Posted on 29th August 2024
What Are The Key Challenges Facing Public Sector Finance and Operations in Their Digital Transformation?
The public sector is undergoing a profound digital transformation, driven by the need to enhance service delivery, improve efficiency, and better serve the public.
In 2022, the government launched Transforming for a Digital Future, the 2022 to 2025 Roadmap for Digital and Data, with an ambition to transform public services, deliver world-class technology and attract and retain the best digital talent. The roadmap outlined a clear set of priorities, focusing on the biggest digital opportunities.
At the heart of this transformation within local authorities and hospitals lie the Finance and IT departments. These departments are under immense pressure to adapt to the ever-evolving technological landscape. While digital transformation has the potential to deliver substantial benefits to our public sector, it also presents a complex set of challenges that public sector finance and operations departments must navigate and adapt to.
Keeping Pace with Technology
Every year new technologies emerge as the rapid pace of new technologies begins to increase, from financial management software to resource management and data analytics connectors. AI changes are the hot topic and have been for a few years. It is happening rapidly. Artificial intelligence (AI) has been a particularly prominent trend in recent years, with releases like OpenAI’s industry leading ChatGPT gaining widespread attention in late 2022. As software providers rapidly integrate AI into their product roadmaps, public sector Councils and Trusts will find themselves at a disadvantage unless they are able to adapt and implement these new technologies.
The primary obstacle for public sector organisations is the length of their software contracts, which often extend for several years. This can hinder their ability to adopt the latest technologies quickly, putting them at a competitive disadvantage compared to the private sector.
Access to this software is not just the only obstacle to keeping up with this rapid change. Beyond the initial cost and longer contracts when acquiring new software, public sector organisations must also consider the increased expenses associated with implementation, staff training, and integration with existing systems.
The Looming Threat of Budgetary Constraints
The recent announcement from Labour regarding a potentially "painful" October 2024 budget raises concerns about potential tax increases and reductions in public spending.
This could have a significant impact on the allocation of funds for new technologies and efficiency initiatives within Councils and the NHS. While the full extent of these cuts remains unclear, the prospect of austerity measures similar to the 2010s Austerity policies could severely hinder public sector organisations' ability to invest in digital transformation efforts.
The Evolving Role of Finance and Operation Teams
Finance and Operations teams are facing increasing workloads with limited resources. One significant challenge is the need to analyse and interpret larger, more complex datasets to support daily operations and informed decision-making. The more successful teams and departments will leverage digital technologies to streamline these processes. While departments once relied on large data teams, the need to maintain efficiency and remain competitive requires a more digitally focused approach.
AI and automation technologies can improve efficiency and decision-making, but their implementation can present challenges related to data governance, ethics, and workforce transformation.
Bridging the Skills Gap
IT leaders face challenges in delivering digital transformation, such as educating employees on legacy systems, data, and innovation methodologies.
There is a significant and growing demand for data-literate employees across the sector and many of these organisations are struggling to fill these roles. The growing demand for data-literate employees across the sector has created a significant skills shortage. Many organisations struggle to fill these roles, with only 49% of public sector organisations believing they have the necessary data skills to succeed in the future.
This skills deficit related to digital expertise and data analytics is particularly acute for finance teams as these skills become increasingly critical for the running of their department.
A Strategic Approach to Digital Transformation
Addressing these challenges in the public sector requires a strategic approach that involves technology, people, and processes. Finance and operations departments in local government and Hospitals will face a number of key issues this year, including budget constraints, talent management, and skills gaps in their digital transformation.
Investing in employee training and development is essential to build the necessary skills. Adopting agile process to ensure these organisations are able to adapt to change more quickly will help make these technologies have a greater impact on our public services.
While the journey towards digital transformation is more complex in the public sector, it is essential for these organisations to embrace the challenges and opportunities. By investing in the right people, processes, and technologies, public sector finance and IT departments can position themselves for success in the digital age.
How IBSS Addresses the Public Sector’s Digital Transformation Challenges
IBSS (Integrated Business Software and Solutions) helps public sector organisations streamline their financial management and digital ecosystems as part of their digital transformation strategies.
We have a wide heritage in local government and healthcare sectors in delivering our own cutting-edge digital platform that supports Finance, ERP and system integrations to help you solve your digital transformation challenges.
Dumfries & Galloway Council, a recent IBSS client, has experienced significant benefits from our supportive services. IBSS supported the council with our expertise, industry knowledge and responsive support department. This enabled issues and challenges with their digital migration to be resolved quickly and efficiency.
“As a hosted service I log a call with the service desk and 99% of them are looked at within the hour and a lot of them are resolved, certainly that day or very soon after.”
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For more information on how IBSS can help your organisation navigate your challenges digitally transforming, contact us here
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