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Dematerialization in the Public Administration: The situation in Italy

There has been talk of dematerialisation for the Italian Public Administration for many years now, but finding the right strategy to implement this revolution has proven difficult. However, there are plenty of positive examples that we can learn from. In recent years, digital transformation has affected businesses in every sector and it includes those in the public sector that provide services to citizens.

Digitization has made a world of tools and opportunities more accessible than ever before, and these aren’t just limited to the private sector. Public sector companies can also obtain the same benefits.

Operations is one area of the business that can benefit from digital transformation. Here, digital internal processes are more efficient, and this benefits the entire public machine, which in turn benefits citizens and potentially all of society. Financially, a more efficient Public Administration is also and above all a Public Administration that costs less. I

n this sense, digitization is also valuable because more than just cost-cutting, it’s possible to have a deeper understanding of costs and opportunities for savings and efficiency that would not be visible otherwise. In a nutshell, digitizing public administration means doing more (and better) with less. Article 97 of the Italian constitution outlines the basic principles to which the Public Administration must conform. In particular, the first and second subparagraphs state that the Public administrations shall, in accordance with the law of the European Union, ensure the equilibrium of budgets and the sustainability of public debt. Public offices shall be organized in accordance with legal provisions, so as to ensure the smooth running and impartiality of the administration.

It is from these words that we derive the so-called principle of good performance of the Public Administration, which is identified along with the objectives of timeliness and efficiency of administrative action and cost-effectiveness in terms of the management of public services. These are objectives that digitization helps to achieve.

 

The conditions for digitization 

Achieving a digital revolution and making the Public Administration truly modern and efficient, in the words of the Constitution, is not easy and requires a series of joint efforts in different areas. A digital PA requires the following ingredients:

  1. the simplification of processes
  2. project financing
  3. rationalization of purchases
  4. dematerialization

These four factors necessarily imply a rethinking of the entire public organizational structure. Therefore, it is not surprising that such a radical change is not at all easy to make. The most striking example is undoubtedly dematerialization, which is perhaps the most important (and most difficult) condition for the effective digitization of the Public Administration.

 

Dematerialization: a history 

The term dematerialization means the conversion of a paper document into an electronic or digital document through a process that is able to preserve its evidential and legal value.

In Italy, dematerialization is not a new concept. The Bassanini reform of the 1990s, for example, had as its main purpose the objective to change the administrative structure of the State in order to make it simpler and more effective. Dematerialization was also mentioned in Presidential Decree No. 445 of 2000, issued almost 20 years ago. The Digital Administration Code itself, which brings together the rules governing the computerization of the Public Administration in its relations with citizens and businesses is the standard of reference in terms of digitization and dematerialization, dates back to 2006.

This shows that the idea of modernizing the PA has been in the works for some time now. However, the reality has been slower to realize.

Just think, for example, of the consumption of paper by the PA. The elimination of paper in favor of electronic documents has long been a goal, and it is precisely from here that the process of dematerialization must begin. Theoretically, this process should have been completed by the end of August 2016 at the latest.

This is the date on which the technical rules on computer documents became operational, to which all public administrations have a duty to adapt. At the time, the moment was celebrated as a real watershed between the old and the new way of conceiving the Public Administration. Needless to say, in fact, paper continues to be widely present in the administrative offices and progress toward true digitalization has been slow.

This is confirmed by the fact that, between 2017 and 2018, public expenditure on paper, stationery and the printed matter fell from €96 million to €87 million, a total saving of only €9 million. But this fact, in reality, is part of a wider and more complex context, which gives us the image of a country divided between light and dark, between innovation and slowdowns.

 

Dematerialized Italy: data and rankings 

According to DESI (Digital Economy and Society Index) or the composite index developed by the European Commission (DG CNECT) to assess the progress of Member States towards a digital economy and society, Europe is moving toward digitization at two different speeds. As in 2015, Italy currently ranks 25th for the level of implementation of the Digital Agenda.

While it has made some improvements, those have not been enough to be considered a real leap forward. This is explained in the report, which summarizes the situation as follows: “The main challenge is the lack of digital skills. Although the Italian government has taken some measures in this regard, these measures still seem insufficient. The consequences are detrimental to the performance of the DESI indicators in all five aspects considered.”

The aspects referred to are connectivity, use of the internet, integration of digital technologies, digital public services, and human capital. Specifically, while Italy has confirmed its position regarding the integration of digital technologies and the development of digital public services (for example, climbing eleven places on big data), on other indicators the country is second to last place when it comes to use of the Internet and third to last place in terms of connectivity, therefore well below the European average. In Italy, there are several examples that demonstrate its innovation.  

 

Electronic invoicing

Let’s start with an example that impacts the whole country: electronic invoicing. Electronic invoicing was, from the outset, an effective and convenient tool for the dematerialization of the Public Administration. Introduced by Decree No. 55 of April 3, 2013, electronic invoicing came into force from March 31, 2015 as an obligation to all public administrations.

The benefits realized were so significant that Italy was one of the first countries among EU member states to extend the obligation to the entire private sector in the context of B2B transactions. In particular, thanks to the introduction of this measure, it was possible to:

  1. Achieve significant savings, estimated at €1 billion per year, of which € 200 million are direct savings on public accounts, and € 800 million in productivity gains
  2. Significantly simplify processes, especially archiving, since there is no longer the need to keep the paper invoice and therefore it is no longer need to have physical warehouses and the manpower to manage them
  3. Increase the traceability of operations and combat tax evasion. In fact, it is no longer necessary to analyze paper documents in search of irregularities, but it is possible to trace the various transactions directly through the Interchange System, the revenue department’s IT system, which is used to send and receive invoices as well as to carry out checks on the documents received.

In this respect, the results of the implementation of this measure have been very encouraging. According to data made public by the Ministry of Economy and Finance and the Department of Revenue, in just over two months, 350 million electronic invoices were recorded and issued by 2.7 million professionals. This has recorded €560 billion in taxable income relating to B2B transactions, while the Public Administration handled as many as 28.5 million invoices.

The results are even more surprising when it comes to revenue from tax assessments. The use of electronic invoicing has allowed the Revenue department to increase its receipt of tax controls in 2018 by 11% compared to the previous year, at a total of €16.2 billion. In addition, there are also results from the fight against tax evasion.

The Revenue department reported that: “Thanks to the risk analysis based on e-bills and invoice data, in a little over two months, a complex system of fraud put in place through false invoicing between paper companies has been unmasked and false VAT credits for €688 million have been discovered and blocked.” This allowed Italy to recoup this amount and also made the country more interesting for any foreign investment. In fact, new investments could lead to about €15 billion in revenue and 13 thousand new hires.  

 

TARI

Dematerialization has also produced significant results at local government level. An example is the TARI, the tax for the collection and disposal of urban and assimilated waste, which some municipalities (including Milan, Genoa and Bologna) have chosen to manage using Doxee Pvideo®, the personalized video platform that allows the communication of content in an effective and innovative way.

This has made it possible to eliminate paper-based communications, making them more efficient and at the same time more engaging. Instead of receiving a paper newsletter or bill, citizens received a video. The first part of the video showed the amount to be paid, the payment deadline, and the possibility to break down the payment into instalments, while in the second part showed how the tax was calculated through scenes that were tailored to the characteristics of the recipient. Finally, in the last part, the citizen was invited to leave their contact information, request additional information on the TARI, request a recalculation of the amount due, or the option to pay online through PagoPA. The results have been remarkable.

The administration has significantly reduced the amount of paper used and at the same time has made tax collection more effective, providing citizens with relevant content thanks to the optimization of videos, which was made possible by monitoring of digital behavior of the citizens themselves Just consider that 85% of videos were watched through to the end, and more than half of users then proceeded to pay their bill. In addition, 1550 pre-filled requests to modify information were submitted.

All of this demonstrates that dematerialization in Italy is indeed possible. Obviously, there is still a long way to go and there is much room for improvement.

There must be a union of intentions on the part of the political class, which must develop a real sensitivity to the issue, on the part of operators who must be willing to question their approach, and on the part of professionals in the sector, who must support administrations with the awareness that they are laying the foundation for a key revolution in the country.  

 

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