Has the public sector finally overtaken the private sector?

Written by Ross Mason on 11 March 2015 in Opinion
Opinion

For the first time, the public sector is nosing ahead of private firms in some areas of digital technology, according to Ross Mason.

Traditionally the public sector and UK government have been synonymous with the entrenched and dated methods so often associated with post-colonial institutions.

Vendor lock-in, proprietary systems, closed-door auctions and a general lack of contemporary technology awareness all have historically blighted this space.  

However, in the last twelve months, the government has emerged as one of the leaders and biggest advocates of open source and the open API movement.

The public sector could be on its way to outpace its private sector cousin for the first time ever, if enterprises don’t begin digitally transforming their businesses and accelerating their pace of innovation.

Ever since David Cameron occupied Number 10, the UK’s digital economy and overall technology offerings have been some of the coalition’s flagship areas of development, and largely speaking, they have worked: G-Cloud revenue is up substantially; Silicon Roundabout and Silicon Fen have gone from strength to strength; broadband inclusion and speed have improved; and more students are studying technical subjects like software engineering..

With Westminster recently putting a stake in the ground around open source & open API initiatives, this is simply a continuance of the government’s wider digital economy policy.

By opening up data and assets through these open APIs, it should further promote an ecosystem built around government services and data, engendering transparency and creativity in the same way that hundreds of thousands of apps were built around the Facebook platform.

The benefits of open APIs to the legislature and citizens

Government records and data that were previously isolated and difficult for the public to access are now becoming widely available through APIs.

By using APIs to expose such data, the government is encouraging and enabling creative developers to discover and create new uses for this information in ways that engage and inform the public, while also making the legislature more transparent, responsive and effective.

The benefits are not just about driving innovation and transparency. By leveraging open APIs, the government can improve its own operations to better serve its citizens and also discover huge efficiencies around the likes of processing tax returns, NHS applications and a slew of other manual civilian services.

The private sector must keep pace

In the same way that the government is transforming itself digitally, enterprises should be thinking about how they can execute digital transformation initiatives too.

Most companies see customer demand evolving faster than they can adapt. Throw into the mix the ever-changing technology landscape, the need to fundamentally and continually transform at a rapid pace is now an absolute necessity.

Think of APIs as digital distribution channels, crucial to fostering innovation and maximizing market reach. The travel and retail sector are already taking advantage of APIs to generate new revenue opportunities.

The number of open APIs has consistently doubled every year since 2005, with the total number of APIs now over 13,000. 50 billion devices will be connected by 2020, and behind every new app, device and connection, there will be an API.

Open APIs allow organisations to expose core competencies to the outside world for consumption (e.g., PayPal exposing their payment system) and allow organisations to outsource and acquire functions that are not their core competency, like Fedex has done for shipping and Workday for HR.

They also represent new revenue channels for companies, and enterprises like Expedia are driving billions of dollars in revenue through affiliate APIs. Expedia drives over £1.25 billion in revenue through its affiliate API by allowing sites like Kayak, Hertz and Hilton to embed its travel booking services through its APIs, and Salesforce generates 50 percent of its revenue through API activity.

These companies are amplifying their value in the market by using APIs, or their digital channels, to engage with consumers, and more companies in the UK private sector need to follow this lead.

Paving the way for digital economy enablement

While still in the early stages of its transition to truly open APIs, the UK government effort called data.gov.uk has already been pretty successful in attracting an ecosystem around its data.

The UK also started a far more ambitious approach with its Government Digital Service (GDS) to create APIs around their most popular transactional services like tax filing.

Even though the GDS is on hold this year, it is an indication that digital transformation is generally a multi-year commitment to change and is a balancing act since you have to manage short term needs with long term outcomes.

To achieve efficiencies in today’s turbulent economic climate, government entities need to connect legacy applications with modern systems and web services.

An API-led connectivity strategy is critical to unlocking valuable data and public services through digital channels.

In order to deliver quality public service, there needs to be orchestration between multiple systems across various departments and municipalities.

Simultaneously, the public sector faces aggressive timelines and budget constraints, changing constituent needs and policies.

These changes are making it increasingly important for federal, state, and local government bodies and agencies to develop and execute successful API strategies as start creating more autonomy within and between these government bodies.

Regardless, the UK government and public sector may for once be one of the leaders of innovation with its proactive and forward thinking approach to the country’s technology roadmap.

Its continued investment in open source and API projects will ultimately benefit private enterprises, public sector bodies and citizens, and ultimately promote constitutional transparency along the way.

Whether you are red, yellow or blue on the political spectrum, there are some things that everybody in the country can agree on.

And following the general election on 7 May, long may this digital and technological transformation continue.

Ross Mason is the founder and vice president of product strategy at MuleSoft, a San Francisco-based company that enables the connection of applications, data and devices. 

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