The Scottish Government needs to grow the GovTech sector in Scotland

Written by Neil McEvoy, Digital Scotland on 26 September 2018 in Comment

Neil McEvoy of Digital Scotland explains why GovTech is a significant opportunity for the Scottish Government

Scottish Government building at Victoria Quay - Image credit: Benjamin Brock/CC BY-SA 3.0

The section of the Scottish Government’s digital strategy, Realising Scotland’s Full Potential in a Digital World’, on digital public services has two notable quotes.

“A world-class digital Scotland requires a world-class digital government,” says Derek Mackay, Cabinet Secretary for Finance, Economy and Fair Work.

“We will achieve our vision that, by 2020, all councils in Scotland will be digital businesses,” says Lorraine McMillan, chief executive of East Renfrewshire Council and chair of the Local Government Transformation Board.

However, research earlier this year from Civica identified an alarming reality gap between these high-level aims and the public sector charged with making them happen.

“In our survey, 57% of local government employees in Scotland do not believe the nation will achieve its digital vision by 2020,” it said.

“Only 43% of local government workers believe the country will achieve its vision of being recognised as a truly digital nation by 2020."

Moreover, another stat that “only 19% of local government employees in Scotland believe their organisation has a clear vision for its transformation journey” is especially concerning.

Meanwhile, the ‘Public Sector ICT Expenditure in Scotland’ report from ScotlandIS predicted that annual government spending on digital in Scotland will increase to £877m. 

That's a huge sum to be spending when you lack the clarity for what it will achieve.

Defining an overall vision is a relatively simple challenge, when you consider there are other nations who have already paved the way for Scotland to follow.

Most notably among these is Estonia, now globally renowned as the world's leading digital nation.

The country is one fifth the size of Scotland, and e-Estonia has been achieved largely through necessity being the mother of invention.

After gaining independence from the Soviet Union, the country needed to quickly establish an entirely new national infrastructure and, with limited means to do so, built it from scratch via efficient, low-cost systems.

This foundation for excellence has blossomed into an end-to-end integrated digital nation.

Whereas the UK boasts a few exemplar online applications, everything about Estonia is digital: submitting your tax returns, court proceedings, your medical records, setting up a business – even voting in elections.

What's critical to note is there's nothing particularly revolutionary about their technology approach, and it is entirely replicable. Indeed, that simplicity is key to its success. 

The backbone is the X-Road system, which has been in use since 2001.

It doesn't try to centralise all government data, instead it acts as a gateway to unify the many local information stores each agency holds – a crossroads between applications. 

Through a national identity card embedded with a microchip, each citizen is issued a unique digital identifier that then retrieves their local data when required for each transaction.

This is the central foundation to a 'government as a platform' approach – something that many countries, including the UK, are trying to achieve.

Projected YoY growth in the Scottish Government’s annual digital spending over the next three years, according to ScotlandIS

Projected annual worth of the UK GovTech market by 2025, according to

Launch of Estonia’s X-Road system

800 years
Amount of working time the Estonia government claims to have saved since X-Road was implemented

How it has been implemented in Estonia highlights another keystone foundation for a digital nation of this maturity: technology architecture married with enabling legislation. 

Enforced through law, every citizen controls access to their own data.

They can choose to share some aspects of their medical records, but lock down others, and every access request to their information by public-sector officials is logged and making inappropriate requests is a criminal offence.

Estonia passed the Digital Signatures Act as far back as 2000, and standardised the national public key infrastructure, making the X-Road system possible.

Not only does this ensure citizen safety and record integrity, it also codifies business process best practices. 

In short, it legally forces government agencies to be efficient, legislating that they are not allowed to continually reinvent the wheel by recreating data capture forms for citizens to repeatedly input their personal information that has already been captured elsewhere.

The Civica research also highlighted that “40% of Scottish citizens still don’t trust their council or government to handle their data”, which is no surprise, when every online service, every GP visit and every other interaction point requires yet another paper form to be filled in – with the same personal data we have supplied innumerable times before. 

How can we trust our data with a government that hasn't even mastered this basic level of workflow automation, and is still shuffling paper around?

Adopting the systems used by Estonia would not only achieve better digital services for citizens, but it also presents a massive economic growth opportunity for Scotland too.

Its global reputation as tech leader does far more for Estonia than just promote its national brand.

Many other countries such as Finland and Canada have begun to emulate their approach and are also adopting the X-Road system, creating international export opportunities for Estonian experts and technology vendors.

This category of the tech sector is defined as 'GovTech', one that venture capital firm and tech incubator forecasts will grow to a £20bn market in the UK by 2025.

Globally, it's expected to grow to over $400bn, and pursuing that opportunity offers a double whammy of fiscal benefit for the country.

The Scottish Government has smartly invested in developing an industry accelerator for FinTech, but the crucial difference is, of course, they themselves are a user of GovTech. 

Successfully growing this sector locally would directly improve their own efficiencies and further compound the economic benefits through their own cost savings.

In Estonia, digitising processes has reportedly saved the state two per cent of its GDP a year in salaries and expenses.

For Scotland, this would equate to savings of nearly £4bn per annum.

However, even that giant sum still pales into significance when we consider the big picture of the benefits that come with being a fully digital nation in terms of skills, productivity, and business growth. 

Microsoft Scotland estimated in its ‘Blueprint for a Digital Nation’ that a full embrace of the required spectrum of ICT sector policies would add a cumulative £100bn to Scotland's GDP between 2014 and 2030.

Nothing of what is proposed in order to achieve this is unrealistic. And, as Estonia demonstrates, it has been done already by others.

So, imagine a government as entirely efficient as theirs, imagine all aspects of Scottish society like public transport being seamlessly interlinked via an X-Road type system, imagine the rising tide of improved skills across our populace, and imagine the new generation of entrepreneurs this would enable.

Imagine even just ten more startup acquisitions like Skyscanner, each one generating over £1bn new wealth for the country through their acquisition.

Imagine Digital Scotland.

Neil McEvoy is the founder of Digital Scotland, a community dedicated to helping Scotland become a world-leading digital nation. He tweets as @DigitalscotNews.



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