02_Dealing_with_Digital_Disruption

How Public Sector Entities Can Turn Its Negative Impacts into Positives

Welcome to Part 2 of our series on Digital Transformation for the Public Sector.  Today’s topic is dealing with digital disruption in a manner that turns its negative impacts into positives.  Before we get to that, we need to define the term digital disruption.

Digital Disruption Definition

What does digital disruption mean?  First, understand that digital disruption is a natural outgrowth of digital transformation.  This makes escaping digital disruption impossible for any organization engaged in the battle to gain efficiencies and increase effectiveness.  The cresting wave of digital disruption is going to wash over your organization, and there isn’t anything that can stop it.

While it sounds like dire straits, tagging the disruption as negative or positive depends on your perspective.  If you’re skilled at turning lemons into lemonade, dealing with digital disruption is right up your alley.  Here’s why: Although new or emerging technologies tend to disrupt the status quo, they also bring with them the promise of opportunity.

This idea is inherent in how this term is defined. The digital disruption definition found in the Gartner IT Glossary states that it is “…an effect that changes the fundamental expectations and behaviors in a culture, market, industry or process that is caused by, or expressed through, digital capabilities, channels or assets.”  The blog for the Oxford College of Marketing defines our term this way: Digital disruption is a transformation that is caused by emerging digital technologies and business models. These innovative new technologies and models can impact the value of existing products and services offered in the industry. This is why the term ‘disruption’ is used, as the emergence of these new digital products/services/businesses disrupts the current market and causes the need for re-evaluation.”

Examples of Digital Disruption

To see these definitions in action, let’s use Uber as an example.  Most understand how Uber’s service disrupted the taxi industry- but not very many know that it also disrupted airports.  Cab drivers haunt airports looking for fares, and most airports have agreements with the companies to pay for this privilege.  To ensure airports get paid, the companies install transponders in their cabs so that taxi activity can be tracked.

However, when airport travelers started using Uber’s services, airports found themselves caught in a case of digital disruption.  Since Uber drivers use their personal vehicles, transponders could not be installed in them, so driver activity couldn’t be tracked- and the airports couldn’t charge Uber.  The IT team at San Francisco’s airport solved the problem by developing a system that detected Uber’s GPS app, used by every Uber driver.  When an Uber car entered the airport’s perimeter, its presence was registered and its activity tracked. Uber was charged according to its agreement with the airport.

Here’s another example: In the Public Sector, many government entities are struggling to continue providing key citizen services in the face of dwindling funds.  However, many are forced to either suspend or end important services, or raise the price of these services through increased taxes or outright fees.  This causes citizens to seek out alternative providers, exactly the scenario that digital disruptors seek out.  Why?  Because there is a gap between what the citizenry wants and what the government provides.  The technological advantages championed by disruptors enable them to establish fill the gap with new digital business models based on delivering value to customers through reduced costs, economies of scale and- the ultimate arbiter- improved customer experiences. They deliver the same or enhanced value as the government entities without duplicating the investment of capital, coping with seemingly endless regulatory requirements and overcoming the other burdensome impediments that bind many Public Sector entities.

Solving the Public Sector Dilemma

So what’s a well-intentioned Public Sector organization to do? How can it change digital disruption from a negative to a positive? Simple- embrace the change. Here are eight effective strategies to help with this effort:

  1. Don’t run from change; Face it. Change is coming. Organizations looking to improve their effectiveness and increase their efficiencies must understand that early adoption of new technologies is a way of life. Understand how digital disruption works in your favor. Challenge the assumptions inherent in the way your processes work.
  2. Don’t wait; Start moving forward today. The key here is to respond deliberately, not reactively. When you act, act strategically. Evaluate and refine everything you do. Plan how you’ll cope with change when it comes. Prepare now to take advantage of opportunities when they appear.
  3. Visualize how your best self serves your constituents. Take off the blinders, give yourself permission to dream big and focus on your constituency. Will new technologies solve their biggest issues and concerns? How? Are there new technologies enabling you to improve processes, deliver better service or reduce costs? If so, adopt them now.
  4. Reduced costs trump increased value nearly every time. The one near absolute of digital disruption is this: customer demand is driven through reduced costs. It is the single greatest attribute that almost every digital disruptor brings to the table.
  5. Benefit from the change. Think about the IT spend that bought those systems and servers running your organization’s ERP software and activities. If it were possible to remove that hardware, and the costs associated with service or upgrades, would you benefit financially? If so, say ‘hello’ to cloud-based ERP systems and ‘good-bye’ to all that hardware.
  6. Understand how the job must be done. Think in terms of inputs and what steps are essential to arriving at your desired outputs.  Eliminate as many of the interim steps as possible. In the end, if a process does not add value, eliminate it.
  7. Understand the inherent trade-offs. Every opportunity for advancement comes with some trade-off. Identify those trade-offs. Realize when ‘just good enough’ is, well, just good enough. If providing 25% of a service enables substantial savings, then perhaps that 25% is just good enough.
  8. Partner with the change. As a Public Sector entity facing the prospect of digital disruption, realize that you don’t have to be a victim. There is an alternative: Partner with disruptors. Help level the playing field between older, established partners and new up-and-coming entities. Work to change laws and regulations that strangle innovation. Establish Public-Private partnerships when appropriate.

Coping with changes brought on by digital disruption is never easy. Finding ways to work through the disruption and seize the opportunities it provides is a crucial in determining the success of your digital transformation.

Find out more about how SAP’s Business ByDesign delivers the benefits of digital transformation for your organization by getting in touch here.

By: Teresa Blackwell, Director, SAP Business ByDesign Practice, & Jay M. Winchester, Proposal Writer

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