The numbers for the EU member states of Central and Eastern are encouraging. This year, GDP growth is forecast to grow by more than 2% in countries such as the Czech Republic, Slovakia, Romania, and Hungary, and by more than 3% in places such as Poland and Latvia. Policymakers should help maintain the momentum by making better use of IT – which should include increasing budgets.
The Czech Republic is an unfortunate outlier. Collectively, government bodies in the country spend more on IT per capita than anywhere else in Central and Eastern Europe. But the Czech public sector is not getting its money's worth. On the World Bank Ease of Doing Business Index (EODB), the country ranks below all of its CEE regional cohorts.
Although it only started in 2001, the EODB Index is already a venerable measure of the business environment. The annual survey examines ten criteria essential to commercial and non-profit organizations. In most countries, eight to nine of those criteria are directly or indirectly related to government services. Even where procedures and application processes may be complex, information technology can (and does) greatly facilitate the starting of a business, the paying of taxes, the acquisition of permits, and international trade. The digitization of court procedures can (and does) allow for faster legal action that helps ensure companies and individuals fulfill contractual obligations and that insolvency is cleanly and efficiently resolved.
This last area is the only place the Czech Republic shines in the EODB Index. The country currently ranks 29th overall, well ahead of the rest of Central and Eastern Europe (so it may be the best place to go out of business in the region). But for enforcing contracts it ranks 75th, the lowest among EU member states in Central and Eastern Europe. For paying taxes it ranks 122nd, and for starting a business (and getting electricity) it ranks a dismal 146th. In fairness to Czech government bodies, other countries in the region also do poorly in the rankings. Starting a business in Poland (ranked 116th) or Slovakia (108th) is complicated and slow. Hungary (128th) and Slovakia (115th) both do poorly when it comes to protecting investors. And Bulgaria (118th) and Romania (136th) are terrible places for securing construction permits.
But then government bodies in Romania collectively spend only one-sixth on IT per capita when compared to their Czech counterparts. In Bulgaria the amount is less than one-fifth. By contrast, Slovenia spends a bit more than half and ranks 33rd overall on the EODB index while Poland spends a bit less than half and ranks 45th, up 25 spots since 2011, the year it launched its Ministry of Administration and Digitization. On the surface then, it appears that low IT budgets do not necessarily spell doom for countries working to be more competitive.
But just like the Czech Republic, Poland is also an outlier, and ruins it for the rest of CEE by rising in the ranks with little additional investment. The nearly decades-old Polish ePUAP program, which provides a web and services delivery platform for government bodies at no charge, has been enormously successful. The centralization of IT initiatives, planning, and policy into a single ministry in 2011 has generated economies of scale and significantly improved efficiency for the implementation of major IT initiatives. Speaking more broadly, Poland has shown tremendous resilience and flexibility in the face of economic crises, never falling into recession while climbing the EODB rankings without raising IT budgets significantly.
But the view that if Poland can do it, other countries can too, is shortsighted. Consolidation, shared tools and services, and cloud-based solutions can only take a government body so far. This is immediately apparent when we broaden the view of the EODB Index to include Western Europe. Italy and Spain are not doing so hot (austerity certainly has something to do with that). But the U.K., Germany, and France are well ahead of Central and Eastern Europe, and also spend proportionally more on external IT. At a bit less than USD 400 per capita, Norway and Denmark (not included in the graph due to scale) both rank in the top ten. Moreover, Western European governments are all pursuing IT spending strategies that are designed to do more (and new) with less.
Centralization of authority and the sharing of resources alone will not be enough for a country ranked in the mid 40s, 50s, or 60s (or even 70s) to catch the competition further West and North. But they are important first steps. Even before these steps are taken, policymakers and those in control of the purse strings need to perform a thorough internal investigation of current systems, their use, their usefulness, and the degree to which they can be shared with other departments. Moreover, IT directors and non-appointed authorities need to educate elected officials, many of whom lack a true understanding of the ubiquity and importance of IT to efficiency and service delivery (a little spending on IT can save a lot on payroll). For many countries, a seismic shift in how IT leaders, policy decision makers, and elected representatives think of their budgets will be required. Mistakes will happen and there will be setbacks. But it will be worth it. An austerity mindset that aims to do more and new with less will prove invaluable once budgets are raised and politicians see the virtue in spending more.
The ideas and IT spending data presented above have been largely excerpted from Government IT Spending and the Ease of Doing Business in Central and Eastern Europe (CEMA21178, May 2014), IDC Government Insights. For more information, please contact Pavla Cincerova at email@example.com or +420 221 423 116.
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