Economic Stimulus Package: An Analysis of Investments in Digital Administration

The COVID-19 pandemic has bundled the status of digital administration and the need for changes and has sparked fires wherever the digitization deficits are greatest. The management and technology consultancy BearingPoint and the Handelsblatt Research Institute (HRI) have analyzed the investments in the digitization of administration contained in the federal government’s economic stimulus package in more detail and evaluated them with a view to future developments in their study. Their analysis was focused on the challenges that need to be mastered when investing in e-government so that the money flows into the development of digital administrative structures in a targeted and meaningful way and sustainably strengthen Germany as a business location.

Below we sum up the main deductions from the analysis.

Investments should give digitization a boost

The investments from the economic stimulus package are used to finance various measures to digitize public administration at federal, state, and local levels. These are intended to give digitization a further boost, which BearingPoint and HRI believe is urgently needed. Essentially, this should be achieved through three major projects — the Online Access Act (OZG), the modernization of registers, and the digital empowerment of municipalities.

Indirect economic effects are decisive

Since most of the economic stimulus is to flow in the years 2021 and 2022, the greatest immediate effects are expected in this period. According to the study, the administration will invest the money in personnel, hardware and software, infrastructure, and external support. The study, therefore, predicts an increase in demand for the IT industry over the next two years.

Billions in savings and strengthening of democracy through e-government

According to the study, a more digital administration will trigger many positive developments, from faster and more efficient handling of bureaucratic processes for citizens and companies from strengthening democracy to supporting new business models through open data and creating innovations for society and the economy. Also, the digitization of administration can save billions in bureaucracy costs.

Intensive coordination of all federal and state departments and administrative levels is a must

The digitization of public administration requires intensive coordination of all departments and administrative levels. The federal states and municipalities, in particular, play a major role here, as citizens and companies come into contact with state administrative action primarily at the municipal level and the cities. Municipalities are responsible for the implementation of the vast majority of laws and ordinances.

The coordination of the various levels requires greater effort because implementation measures cannot simply be implemented centrally, but must be carried out by mutual agreement. Building a sense of togetherness and a common culture that counteracts the risks of the “Not Invented Here Syndrome” through shared leadership is essential for success.

Germany still lags significantly behind in e-government across Europe

When it comes to electronic administrative services — so-called e-government — Germany is still at the bottom of a European comparison. According to the “Digital Economy and Society Index Report” of the European Commission, the digitization gap is not only considerable compared to small countries like Estonia and Austria, but Germany also lags behind the front runner Spain and other countries like France and Italy in a European comparison. Austria — a pioneer of digital administration — with its similar legal system and federal administrative structure could serve as a model for Germany. In Austria, for example, 70 percent of citizens used e-government services, while in Germany it is only about half.

About the Handelsblatt Research Institute (HRI)

The Handelsblatt Research Institute (HRI) is an independent research institute under the umbrella of the Handelsblatt Media Group. It writes scientific studies on behalf of clients such as companies, financial investors, associations, foundations, and government agencies. It combines the scientific competence of the 30-strong team of economists, social and natural scientists, and historians with journalistic competence in the preparation of the results. It works with a network of partners and specialists. Also, the Handelsblatt Research Institute offers desk research, competition analyses, and market research.

About BearingPoint

BearingPoint is an independent management and technology consultancy with European roots and global reach. The company operates in three business areas: The first area comprises the classic consulting business with the service portfolio People & Strategy, Customer & Growth, Finance & Risk, Operations, and Technology. In the area of ​​business services, BearingPoint offers customers IP-based managed services beyond SaaS. Thirdly, BearingPoint provides software solutions for successful digital transformation and develops new, innovative business models together with customers and partners.

BearingPoint’s customers include many of the world’s leading companies and organizations. BearingPoint’s global network has more than 10,000 employees who support customers in over 75 countries and work with them to achieve measurable and long-term business success.