Governments increasingly require plain numbers of costs and benefits for making administrative decisions towards digitalizing. Here is a brief introduction into Estonia’s experience of cutting costs, and improving the overall quality of life for everyone, through digital services. Estonia has more than 2000 officially registered information systems and databases. According to a study, the most popular services, each with about half of the Estonian population between 16 and 74 of age as users, are:
- Digital tax reporting
- Drug prescriptions
- Paying state fees
- Central service portal eesti.ee
Other services, such as the digital education portal, e-voting, business registry, social benefits, and legal text portal, are also popular. No doubt, the sheer popularity of services signals particular attraction, but, additionally, 80% of the users of each of these services report increased accessibility and time saved. Registering new business, for example, is 14x faster using the digital service. Thus, on the one hand, we have lower costs for users.
No doubt that reporting annual taxes in mere minutes due to pre-filled digital reports automated by inter-operable databases may be especially noteworthy to our US readers. It takes 11 hours for an average taxpayer to prepare their taxes according to the IRS.
e-Voting is 20x cheaper than regular voting
More significantly, however, on the other hand, there is a cost reduction for the service provider. This is more difficult to calculate because of the interoperability of databases. According to the Estonian X-road – a centrally managed distributed Data Exchange Layer between information systems – factsheet, more than 1,3 billion queries were made last year to various databases, and citizens submitted only 3% of them. Assuming that each of the human-based queries saves 15 minutes of someone’s working time, those requests have saved more than 1100 working years last year alone. To calculate the time saved from the remaining 1,28 billion queries is a more notorious task. There have been attempts, though. A study of e-voting in 2017, showed that while processing regular votes in a shopping center cost 20,4 euros, the cost of processing an e-vote was 2,3 euros. The difference is close to 20-fold.
Digital signatures help save tens of thousands of euros
Savings from the most mundane of the entire portfolio of services – a digital signature – can be more easily calculated. A simple calculator is even available for estimates. For example, Tartu University (hosting 18 000 students) calculated that the organization saves 12 190 euros each month by using digital signatures in their interaction with students compared to “old school” signing with pen and paper. How? The University has to sign more than 7000 documents monthly and send 10% of them by mail. Given that one signature – in two copies – takes about 15 minutes, switching to digital signing reduces 9700 euros monthly on saved working time, 2100 euros on printing, and 390 euros on postal services. Stretching this to the whole country, the widespread expectation during the implementation of digital signatures in 2002 was that it would save 2% of GDP. Because of added functionality such as signing using mobile phones, this estimate may be even higher today.
e-Services’ positive influence on the quality of life
And the benefits for each user are probably higher, too. According to Indrek Õnnik, Global Affairs Director at Government CIO Office, the saved time and money is only half of the equation. “Besides reduced financial cost, other potential measures in quality, accessibility, and increase of satisfaction are perhaps as important. This has an overall positive influence on the quality of life of our citizens,” he suggests. “For Estonians, knowing that their state services are available, 24/7 has become self-evident. I guess that people who are used to paper-based bureaucracy don’t even know what they are missing.” He then brings an example where constant and distant availability of services is especially useful – requesting documents when abroad. Also, when applying for a driving license, for example, proving one’s driving record can be done in mere minutes instead of getting someone to search for, and then fax hard copies. According to the State Audit Office, Estonian public sector annual costs for IT systems are 100M Euros in upkeep and 81M Euros in investments. It is evident that the benefits greatly surpass them.