Innovation
Article

How is Industry 4.0 Changing the Public-Private Partnership Model?

by
Haissam Badih, Automation Alley
May 26, 2022
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Summary

This article seeks to clarify the role of information and communications technology (ICT) in public-private partnerships, share best practices for risk allocation in ICT PPPs, and address numerous dangers and opportunities associated with PPPs for innovation in service delivery.

By Haissam Badih, PhD, Automation Alley  

A public-private partnership (PPP) is an arrangement between the government and the business sector to accomplish a strategic goal. The PPP approach is founded on risk allocation and transfer, affordability, and cost-effectiveness. Historically, PPPs have created complex services, such as infrastructure. And now, with the growth of technology within Industry 4.0, there are new opportunities and potential risks for PPPs.  

Governments frequently lack the capacity and resources to keep up with technological progress. However, the rapid and dynamic changes of Industry 4.0 are imposing pressure on governments to reinvent themselves to provide new services and enhance old ones while operating more efficiently, with better transparency and a greater emphasis on the service user.  

The purpose of PPPs is to utilize the power and resources of the private sector to aid in the delivery of specific hard and soft public services. PPPs are often long-term contracts between the public and commercial sectors. If done correctly, PPPs can mobilize socioeconomic goals. The adoption of PPPs encourages the delivery of ongoing, profitable public organizations or services by mobilizing private sector expertise and transferring a large amount financial risk to the private sector.  

This article seeks to clarify the role of information and communications technology (ICT) in public-private partnerships, share best practices for risk allocation in ICT PPPs, and address numerous dangers and opportunities associated with PPPs for innovation in service delivery.  

The role of ICT in PPPs

Since the late 1990s, developed countries have adopted ICT PPPs, but there is limited literature on ICT for public service delivery, especially in developing and emerging nations. Governments should endeavor to boost connection through innovation and bandwidth expansion.  

PPPs are a solution to the lack of investment in ICT infrastructure in Africa; they have created an assortment of fiber-optic backbone systems, satellite systems, mobile mast networks, local loop unbundling, securitization, and video and telephony services.  

Industry 4.0 has produced new ICT markets due to the environment's rapid transformation. In addition, the rising demand for technological innovation has outpaced the public sector's budget and commercial activities. Mobile applications and Internet connectivity, for example, have primarily driven the majority of recent ICT-related PPPs.  

Best Practices

The implementation of ICT is crucial to continued societal development. ICT policies should prioritize universal access and the potential to establish an ICT-driven economy, which would result in economic growth. The implementation of ICT through PPPs can, among other things, improve service delivery's speed and accessibility.  

One mechanism to do this is through E-governments, which emphasizes ICT advancement in government service delivery. Recent public-private partnerships have centered on e-government, management and information systems, broadband, and the implementation of blockchain technology. E-government refers to how governments efficiently utilize ICT to provide citizens with electronic services (e-services). E-government is crucial to the transformation of public administration. Increased emphasis is placed on the readiness of governments to profit from ICT development. Innovative e-government initiatives that incorporate e-readiness performance measures should be pursued. Estonia and Singapore are examples of nations that are the most e-ready. Estonia has been hailed as the world's most tech-savvy society and the pioneer in technology and e-government.  

The evolution of e-government is characterized by shifting away from conventional procurement processes and toward a higher dependence on collaboration. E-government development is dependent on the availability of technical skills. Governments frequently lack the technical capability to launch such projects, making PPPs in ICT crucial.  

Another best practice is the use of smart contracts to provide a vehicle for smart partnering, which will increase the efficacy of PPPs by facilitating the establishment of explicit agreements, automating contract administration and management, and enhancing risk allocation. Smart contracts provide a digital workflow process in which one must complete a sequence of legally binding steps before concluding, with the contract terminating upon completion of this procedure. Smart contracts can enable the public sector to provide predictability and transparency in transactional systems. Globally, over 46 nations have launched 200 blockchain initiatives. By connecting the Internet of Things (IoT) with blockchain technology, smart contracts save transaction time and costs by executing themselves. Contractual fraud is quickly discovered, hence boosting contract security.  

The smart partnership concept focuses on collaborative management methods rather than procurement and compliance. Smart contracting is a proactive strategy for operationalizing contract theory and integrating practical and financial systems without friction. Open information sharing and open innovation are essential means of enhancing partnership success.  

Risks

There are numerous dangers and opportunities associated with PPPs for innovation in service delivery. In terms of money, stakeholder involvement, and the complexity of relationships, these partnerships frequently face a significant degree of unpredictability. Other risks include finance from vendors, market risk, intellectual property (IP) risk, data governance, and regulatory risk. Risk sharing can be advantageous to the success of these projects because they are usually laden with obstacles and uncertainties due to the novelty of the undertaking, necessitating new ways of thinking and doing.  

Opportunities

The use of PPPs for developing ICT and e-government has numerous prospects. The public sector cannot fully participate in Industry 4.0, but PPPs allow the government to strengthen its digital capabilities to improve service delivery. The implementation of PPPs can enhance service delivery and help economic growth. For governments to engage effectively in Industry 4.0, they must implement robust ICT PPP plans. Frameworks for risk allocation and sharing can aid in the efficient management of PPP agreements.

References

Dergipark

Public Private Partnership Contract Management Failure in Information Technology Service

IGI Global E-Government and Private-Public Partnerships: Relational Challenges and Strategic Directions

Blockchaing for Digital Government: An Assessment of Pioneering Implementations in Public Services

Towards the Construction of Unobtrusive Research Techniques

University of Cape Town

The Role of Public-Private Partnerships in Driving Innovation

How a Tiny Country Bordering Russia Became One of the Most Tech-Savvy Societies in the World

How Did Astonia Become a Leader in Technology

Private Sector Investment in Infrastructure: Project Finance, PPP Projects and Risk. (2nd ed.) AH Alphen aan den Rijn: Kluwer Law International.

Haissam Badih, Automation Alley
Haissam Badih, Automation Alley

Haissam Badih PhD, is the Researcher and Professor at the Department of Math and Computer Science at the Lawrence Technological University, Southfield, Michigan, USA. He earned His B.S. degree in Computer Science from the University of Windsor at Ontario Canada, his M.S. Degree from Lawrence Technological University, and a Ph.D. in Computer Science and Informatics from Oakland University in 2020. He will begin his academic career at Lawrence Technological University in 2021. He has worked in various software companies in software engineering and architecture.He authored numerous journal and conference papers that were peer-reviewed. His current research and development interests and activities in Project DIAMOnD for Automation Alley in blockchain for building a 3D printer marketplace for the supply chain to support all kinds of business, including 4.0 Industry. This work on blockchain for autonomous systems design, sensor fusion, intelligent agents, automation, human/machine interaction, robotic programming, and interfacing/coding. His research dissertation, entitled "Advance and specialize our application of blockchain for webcam/microphone access control" and "Add Blockchain in A.I. for communication," has worked within research on the Blockchain and Decoy deception research project. He worked on blockchain and decoy deception using smart contracts. This project utilized a Blockchain application that enforces limited access to webcam and microphone devices. We utilize Blockchain's Smart Contract to form a contract between the user's computer and another party connected via a network.

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