Fixing digital funding in government

To successfully design, build and sustain great digital services you need to fund them properly. Too little process to manage funding, and you won’t focus on the right priorities and you’ll duplicate effort. Too much, and you’ll suffocate innovation and condemn your existing services to gradual decline and growing risk.

When digital services are the face (and increasingly the heart) of any organisation, getting digital funding right is fundamental to whether you’ll thrive or decline in the internet-era. Organisations in every sector have accumulated processes for creating and approving business cases for funding. The ones that win are the ones who can adapt those processes so they help teams make and sustain great services.

These are challenges for every sector, but governments particularly suffer from accumulated funding processes that often do more to impede than to support. Fixing that requires leaders to make it a priority.

Australian state New South Wales redesigned its digital funding model in three critical ways. It released funding in smaller increments tied to progress toward specific outcomes, which reduced risk and encouraged agile behavior. Secondly, it transitioned from funding multi-year projects to funding persistent teams that delivered end-to-end customer journeys. And thirdly, it reformed governance to focus on outcomes.

Victor Dominello, New South Wales' minister for customer service explained why funding reform was necessary: “Leading digital governments are thinking about funding in different ways, and putting that at the centre of their political programmes. Good governments have to compete with the likes of Apple, Google, and Amazon. People are used to customer service and digital tools that work”.

We’ve been working with Boston Consulting Group’s Robin Mann, Miguel Carrascoand Rajive Mathur over the past few months on how to reform funding to realise digital transformation’s full potential. We’ve identified seven shifts in culture, attitude, and behaviour that are crucial, and published them together. You can read the paper over on BCG’s website.