Managing Director & Senior Partner, Global Leader, Center for Digital Government, BCG X in Public Sector
The new tools of generative artificial intelligence (GenAI) are fundamentally changing the nature of knowledge work, creating promising opportunities to significantly increase productivity and spur innovation across entire economies. Public administration is one sector where GenAI could have the greatest potential. To reap the benefits of the technology, public sector leaders need to start by understanding how GenAI can create value for them. Then they should set priorities and mobilize to capture its transformative impact.
Generative AI refers to a category of artificial intelligence capable of creating credible new content, including text, images, audio, code, data, and other media, based on foundational or generative models. The most powerful GenAI tools are trained on large language models (LLMs) that process a vast quantity of data to emulate the way people communicate. This capability makes GenAI a general-purpose disruptive technology. It expands the boundaries of what organizations can do in everyday operations, especially in the realm of knowledge work. ChatGPT, one of the first GenAI models for processing language, has more than 180 million users. The market for generative AI products and services is growing exponentially. Since the consortium OpenAI first announced its language model GPT3 in 2020, GenAI has attracted more than $20 billion in venture capital funding. A recent report by Bloomberg Intelligence predicts the market will grow by over 40% per year for the next ten years.
The use of GenAI offers significant potential productivity gains for the public sector. It can improve the quality and speed of government decision-making at scale and raise the efficiency and effectiveness of public policies, programs, and services. The new GenAI tools complement existing AI capabilities already used in the public sector. (See Exhibit 1.)
Currently, most governments are just beginning to experiment with the technology. The conditions are not yet in place to leverage GenAI at scale and unlock its potential. There are also a number of risks related to issues such as accuracy, security, privacy, bias, and intellectual property ownership that need to be managed before fully deploying the technology. This article is the first in a three-part BCG series exploring how governments can responsibly leverage GenAI to drive maximum public impact, how they can scale the technology, and how to assess and mitigate the risks.
GenAI provides an unprecedented opportunity for governments around the world to deliver greater value and public impact for citizens, businesses, and government. At a minimum, these tools could free up many valuable hours of a public servant’s time on simple and repetitive cognitive tasks and enable that individual to focus on other, higher-value activities.
BCG estimates the productivity gains of GenAI for the public sector will be valued at $1.75 trillion per year by 2033. (See Exhibit 2.) Our estimate on the impact of GenAI is based on using inputs from Pearson-Faethm modeling. It reflects productivity gains across all national, state or provincial, and local governments and across all domains such as legislative, administrative, courts, health care, education, transportation, and security.
The impact of GenAI on public sector jobs is more nuanced. While some efficiencies may lead to reduced need for labor, in most cases governments will seek to reinvest the productivity benefit to address unmet needs of citizens or in higher value-added activities that will generate better outcomes. Some employees will be readily able to adapt and incorporate higher-value work into their role; however, for many workers, reskilling and upskilling will be essential.
Given that the nature of opportunities varies across government, we have found it helpful to consider the use cases for GenAI from the perspective of senior executives in five different types of government functions. The range of opportunities and the types of changes that may occur at each level are outlined below, followed by more detailed discussion and use case examples.
Expanded capabilities for policy development
Stewardship of how a country serves its citizens requires great skill and involves the continuous optimization of policy and programs. GenAI provides new tools for improving the capabilities needed in policy functions, including problem identification and analysis, policy research and synthesis, policy and program design, consultation and stakeholder engagement, and implementation and evaluation.
Enhanced service delivery outcomes
Many service delivery agencies have long used innovative technologies, such as virtual assistants and robotic process automation, to provide public services in the most efficient and effective way to meet the needs of citizens and businesses. GenAI now offers agencies the chance to go further by implementing new tools for optimizing operations and for designing digital services with more accessible interfaces, cross-agency interoperability, and personalized features.
Improved internal workings of government
GenAI presents a significant opportunity to enhance the internal administration of public sector organizations. For Chief Finance Officers, Chief Information Officers, Chief Legal and Risk Advisors, Chief HR Officers, and heads of other corporate and support functions, these tools can automate and augment many existing tasks and activities. Generative AI can streamline procurement, enhance employee engagement, facilitate better learning and development outcomes, and optimize budgeting and forecasting.
Streamlined regulation development, compliance, and reporting
GenAI presents an exciting opportunity for heads of regulatory bodies to streamline regulations and compliance monitoring processes. Regulators can use the tools to analyze a broad range of data to identify trends, patterns, and anomalies that might be difficult to identify otherwise, and use the analysis to target compliance and enforcement activities where the greatest risk exposures are.
Accelerating whole-of-government priorities
For the heads of central agencies, such as finance departments, treasury departments, and cabinet or executive offices, GenAI offers a unique opportunity to accelerate the delivery of whole-of-government strategic priorities. Outcomes could include:
As this article highlights, the rapid advances of GenAI technology present exciting opportunities for the public sector. We have identified five key success factors that will enable government leaders to move beyond the initial small experiments, identify where to begin their GenAI journey, and build their capability to unlock the opportunities of GenAI at scale.
Explore the landscape of opportunities, but quickly focus on a few “golden” use cases—the opportunities with the greatest potential value or benefits for citizens and government. Develop pilot projects for these use cases, monitoring the outcomes carefully. We call this phase “experiment and learn.” It enables governments to build-up valuable first-hand experience and skills.
Governments are still early in experimenting with GenAI and learning how it can improve public services. One of the most effective things senior leaders can do is establish mechanisms that encourage the cross-pollination of ideas and learning. To do this, leaders should establish a central team whose responsibility is to track and share success stories and synthesize common lessons and hurdles that government agencies encounter. As GenAI maturity increases, this role will shift towards removing the hurdles and delivering central enablers.
At some point, every government will roll out these technologies more broadly: refining them, scaling them, and optimizing beyond use cases and pilots. Begin preparing for this at the start. Invest in workforce skills, design governance mechanisms, and put in place key processes and technology choices. Build the technology and data capabilities required to enable more sophisticated GenAI use cases.
Deployed responsibly, GenAI has the potential to deliver significant value, but it also comes with significant risk. This being said, the biggest risk may be if governments fail to adopt GenAI quickly enough or at all. To balance risks and opportunities, government leaders should be seeking to establish Responsible AI frameworks which build the necessary guardrails and create the confidence needed to drive innovation. Recent BCG research shows that when leaders are actively engaged in Responsible AI, companies achieve 58% more business benefits, are 17% more prepared for investing in Responsible AI, and are 22% more prepared for emerging AI regulations.
The benefits of GenAI will emerge as knowledge workers explore the technology first-hand. Leadership encouragement will make a difference. Government leaders must create a permission space for public sector employees to experiment within reasonable boundaries. One way to do this is to demonstrate their own hands-on engagement, working closely with one or two pilots themselves.
Public sector adoption of GenAI is still in the early stages, but it needs to accelerate. The efficiency and citizen benefits of an AI-powered government are no longer hypothetical. Private sector implementations of GenAI-augmented products and services, AI bots and assistants, and even company-specific proprietary trained models show that the value is real and achievable. Some public sector leaders around the world are starting to experiment with use cases, but there is a disproportionate focus on the downside risks. More senior leadership focus and investment are needed to scale this and maximize the upside potential. The time to act and capture the immense government and citizen benefits of this revolutionary technology is now.
The authors would like to thank Francisca Browne and Brad Goff for their contributions to this report.
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