Councils could save 13% of their budgets through digitisation by 2025 even if they leave their fundamental business models unchanged.
The finding has been included in a report by innovation charity Nesta, which commissioned investment body Social Finance to investigate cost increases from demographic change and savings from digital.
The report found that councils have a long way to go to make the culture shift necessary to reap even greater benefits from new technology.
Nesta said that: “the model shows that if average savings from digitisation programmes can be replicated across local government, an average unitary council could save up to 13 per cent of its total budget by 2025, compared to the status quo.
“This is a conservative estimate, as it assumes the fundamental business model of councils remains unchanged.
“For ambitious councils willing to transform everything they do (from procurement to how they organise), the potential savings could be much greater – up to 40 per cent, according to some estimates.”
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However, the report said that councils will have to overcome “entrenched siloes and barriers to data sharing, open up data both internally and externally” before it could undertake more ambitious organisational change.
It said other barriers included attracting and retaining talent, ensuring mobile working and using public owned land more intelligently.
The report also said that council do not to take a Big Bang approach to digital transformation.
It said: “Fortunately, much of the latest cloud-based software means that councils can bolt pieces together cheaply and move away from big IT procurements.
“Sorting out this underlying infrastructure will put councils ahead of the game in making cuts and taking advantage of devolution.”
The report made six recommendations to help councils achieve digital transformation:
1. Councils should be digital by default, moving all transactional services online and fully digitise back offices by 2020.
Councils should aim to move all transactional services online and fully digitise their back offices by 2020.
2. Open standards need to be defined for the public sector, coordinated by the Cabinet Office
3. Councils should address market failures for digital products, stimulating the market for products
4. City regions should be required to set up an Office of Data Analytics (ODA) as part of devolution settlements.
5. Councils should invest in making services accessible to all, including free Wi-Fi in public spaces.
6. The Cabinet Office should review the ethical dimensions of data sharing.
