Europe, Amsterdam has replicated the model and has been developing the “Startup in Residence Program” for three years. And in Spain, Govtechlab Madrid is piloting up to five innovative solutions this year in five cities in the region.
GovTech is also a reality in Latin America and the Caribbean cities. The city of Córdoba in Argentina and the city of Bogotá in Colombia are setting up their GovTech laboratories and programs. These are joined by new initiatives in Peruvian, Costa Rican, and Uruguayan cities. It should be noted that an interesting feature of the region’s ecosystem is the number of private actors that are also promoting this space. The work of the pioneer BrazilLab, the first and until now the only GovTech accelerator in the region, and the impact of the GovTech OS City company and its GovTech forums (in 2020 five were held with an average of 400 attendees) highlight this trend.
All of the examples above reflect initiatives undertaken by local governments, this trend is logical considering the larger context: urban areas are where most of the population is consolidated, with all the opportunities and challenges that agglomeration brings. The most innovative solutions are being tested at the city level, largely thanks to the greater proximity between local governments and their citizens, and the greater speed and flexibility in the operation of these governments.
GovTech ecosystems boost growth and transparency
Likewise, the GovTech ecosystem is also an important market that can be a great engine for growth and economic development. Accenture values the global public sector technology purchasing market at about US$ 400 billion and predicts it will reach one trillion by 2025. In most OECD countries, governments manage around 15% of their national GDP in public purchase contracts according to the Observatory of Local Public Procurement.
According to a study by Digital Future Society, while it is difficult to pinpoint funding spent on GovTech-driven projects, the level of public expenditure on information technology provides an indication of the size of the information technology public procurement market as a whole. For example, as cited in the same study, the US government spent US$425 billion on information technology in 2015, a figure surpassed only by banking and manufacturing. If a small part of this market could be channeled to small and medium-sized companies, a great space of opportunity would be generated for the majority of innovative companies.
However, implementing these innovations requires governments to be eager to develop new methodologies and work cultures, and to render transformation in their institutions. They must promote transparency, cross-sectoral collaboration and accountability, just as the leading countries in the OECD Digital Government Index are doing. Nonetheless, developing a GovTech ecosystem entails overcoming barriers such as procurement laws, access and identification of the public buyer, lack of spaces for mutual knowledge, different timings of public administrators and entrepreneurs, or the public sector resistance to pilots and experimentation.
On the one hand, many startups perceive these barriers and choose to redirect their solutions and efforts towards the private sector. On the other hand, many governments also experience frustration when they find that internal rules and procedures prevent them from accessing the best solutions on the market. When public demand is formulated based on the known supply of common technology solution providers, emerging innovation falls far short of public purchasing. The great distances in work cultures and even the language between the two worlds prevent governments from accessing the best innovation.
Bridging the gap between innovators and governments
The generation of GovTech ecosystems seeks to reduce these barriers, bringing innovators and governments closer together. Precisely, with this series of blogs, we want to contribute to this effort of making the GovTech ecosystem visible in Latin America and the Caribbean, especially in the urban environment, and by sharing the best international practices for the development of these ecosystems. In the blog series to follow, we will talk about the leading international programs, we will describe the GovTech open innovation methodology step by step and we will analyze the state of the GovTech ecosystem in the region.
This series aims to be especially relevant for those cities in the region interested in seeking new solutions to improve their service to citizens in alliance with the private sector. We invite you to follow the GovTech activities that will take place in the coming months in collaboration with IE University and the IE PublicTech Lab
Photo credits: Zap Art / Getty Images