10 ways that governments incentivize cloud use to accelerate digital transformation

Governments encourage public sector organizations, businesses, and citizens to embrace digital technologies and practices through a range of incentives. These incentives standardize processes and motivate behaviors that achieve the objectives of these initiatives in a way that can be sustained over time. They create an enabling culture for innovation and promote transparency and trust in digitized services.

As an Amazon Web Services (AWS) government transformation advisor, I’ve observed best practices that deliver success, and in this post, I summarize them. Here are 10 ways that governments use incentives to accelerate successful digital transformation. 

1. Government grants and other financial support

Governments may offer agencies a share of savings achieved through change, as well as grants, subsidies, tax incentives, or low-interest loans. These support vehicles help offset the initial cost of transformation and encourage investment in technology upgrades.

For example, the Australia Digital Transformation Agency (DTA) invests in digital infrastructure that drives the digital economy. There are tax and other financial incentives targeted at building skills and using the DTA’s digital skills passport, MyPass.

2. Capacity building and training

Governments provide training programs, educational resources, hackathons, labs, incubators, and test beds to build digital literacy and technical skills among public sector employees, businesses, and citizens.

The Canadian government’s Information and Communications Technology Council (ICTC) program Beyond the Cloud trains people and upskills employees for essential roles such as cloud architects, engineers, and administrators. Beyond the Cloud is designed to give people skills to enter the modern workplace and to give businesses and the government the capability to transform. 

3. Regulatory reforms

Governments update regulations and policies to remove barriers to digital innovation and entrepreneurship. This includes simplifying licensing processes, promoting interoperability standards, and creating regulatory sandboxes to allow for experimentation with new technologies in a controlled environment. Built-in guardrails and checkpoints increase awareness of reforms, compliance, and successful use.

Cloud-first policies are an example of a regulatory reform to incentivize digital transformation by removing blockers to commercial cloud adoption and use. In the Philippines, the Department of Information and Communications Technology (DICT) published the country’s Cloud First Policy to drive cloud adoption and “foster flexibility, security, and cost-efficiency.”

4. Public-private partnerships (PPPs)

Governments collaborate with private sector companies, industry associations, and academic institutions to develop joint initiatives and projects to advance digital transformation.

PPPs are one way to invest in the digital public infrastructure (DPI) that is an essential foundation for digital services. Ukraine’s open government procurement site Prozorro (which means transparency in Ukrainian) is an example of a successful PPP investment in DPI. The United States Agency for International Development (USAID) invested in the development of Prozorro, which is estimated to have saved Ukraine’s government $6 billion since 2017.

Examples of successful government partnerships for transformation also include the development of cloud procurement agreements, cloud-first policies, and digital marketplaces. 

5. Open data initiatives

Governments release public datasets and APIs to promote transparency, innovation, and economic development. Open data initiatives provide resources for businesses, researchers, and developers to use government data to create products and services.

Spain launched the Aporta Initiative in 2009 to open public information and promote data-based development of modern services. Aporta, backed by the Ministry for Digital Transformation and Civil Service provides insights on how to manage open data. 

6. Digital service delivery

Governments digitize public services to improve accessibility, convenience, and efficiency for people and businesses. They develop online portals, mobile apps, and digital platforms to access government services and information. Simpler access drives service use and increases customer demand and adoption.

The United Kingdom Government Digital Service (GDS) incentivizes public sector transformation with tools it creates that remove barriers to change and improve services. These are available for reuse. An example is the GDS design system, which streamlines websites and digital content with standardized styles, components, and patterns and offers a guide on how to use them. Another example is the General Services Administration’s (GSA) 18F in the US.

7. Recognition and awards

Governments recognize and reward organizations and individuals that demonstrate excellence in digital transformation and innovation. These awards raise awareness, incentivize best practices, and inspire others to embark on their digital transformation journey.

In 2023, the European Union had more than 330 applicants for the European Digital Skills Awards across five categories. Digital government awards build culture and community and motivate people to try new things. 

8. National strategies and roadmaps

Governments develop national strategies for digital transformation to coordinate objectives and resource allocation across sectors and stakeholders. Digital strategies linked to government priorities tend to succeed. For example, the Korean Digital New Deal launched by the Ministry of Science and ICT (MSIT) has 12 goals across four sectors. Though the scope is broad, the individual goals are focused on specific government objectives and have led to South Korea being a recognized digital leader.

9. Monitor and evaluate against objectives

Governments set clear objectives and create mechanisms for continual introspection, improvement, and accountability. This helps leaders to make adjustments to keep activity on track. 

For example, Saudi Arabia’s Digital Government Authority (DGA) established indicators and a public website to provide open and transparent measurement towards its goal to move 80 percent of its workloads to the cloud. The DGA goal and measurement support the Saudi 2030 Vision.

10. Financial operations and spend controls

FinOps is the practice of managing spend on cloud technology. Governments establish FinOps teams, produce guidance, and provide tools to help plan, monitor, and control spending. These resources help users manage the transition from upfront investment in capital infrastructure used for traditional IT to the pay-as-you go model used to buy cloud technology.

The UK Central Digital and Data Office (CDDO) provides guidance on cloud spend controls for all of government. It owns and standardizes controls, which reduces effort, removes guess work, and creates organization-wide best practices.

Conclusion

By implementing these incentives and strategies, governments create an enabling culture of innovation for digital transformation that supports increased user adoption, more transparency and trust, and better impacts. Incentives are a powerful mechanism for transformation. In building and executing on a digital strategy, consider how these and other incentives can be used to navigate different types of blockers to realize transformation objectives.