Why Bite-Sized Digital Changes Are the Key to Success for Government Regulators

“Digital transformation” evokes grand visions of sweeping changes and monumental improvements. But when it comes to achieving digital transformation in the real world, particularly within government regulatory bodies, ambition often overshadows practicality.

The allure of sweeping IT projects, complete with “bells and whistles” can be intoxicating. Regulators envision a promised land; a digital paradise wherein all our process and technology problems are behind us. They sell the vision, inflating hopes and expectations among stakeholders while heightening the risks of failure in both hard costs and reputational damage.

It’s always useful to have a guiding vision of a better state, but in the context of practical IT solutions, such lofty ideals may blind us to the simpler, more effective path: incremental change.

For regulators facing unique constraints—tight budgets, legislative requirements, and high public accountability—a “bite-sized” approach to digital transformation may not just be practical, but essential.

The Pitfalls of Large-Scale IT Projects for Regulators

Large-scale IT projects are often seen as the ultimate solution to modernising outdated systems. However, history shows these projects often fail to deliver on their promises. Studies have found that IT projects in the public sector, particularly those with budgets exceeding $10 million, have a high failure rate due to scope creep, unrealistic timelines, and a lack of stakeholder alignment.

For government regulators, the stakes are even higher.

Failures in regulatory IT systems can lead to public mistrust, operational inefficiencies, and significant financial losses. A notable example is New Zealand's Novopay payroll system, which was introduced to manage payments for over 110,000 school staff. Despite seven years of planning, the system was plagued by widespread errors upon its launch, resulting in incorrect or missing payments for thousands of employees.

The fallout led to public outrage, the resignation of a top education official, and over $45 million in costs to fix the system. This example highlights how over-ambition and poor execution in IT projects can undermine public trust and disrupt essential government services. Similarly, Queensland Health’s payroll system in Australia became infamous for operational chaos and cost overruns exceeding $1.2 billion, highlighting the dangers of underestimating complexity.

More recently, the UK’s Financial Conduct Authority (FCA) faced significant criticism for its ineffective transformation program, which heavily relied on technology initiatives. The story now serves as a cautionary tale, highlighting the potential pitfalls of large-scale IT projects that lack clear objectives and adequate oversight.

How Bite-Sized is Better

Instead of aiming for a transformative overhaul, many experts now advocate for smaller, incremental improvements. This approach offers several key advantages:

1. Manageability: Smaller changes are easier to plan, implement, and monitor. Each phase can be fine-tuned based on real-world feedback, ensuring that the project stays on track and delivers value.
   
2. Lower risk: Incremental updates spread the risk over multiple smaller initiatives rather than concentrating it in a single high-stakes project. If one phase encounters issues, it doesn’t jeopardise the entire system.
   
3. Staff buy-in: Changes that directly address immediate pain points tend to gain quicker acceptance from staff, building trust and enthusiasm for future updates.
   
4. Continuous improvement: A bite-sized approach allows regulators to adapt to evolving needs and technologies without being locked into a rigid, one-size-fits-all solution.

Examples of Bite-Sized Success

Several regulators have demonstrated how incremental changes can lead to significant improvements. For example, by focusing on a targeted solution—publishing trader complaints data—NSW Fair Trading’s Complaints Register was able to increase public accountability and help consumers make informed decisions. This was a small change, but it had a significant impact on consumer trust and regulatory outcomes.

Similarly, Australia’s Natural Resources Access Regulator (NRAR) adopted a data-driven approach to monitor environmental compliance, integrating satellite imagery with existing regulatory data to create a demonstrably more focused and efficient enforcement process. This small but impactful step showcased how leveraging technology incrementally can yield big results.

These examples underline how addressing specific needs with focused updates can provide measurable benefits without overwhelming teams or budgets. Bite-sized moves mean small wins that net big, visible results.

Bite-sized moves mean small wins that net big, visible results.

Steps to Implement Bite-Sized Changes

Making the shift to incremental updates requires careful planning and a clear focus on priorities. Here are some actionable steps to get started:

1. Prioritise high-impact areas: Start by identifying specific pain points or gaps in your current system. For example, is there a repetitive task that could be automated? Or a compliance process that could be streamlined? Small, targeted improvements in these areas can quickly demonstrate the value of change.
   
2. Engage stakeholders early: Collaboration is key. Involve staff from across all levels of the organisation—policy, enforcement, licensing—early in the planning process. Their input will help ensure that the changes address real needs and are feasible to implement.
   
3. Focus on core processes: Before considering any technological solution, review and optimise your core business processes. Let the needs of these processes guide the design of any digital tools.
   
4. Iterate and learn: Treat each phase of change as an experiment. Measure the impact, gather feedback, and use these insights to inform subsequent updates.

A Case for Long-Term Success

While incremental changes may lack the flashiness of large-scale digital transformations, they offer a more practical and sustainable path for government regulators. A phased approach allows teams to build confidence, demonstrate tangible results, and refine their strategies over time.

For regulators already grappling with resource constraints and complex legal frameworks, this adaptability can mean the difference between success and failure.

Think Small, Win Big

In the world of regulatory IT, ambition must be tempered with pragmatism. The evidence is clear: attempting to find panaceas in massive projects often leads to disappointment. By focusing on bite-sized changes, regulators can achieve meaningful progress while minimising risks and maximising resources.

If you’re a regulator grappling with the challenges of digital transformation, it might be time to rethink your approach. Incremental changes may not inspire as much excitement as grand visions, but they can quietly and effectively build the foundation for long-term success.

Want to learn more about how regulators can navigate the complexities of digital transformation? Download “Enabling Digital for Regulators” today. Packed with insights, case studies, and actionable strategies, this resource is your guide to making smarter, more sustainable IT decisions.