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Taking the lead in digital transformation: A Kiwi perspective

Taking the lead in digital transformation: A Kiwi perspective

Government CIO Colin MacDonald on how NZ became a digital ‘standout’ nation

Increasingly, governments are turning to big data and analytics, as a way of better understanding the cost and effect relationship between what they do and trying to support the citizens

Colin MacDonald, NZ GCIO

Colin MacDonald believes his earlier career in banking is helping him now, in his concurrent roles as chief executive of the Department of Internal Affairs and Government Chief Information Officer (GCIO).

MacDonald was chief operating officer of ANZ Banking Group in New Zealand, when he joined government in 2002 as CEO of Land Information New Zealand.

“Government is much more complicated and more complex than the private sector,” he says.

"We have a whole range of agencies we have to work with. We have to balance taking a central system approach and the individual independence of the agencies through their ministers reporting to Parliament.

He says when he worked for ANZ Bank, they faced a similar issue.

“New Zealand was an operating entity. We had a level of independence from the group in Melbourne, but we had some rules to follow.

"But it is much more exaggerated in government because there are more entities involved."

Asked whether this could be one of the reasons why a number of people in banking are now in government, he says, “well, it may be”.

“They are used to that level of complexity. They are used to large operational functions."

He observes most government transactions at some level involve money, be it collecting tax or distributing revenues.

But then there are basic differences too. 

“It is harder to measure success in government,” he states. “In banking, we would measure by share price, return on investment. Those are  clear measures and they happen quite quickly.”

“In government we are looking at longer-term outcomes and the impact of a particular agency activity is often hard to measure.”

He brings the discussion towards the use of big data and analytics in government.

“It is a well known issue,” he says. “Increasingly, governments across the world are turning to big data and analytics, as a way of better understanding the cost and effect relationship between what they do and trying to support the citizens.”

He says the current government’s investment approach has received a lot of international positive attention.

"The whole idea of using data and information to identify at risk members of the community and at risk communities and intervening early and supporting those communities early with investment rather than waiting further down the track...analytics is absolutely key to that.”

MacDonald says government agencies in New Zealand are broadly speaking reasonably independent in running their operations.

Since the 1980s, there was very clear set of government reforms that meant government agencies operated independently and that drove a lot of efficiency and a lot of value, he says.

“More recently we realised while that is a great strength, it also has some weaknesses.”

Hence, he says, the Government CIO (GCIO) was established, as a functional leader for government ICT, and supported by a team from the Department of Internal Affairs.

"I have been given a set mandate and authority for certain things, and agencies have come to talk to our people to make sure they are investing wisely. The mandate is important because it gets people to the table, it gets people talking," he says.

“That really makes the difference. When you actually try to understand the problems the agencies are trying to solve and you illustrate the value of working together. That has been the approach.”

It is also the approach that has propelled New Zealand into one of the 'digital elites' in governments.

The 2017 Digital Planet report by the Fletcher School at Tufts University has named New Zealand as one of the “standout’ digital nations. The research tracks the progress countries make in developing their digital economies.

New Zealand is also founding member of the Digital 5 or D5, a group representing the most digitally advanced governments in the world.  The other members are Estonia, Israel, South Korea, and the UK.

D5 meets once a year, with New Zealand hosting the next summit in February, 2018.

Watch: GCIO Colin MacDonald talks about the relevance of the digital transformation and its implications for public sectors.

He says he was “pleased” to report back to the ministers a couple of months ago around the progress of the original strategy and action plan for ICT in government.

"Firstly, we have exceeded the financial savings target that we first set," says MacDonald.

He says the government has delivered $107 million annual savings, exceeding the 2017 target of $100 million.

"These have been validated by the Treasury, which had completely supported the savings that have been made."

"We have done that through a number of strategies, though primarily in two broad approaches. One is establishing government as a single buyer, as often as we possibly can.

"We have in place government agreements in both the hardware and software space, and have a panel of infrastructure as a service providers.

“The agencies are drawing from that panel and it is saving them money,” he says, "but also making it easier for agencies to consume their services.”

He says this requires a balancing act. “We have to be seen as even handed."

“It is a polarity,” he adds. “We want to achieve a high level of probity, we also want to achieve simplicity and agility.”

On the other side, he says, the government provides early stage investment cases with agencies, to help them make sure they are aware of what is available.

“But also, that we are investing in a more strategic way. And that has made quite a difference to the way we approach the market in the first place.

 He says another area of progress is accelerating online transactions with government.

"We are on track to achieve 70 percent of New Zealanders’ most common transactions with government being completed in a digital environment by the end of 2017."

He says 70 per cent “was a pretty aggressive target, and we are pretty much on track at 60 percent of target.”

NZ government CIO Colin MacDonald at the ANZ CIO forum in Sydney
NZ government CIO Colin MacDonald at the ANZ CIO forum in Sydney

Game changing technologies

“As I look back, I can not think of a time when there were so many potentially quite game-changing technologies coming into fruition,” says MacDonald, whose ICT career started after completing a computer science degree in 1980 at the University of Glasgow.

“But we are good at hyping,” he says, smiling. “I still look at the Gartner Hype Cycle and use it as a bit of a reality check.”

But I think there is a lot of technologies that are starting to emerge or mature that are very interesting.”

One of these is blockchain as it involves trust and reliability. He cites the potentials of the combination of augmented and virtual reality, with machine learning and AI.

“And of course, the whole Internet of Things,” he says.

“While it is just an extension of existing technology that has been there for a long time, the opportunity of having so many connected and accessible and addressable devices in our day to day lives could be a very significant game changer on how we approach and do things.”

When governments collaborate on digital

Queried on key themes the D5 Summit will tackle next year, he says, "we are focusing on what is next" in digital government.

The members, he says, have agreed on key areas and these include using big data in the health sector, attracting and retaining digital talent, establishing digital identity and building citizen collaboration.

He says a lot of agencies are already using service design as a way to develop their services.

“There is a movement supported by the OECD to move to citizen-driven design and that is the step we are following,” he says.

“How do citizens help you decide what it is you are going to do, rather than government deciding what services and getting citizens to help you build it?”

Using citizen panels is one approach, and adds, “we are interested in how do you scale that up? How do you get citizens more and more engaged on some of government's decision making?”

One of the common themes around the discussion is how to work in a coherent way across government systems, he adds.

For instance, different countries have different levels of comfort over the use of data.

MacDonald says there are broadly two groups of countries. One is where citizens have agreed or accepted a single identifier digital identity card like Estonia.

“One of the things Estonia has established several years ago was a single digital identity for each citizen. Every citizen has a digital identity card and the citizens agree on balance it was a good thing to do.”

And then, there are countries where citizens are not comfortable with that approach. Other countries, including UK and New Zealand, have much more challenges when looking to use big data, particularly when that is applied to individuals, he explains.

“So different countries have different contexts so they can approach these problems in different ways.”

One approach is through the creation of RealMe, a secure way to prove your identity online when dealing with government sites and services.

RealMe was launched in 2013. Growth has been faster over the past two years than in the first two, he notes. "It has started to really impact positively."

From May, 2015, customers can apply for a verified identity at the same time as they renew their passport online. StudyLink also started using RealMe verified identity in October, 2015.

According to figures released by the DIA, there are already 96 agencies using a RealMe login, and 12 services from nine agencies are using a RealMe Verified Identity. In September, 2017, Inland Revenue added the RealMe login service to its MyIR application

At the end of September this year, there have been

o   70,218,369 successful logins to RealMe

o   3,618,326 logins created

o   348,978 verified identities issued

Source: Department of Internal Affairs
Source: Department of Internal Affairs

“So it is being used much more, but increasingly we have recognised digital identity is an area where there is a lot of innovation going on,” says MacDonald.

“It is important to also provide consumers and agencies with choice, around which digital identity and services they may want to use.”

He says in the past few months, the government has been talking to interested parties, identity providers and identity consumers (like banks) around the issue.

“If we move to tackle digital identity, we want to do it in a coherent way," he says. "So that consumers have a choice, but you don't have to have multiple  ways of identifying yourself."

"Equally, as consumers, we don’t think government can be the only provider in that space.

"The goal is individuals can choose to have a single identity product they can use to access a whole range of things.

“We will all be playing in the same ecosystem and we will make it easy for customers to be able to use one method of identifying themselves if they chose to do so, because it has to be the citizen's choice.”

He says New Zealand is looking at Canada, which has established a not for profit entity called Digital ID & Authentication Council of Canada.

DIACC is a combination of government, NGO and private sector and they oversee the digital identity ecosystem.

“It is one of a number of options, but if we were to pursue it in New Zealand, we will tweak it so it will be a Kiwi version. But we are attracted to it because it involves all important players, including civil society.”

He says the great thing about the government is they do not compete with each other on these things.

“Sure, we compete with world trade, but fundamentally, we are collaborative and cooperative.”

  

New Zealand GCIO Colin MacDonald
New Zealand GCIO Colin MacDonald

We are on track to achieve 70 percent of New Zealanders’ most common transactions with government being completed in a digital environment by the end of 2017

The government's competitive advantage

Attracting the best digital talent is an area where the government competes with the private sector.

"We tried to get government agencies to work together and create a graduate scheme for those in technology and business to join government," he says, on one way they are tackling this.

MacDonald says joining government allows these graduates to work on important  issues.

“One thing, we are seeing a lot of people come out of university and they are very keen, clearly they want interesting and well-paid work, but they also want to work on things that matter.”

“They want work with purpose, and one of the things the government can offer people is work for purpose.”

“To use a private sector term, it is a 'competitive advantage' that government has that we should leverage,” he says.

“We are working on some of the more intractable issues the country faces and increasingly, there is a recognition in government that technology is going to be one of the most important ways to achieve that."

Taking a seat at the top table

MacDonald then talks about his career ascent, having started in technology, then moving to CIO, COO and now CEO.

"Technology is always interesting,” he says. "I have been privileged to have been in this career path."

So what insights can he share with CIOs as they lead through the digital era?

“One of the things I see happening is CIOs are at some levels still finding it difficult to influence colleagues at the top table,” he states.

"This is an issue in the CIO community for a long time."

“We are in a really interesting time if a CIO can successfully partner with their business colleagues on really thinking about how to disrupt, how to change their business models, how to totally reframe what they are doing.”

He recalls his experience back when he started in technology roles.

“In those days, in the early '80s, it was essential the technology people led the way," he says.

“Technology was very much a leading edge activity and the technology leaders had to lead the way to show people what was possible.”

“Through the '90s, it must be business-led,” he observes. “Where we are now, in my view, [is] yes, the business must lead, but the business and and tech professionals must truly partner.”

“The job of the CIO now is not to run the legacy systems," he adds.

"You have to have somebody in your shop who is good at doing that, whoever it is. That [person] makes sure the day to day [operation] runs well." 

“The job of the CIO now is to truly drive partnership with the business, as an equal partner.

"With really good CIOs, those opportunities to totally disrupt, totally change, to think quite differently, can be sprung," he says. "It is that equal partnership that will make the biggest difference.”

He says some CIOs are already in this position. 

"First and foremost, as a good CIO, you have to make sure the day to day running is happening,” he advises.

“None of us can get anywhere if we have got poor uptime, and the business is complaining about XYZ. 

“Ensure the sound and reliable running of your organisation," he adds. "That it is delivering what you agreed to, to the business, and that is reliable.

“We know that takes a lot of time, effort and energy, and so making sure you have got the right people doing that is the key.

“Because, if the CIO is the one personally making sure all that is happening, they are not going to have the headroom to work with the business.

"One you have done that, you start to earn the right to have the most strategic conversations.”  

The second thing, says MacDonald, is to "take a deep interest in the business."

“You know your technology, and you keep up to date with it, that is all good," he says. "But that is just normal day to day.

“The key to make a difference is to take a deep interest in the business  and then really understanding the business challenge; thinking [and] working with your senior colleagues.

"If you don't understand the business sufficiently, you are not going to make progress.”

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