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Finnish government eyes €1bn savings through digitisation

Finland’s public sector aims to save €1bn by 2029 as a result of digitising public services

Finland ranks as one of the EU’s most advanced digital economies. Behind this is a government focus on digitisation across public services with digital experimentation in the public sector.

These initiatives are expected to play a central role in the government’s plan to save €1bn by 2029.

“The Finnish government has rationalised [its operations] and improved its efficiency and productivity for decades,” said Olli-Pekka Rissanen, special adviser at the Finnish Ministry of Finance. “The next steps require increasing automation and technology.”

Rissanen said digitisation is not a separate project, but an underlying theme in everything the Finnish public sector does. The aim is to achieve savings by using technology and data to change how the sector operates.

For example, the digitisation of government processes and municipalities’ services is estimated to bring savings of €200m through improved efficiency, increased productivity, lower IT costs and a reduction in man-years (the amount an individual works in a year). And the numbers are expected to go much higher in the long term.

“The numbers aren’t exact,” said Rissanen. “We set a target, envision ways to get there and start to work towards it. But we recognise there will be many changes in the next 10 years and we will need to make various adjustments along the way.”

The €1bn savings target was published in April this year, but benchmark cases in Finland already exist. Notably, the Finnish Tax Administration (FTA) has reduced its worforce from 7,000 to fewer than 5,000 employees in the past decade by automating processes and introducing digital services for end-users.

A key contributor was the move to pre-completed tax returns, which were first introduced in 2008. Instead of waiting for citizens to submit their tax returns, the FTA collects data directly from third parties, such as banks, insurers and employers. In a typical year, the agency handles more than 60 million transactions from 148 data streams and uses them to automatically create a suggested tax return for each citizen, which the individual can then check and accept or alter.

The FTA’s next step is to move this process into a new environment as part of a major system renewal project called Valmis (“ready” in Finnish). The goal is to reduce the agency’s annual IT costs by €15m and speed up development by moving from about 70 existing systems to a single ready-made system called GenTax supplied by US provider Fast Enterprise.

“We have developed IT systems since the 1960s,” said Markku Heikura, CIO at the FTA. “This has led to a situation where our systems architecture is bloated, with many interdependent systems. The running expenses crept up and at the same time development slowed down because making any changes required modifications in several systems.”

The aim now is to enable agency staff to access everything, including centralised databases and registers, through a single system by end of 2019. To achieve this simplicity, Heikura accepted the compromise of a less tailored system – the first implementations have been criticised over their user-friendliness [in Finnish] – as a small price to pay.

Shared services

Streamlining is also the aim behind Finland’s service architecture project, Suomi.fi. For citizens, it is a single-access portal to the country’s digital public services, but for government agencies and municipalities, it also acts as a common platform for digital support services.

“The idea is that the support services are built on top of the [public sector’s] centralised server layer, so they need to be done only once,” said Janne Viskari, director of the Finnish Population Register, which runs Suomi.fi. “Everyone can use the same components instead of spending resources on solving the same problems and creating overlap.”

In practice, all Finland’s public agencies can, for example, use the same e-identification system. When a citizen logs into one public service, they can automatically access other services without requiring identity federation between them.

The shared support services also include e-authorisation, a data exchange layer, a public service catalogue (with more than 21,000 services) and the upcoming digital mailbox, which will move most communication between citizens and authorities into digital formats. Viskari said the savings from postage fees alone are significant.

“The Finnish government spends about €50m a year on postage and the municipalities slightly less,” he said. “This is a direct saving. In Denmark, the equivalent saving from service digitisation was €130m. I think we are about in the same area in Finland.”

Calculation dilemma

But not all savings are calculated as easily as postage fees. While the FTA estimates that a digital tax return costs €4 to process compared with €14 for the paper equivalent, transforming increased productivity, process overhauls and saved man-hours into hard numbers can be a complex task. This is particularly true when several organisations are involved.

“If each organisation arranges everything itself, you can easily count this in the budget and the savings are X euros,” said Viskari. “But when we move from a single organisation into a horizontal structure, the savings trickle down into a wider group and the calculations become difficult. Savings also come from citizens moving to digital self-service instead of using phone services or customer centres.”

Vesa Hagström, CDO at Migri, the Finnish immigration service, also stressed that improvements in efficiency or productivity can rarely be attributed to a single change.

“In monetary terms, increasing our efficiency created €14m in savings last year,” said Hagström. “But was the efficiency boost caused by digitisation alone? Of course, it’s a combination of many things and development projects, but when your operations are increasingly digital and your customers are in digital environments, a lot of it comes from digitisation.”

The robots are coming

In the long term, digitisation is also expected to tackle the issue of Finland’s ageing public sector workforce.

“There are 300,000 people in the public sector who will retire in the next 20 years,” said Viskari. “Investment in digitisation is also preparation for this. Making processes much more efficient means not as many people are needed to replace retirees.”

Much potential for this is seen in artificial intelligence (AI) and robotic process automation (RPA). The FTA is currently running three proof-of-concept trials to learn how software robots could automate routine processes and free up human resources for more challenging tasks. Similar experiments are taking place at Migri, where “robot” workers are testing their skills on phone services.

“Many people think a [software] robot cannot provide a service over the phone, but it is here where the world is moving forward rapidly,” said Hagström. “We trialled this in the summer and realised it is possible, but it’s a big task and requires creating various dialogues in different languages. There are now plans on the table for how we should move forward using robotics.”

The goal for Migri is move 80-90% of its customer interaction to digital channels. Hagström said the agency has a strong focus on not only seeing digitisation as moving processes online, but rethinking them from the end-user’s point of view.

“Nowadays it is quite a lot cheaper to trial, learn and then trial again than spend a long time planning,” he said. “The public government is often good at planning, but there must be a focus on execution and implementation.”

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