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TechUK McKinseyPresentation VF

This document discusses how emerging technologies like the Internet of Things, mobile internet, data analytics, and cloud computing could transform public services by 2030. It notes that governments will need to do more with less over the next decade due to various economic and demographic challenges. Several technologies are highlighted that could significantly impact the economy and public sector through automation, improved energy solutions, and advances in materials and medicine. The document provides examples of how data analytics, RFID tagging, sensors, mobile IDs, and cloud computing have already benefited industries and could similarly increase efficiency and services in the public sector through applications like reducing fraud, optimizing infrastructure, and lowering IT costs.

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266 views15 pages

TechUK McKinseyPresentation VF

This document discusses how emerging technologies like the Internet of Things, mobile internet, data analytics, and cloud computing could transform public services by 2030. It notes that governments will need to do more with less over the next decade due to various economic and demographic challenges. Several technologies are highlighted that could significantly impact the economy and public sector through automation, improved energy solutions, and advances in materials and medicine. The document provides examples of how data analytics, RFID tagging, sensors, mobile IDs, and cloud computing have already benefited industries and could similarly increase efficiency and services in the public sector through applications like reducing fraud, optimizing infrastructure, and lowering IT costs.

Uploaded by

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Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 15

How will Internet of Things,

mobile internet, data analytics


and cloud transform public
services by 2030?
techUK Public Services 2030 Conference
4 March 2015

Andrew Goodman, McKinsey & Company


CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of McKinsey & Company is strictly prohibited

Governments will need to do more with less over the next decade
Governments must do more

with less

Macroeconomic
vulnerability and
uncertainty
Demographic changes
mean public services are
evolving as populations age
Emerging global
interconnectivity requires
increased coordination
Increasing public sector
complexity from crosscutting issues
Rapid technological
innovation raises citizens
expectations
SOURCE: McKinsey Center for Government

Unsustainable debt
burdens driven by
healthcare, pension, and
economic stimulus

Need for
transformative
innovation in
government

Pressure for public sector


productivity improvement

Winning the war for top


talent as the workforce
ages and the skilled labor
market tightens

Increasing natural
resource constraints

McKinsey & Company

| 1

Twelve potentially economically disruptive technologies


Mobile Internet

Next-generation
genomics

Automation of
knowledge work1

Energy storage

The Internet of
Things

3D printing

Cloud technology

Advanced materials

Advanced robotics

Advanced oil and


gas exploration and
recovery

Autonomous and
near-autonomous
vehicles

Renewable energy

1 Includes Data Analytics


SOURCE: McKinsey Global Institute analysis

McKinsey & Company

| 2

By 2025, these technologies could have economic impact in the trillions


$ trillion, annual by 2025

Range of sized potential economic impacts in each category


Low

High

Mobile Internet
IT and how we
use it

3.710.8

Cloud technology

1.76.2

Internet of Things

2.76.2

Automation of
knowledge work1

5.26.7

Advanced robotics
Machines
working for us

Rethinking
energy comes
of age

0.21.9

3D printing

0.20.6

Energy storage

0.10.6

Renewable energy
Changing the
building blocks
of everything

1.74.5

Autonomous and nearautonomous vehicles

Advanced oil and gas


exploration and recovery

Next-generation
genomics
Advanced materials

Impact from other


potential applications

0.10.5
0.20.3
0.71.6
0.20.5

What does this mean for


the public sector?

1 Includes Data Analytics


SOURCE: McKinsey Global Institute analysis

McKinsey & Company

| 3

AUTOMATION OF KNOWLEDGE WORK - DATA ANALYTICS

Big data has already helped transform several industries in the


private sector

Financial
Services

Food /
agriculture

Retail /
grocery

SOURCE: McKinsey analysis








Regulators make data public at scale


Transaction data enables segmentation, evolution
of highly targeted products
Government and other players provide reporting
and prediction data and services
Innovation (e.g., genetically modified seeds)
bends cost curve and changes playing field
Granular POS data drives changes to
merchandising, marketing
Sophisticated machine-learning algorithms
predict future purchases
McKinsey & Company

| 4

AUTOMATION OF KNOWLEDGE WORK - DATA ANALYTICS

The relevance of big data in the public sector will hinge on gaining access
to larger datasets in the private sector
Relative size of data processed or stored by
organizations

processes
~24 petabytes
daily
transfers ~19
petabytes over its
networks daily
adds ~12
terabytes daily
< 1 terabyte of
data stored, total
SOURCE: OECD; Twitter; AT&T; Google

McKinsey & Company

| 5

AUTOMATION OF KNOWLEDGE WORK - DATA ANALYTICS

Application of data analytics in the public sector could


help to significantly reduce rates of fraud and error
Selected analytical techniques

Text mining

Relevance in the public sector

In 2013 the National Fraud Authority


estimated that the UK government
loses in excess of 15 billion a year
through tax fraud, and more than 7
billion in expenditure fraud and
error through improper payments

The US Government has identified


13 high-error programs with annual
improper payments in excess of
$750m some have improper
payments rates in excess of 20%

Several advanced analytics


techniques have been used to
improve compliance and recovery
by insurers, payors and tax authorities

Network analysis

Geospatial analysis

Machine Learning

SOURCE: National Fraud Authority; PaymentAccuracy.gov

Example
Public Sector
Application

McKinsey & Company

| 6

INTERNET OF THINGS

More objects are becoming embedded with sensors and gaining the ability
to communicate the physical world is becoming an information system
Projected growth in the Internet of Things
Billions of connected end-points

Key concepts

The Internet of Things is an ecosystem


3.6

2.9

includes data sources (sensors) and


other devices embedded in the physical
world connected by networks to data
visualization and analytic computing
resources

Connected end-points in the IoT can

2.3

provide information on identity,


location, status, and instructions

1.8

In many industries (e.g. GE aircraft

1.3

engines), IoT concepts and devices


have been used for 20 years

1.0

While consumer products (e.g.,


2013

14

15

16

17

2018

wearables) are a focus of media


attention, 70-80% of total value of the
IoT lies in enterprise applications

1 Personal computers, tablets, and smartphones excluded


SOURCE: MGI, Company Annual Reports, Capital IQ, Machina, Expert Interviews, Global Insight, Census

McKinsey & Company

| 7

INTERNET OF THINGS

RFID tagging has been widely used in the private sector,


but its use in public sector procurement remains limited
RFID tags

Identifies one specific unit of product.


Like a Passport or Driver License, it is
unique

Readiness exceeds sight range


(can be read through walls, ceilings, etc.)
Multiple items read at a time
(hundreds in seconds)

RFID tags can be reused as new


information can be over-written

SOURCE: McKinsey analysis

Example
Public Sector
Application

Relevance to the public sector

RFID tagging has helped private


sector firms to increase the accuracy
of inventory tracking by 25%+

Use of passive and active RFID tags


can help to reduce inventory loss
and enable data-driven supply chain
optimisation

The US Department of Defense has


used RFID tags in its supply chain
since 2005 and now tags more than
15,000 cargo loads a week

Despite pilots dating to the 1990s,


use of RFID in the government supply
chain is still limited compared to the
private sector

McKinsey & Company

| 8

INTERNET OF THINGS

San Franciscos SFpark initiative optimizes parking spot


utilization and reduces congestion through GIS sensors

Example
Public Sector
Application

SFPark is a parking system that:


Collects real-time information about where parking is available
Adjust prices of parking at different locations dynamically, according to demand
Reduces traffic congestion by decreasing the number of drivers circling and doubleparking and ensures drivers willing to pay a premium are more likely to find
a convenient spot

Embedded real-time sensors

identifies parking lots that are


available

Drivers can easily visualize

parking availability and prices


online and via smartphones to
plan their journeys

SOURCE: San Francisco Municipal Transport Agency

Central database monitors

parking occupancy, transport


officals analyses historical
parking occupancy and usage
patterns by location to make
data-driven pricing decisions

Price revisions are readily

communicated to the public

Rates are adjusted no more than


50 cents per hour down or 25
cents per hour up, and no more
often than once per month

McKinsey & Company

| 9

MOBILE INTERNET

Adoption of mobile devices is growing at double-digit rates mobile


devices have become more ubiquitous than land lines
Consumers are increasingly demanding
mobile devices
Global mobile device sales
million units

2005
2010

+25%

66

Laptops

and will have multiple connected device in


the near future

2020
+15%

Internet devices per person


2015E; units
North America

5.8

130
Japan

5.4

510
+35%

54

Smartphones

Western Europe
+20%

230
1,460

Tablets

4.4

+25%

Eastern Europe

2.2

Latin America

2.1

Asia-Pacific

1.5

20
190

Middle East/Africa

SOURCE: Cisco Traffic forecast; SA; Interviews; Strategy analytics, WSJ press article, Team analysis

0.9

McKinsey & Company

| 10

MOBILE INTERNET

Mobile devices could help to provide an integrated solution


to citizen identification, authentication and verification
Estonias Mobiil-ID System

Example
Public Sector
Application

Selected uses

Estonia has one of the most advanced

and widely used e-government


systems in the world almost 100% of
the population have an electronic ID

Mobiil-ID can be used on any

smartphone or tablet and replaces a


traditional electronic ID card

With Mobiil-ID, citizens can access


public e-services, authenticate their
identity, and provide digital signatures
for transactions, public service
registration and contracts

The government has made Mobiil-IDs


digidoc libraries available to
developers to catalyse private sector
uptake

SOURCE: Public sources; McKinsey analysis

McKinsey & Company

| 11

CLOUD

There has been a fundamental shift from a build model to a consume


model in Enterprise IT, giving rise to Cloud Service Providers
Cloud services are fundamentally changing IT
consumption model

giving rise to the Cloud


Service Provider segment

Cloud

IaaS

PaaS

SaaS

BPaaS

Private
Community
Hybrid
Public

Legacy
Architecture

and creating risks & opportunities for traditional players


IT infra
Development platform
Software applications
Business processes

SOURCE: McKinsey Cloud Service Provider Initiative

McKinsey & Company

| 12

CLOUD
Example
Public Sector
Application

Moving to a modern cloud-based environment could help


government departments realise IT savings of up to 40%
Comparison of monthly per-desktop TCO for desktop environment
(% cost, normalized to benchmark of 100%)
188
Software /
services

66

-42%

Hardware

15

109

User support
(L1 L3
helpdesk)
Other

42
88

20

100

44
14

32

27

19

14

11

Government - prior to
cloud transformation

Government - cloud
based environment

Gartner 2013
TCO benchmark

Savings primarily driven through significantly reduced software/services and user support costs,
reflecting the centralised support and deployment of updates and apps in a cloud environment
SOURCE: Gartner; Mckinsey analysis

McKinsey & Company

| 13

Thank You

McKinsey & Company

| 14

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