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WORKINGPAPER|ISSUE03/2023|13MARCH2023

AIADOPTIONINTHEPUBLIC

SECTOR:ACASESTUDY

LAURANURSKI

Thiscasestudyillustratesthedriversofandbarrierstoartificialintelligenceadoptionbyorganisations,andacceptanceofAIbyworkersinthepublicsector.Severalfactorswerecrucialinthesuccessfuladoptionofahuman-centredapproachtoAI,includingafastdiscoveryphasethatinvolvedworkers(orendusers)inthedevelopmentearlyon,andaligninghumanresources,informationtechnologyandbusinessprocesses.Subsidysupportmechanismswerealsospecificallytargetedandacquiredtosupporttheadoption.

However,makingAIsupportavailabletoworkersprovedinsufficienttoensureitswidespreadusagethroughouttheorganisation.TheslowadaptationofexistingworkprocessesandlegacyITsystemswasabarriertotheoptimalusageofthetechnology.Moreover,theusefulnessofthetechnologydependedonboththetaskroutinenessandworkerexperience,therebynecessitatingarethinkingoftheworkdivisionbetweentechnologyandworkers,andbetweenjuniorandseniorworkers.

Successfulhuman-centredroll-outofAIinEuropewillthereforedependontheavailabilityof,orinvestmentsin,complementaryintangibleorganisationalcapital.Verylittleiscurrentlyknownabouttheseinvestments.

TheauthorisgratefultoTomSchraepen(Bruegel)forresearchassistance,toMiaHoffmann(Georgetown’sCenterforSecurityandEmergingTechnology)forcommentsonearlierversions,andtothecontactsatthecaseorganisations,whoprovidedtheircooperationandinputtothestudy.

LauraNurski(laura.nurski@)isaResearchFellowatBruegel

Recommendedcitation:

Nurski,L.(2023)‘AIadoptioninthepublicsector:acasestudy’,WorkingPaper03/2023,Bruegel

1

Tableofcontents

1Introduction 2

1.1Productivityandtechnologyacceptance 2

1.2Theorganisationsinthiscasestudy 3

1.3Selectionofthecase 3

1.4Methodology 4

2AIadoptionbytheorganisation 5

2.1Adoptionprocess 5

2.2Driversandbarrierstoadoption 9

3AIacceptancebystaffmembers 13

3.1Studiedalgorithm:AI-assistedquestionanswering 13

3.2Frameworkforuseracceptanceandactualuse 14

3.3Barrierstotheuseofthealgorithm 15

4Impactandsupport 21

4.1Impactonworkdivisions,learningandsocialrelationships 21

4.2PathtowardsincreasingAIacceptance 22

5Conclusionandrecommendations 26

References 27

Annex:Listofcasestudymaterials 30

S

1Introduction

1.1Productivityandtechnologyacceptance

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3

project

1

atBruegel,whichaimstoidentifytheimpactoftechnologyonthenature,quantity,andqualityofwork.

1.2Theorganisationsinthiscasestudy

WeanalyseAIadoptionbyFlandersInvestmentandTrade,apublicorganisation,whichwasassistedbyRadix,aprivatefirm

2

.Notethatthroughoutthepaperwerefertoalistofcase-studymaterialsthroughnumeralsshowninsquarebrackets.Theannexliststhecase-studymaterials.

FlandersInvestmentandTrade(FIT)isthetradepromotionorganisation(TPO)ofFlanders,aregionofBelgium.TPOsarefacilitativeagenciesthatpromoteandstimulatetradebyprovidinginformation,linkages,technicaladvice,marketingandpolicyadvocacy(Giovannucci,2004).Theiractivitiescanbegroupedintofourbroadcategories:productandmarketidentificationanddevelopment;tradeinformationservices;specialisedsupportservices;andpromotionalactivitiesabroad(Jaramillo,1992).FIT’smissionistointernationalisetheeconomyofFlandersbyassistingFlanders-basedcompaniesintheirexporteffort(‘trade’)andbyattractingforeigncompaniesandinvestmenttotheregion(‘invest’).Alongsidedeliveringtradeandinvestmentservices,FITengagesinpromotionalanddevelopmentactivitiesincludingthehostingofeventsandpublicationofmarketinsights.FIThassixregionalofficesinFlandersandBrussels(employingabout150people)and100localofficesabroad(employingabout180people).

RadixisaBelgianAIsolutionprovider,foundedin2018.Ithasateamof40engineersandsolutionleadsacrosstwoofficesinFlandersandBrussels.RadixprovidesaportfolioofAIsolutionstoimproveoperationsinarangeofindustries,includingmanufacturing,transportation,financialservicesandthepublicsector.

1.3Selectionofthecase

ThecasewasfoundthroughthewebsiteoftheAIdeveloper(Radix),whichshowcasesclientstories.SeveralRadixclientstorieswererelevantfortheFutureofWorkandwerethereforeconsidered.Amongthemweretwoclientsinthehumanresourcesandpublicemploymentsectors:anAI-supportedorientationtestdevelopedfortheFlemishpublicemploymentagency,andanAI-poweredjob-matchingalgorithmdevelopedforaprivateHRservicescompany.AIwilllikelyplayamajorroleinmatchingjobseekerstojobvacanciesinthelabourmarketsofthefuture.Boththeopportunitiesand

1See

/future-work/future-work-and-inclusive-growth-europe

.

2See

/

and

https://radix.ai/

.

4

potentialdangersofthisapplicationarecurrentlybeingstudiedanddebatedwidely,withspecificfocusontheriskofincreasingdiscriminationinthelabourmarket.However,inthisparticularcasestudy,thegoalistostudyAInotinthejob-matchingprocess,butintheproductionprocessitself.

FITwashighlightedasaRadixclientthatadoptedAIinoneoftheircorebusinessactivities:answeringtrade-relatedquestionsfromFlemishcompanieslookingtodotradeabroad.OtherclientcasesofthisAIdeveloperwithapplicationsintheproductionprocessincluded:aproductionplanningalgorithmthatimproveson-time-deliveryofproductionorders,takinglesstimethanahumanplanner;analgorithmthatimprovesvaccinedevelopmentbycountingandreportingcolonyformingunits;andanalgorithmthatautomaticallytagsnewarticlesofanewssupplierwithtopicalhashtags.Weselectedthequestion-answeringalgorithmforFITovertheseotherexamplesbecauseitfittedthecurrentnarrativeofAIreplacingroutinecognitivetasksofknowledgeworkers.AnotherreasonwasthatthedevelopernotedintheirFITclientprofilebothproductivityincreases(27percenttimesavings,36percentmorequestionsanswered)andjobsatisfactionimprovements(focusonmorecomplexcasesandotherpartsoftheirjobs)[8–seetheannex],whichfittedourgoalofstudyingbothproductivityandjob-qualityeffects.

1.4Methodology

Thecasewasstudiedthroughthecollectionandanalysisofseveraldatasources.First,deskresearchwasperformedontheexistingscientifictheoriesandevidenceonAIadoptionandacceptance.Thisdeskresearchresultedinthepublicationofseveralblogpostsandpapersonthesetopics(seeforexampleHoffmanandNurski,2021a,2021b).Second,deskresearchwascarriedoutonpubliclyavailableinformationonthecases,mostnotablytherespectivewebsitesofFITandRadix.Inathirdstep,interviewguidesweredevelopedonthetopicsontechnologyadoptionandacceptanceforseveralintervieweetargets.InterviewswereconductedwithFIT’sAIleadandHRlead(see[4],[10],[13])andwithfour‘endusers’ofonespecificAIapplicationatFIT,alsoknownas‘casehandlers’(see[12]).Thefourendusers(twomenandtwowomen)werestationedinfourdifferentoffices:France,Germany,ItalyandtheUSA.Dependingontheinternalorganisationoftheoffice,someoftheintervieweesspecialisedincertainregionsoftheircountry,whileothersspecialisedincertainindustriesinthatcountry.Afinaldatasourceconsistedofcollecteddocuments,includingslidedecks,screenshotsandtrainingmaterials.Thefulllistofcasestudymaterialscanbefoundintheannex.

5

2AIadoptionbytheorganisation

2.1Adoptionprocess

2.1.1Timeline

Aspartofitsdigitalinnovationstrategy(seesection2.2.1),FITisadoptingAIacrossarangeofactivitiesinitsprimaryservices,namelythetradeandinvestservices.Overfouryears(2017to2021),FITwentthroughthreeAIprojectcyclesto:(1)experimentwithproof-of-concepts(POCs),(2)buildanAIstrategy,and(3)set-upthenecessarydatainfrastructure.

Table1:SummaryofphasesintheAIadoptionprocess

Year

Phase

Goal

2017-2019

AIproof-of-concepts

QuickPOCstoexperiment,learnanddiscover

opportunities

2020

AIstrategy

Assessingcurrentas-isAImaturityanddevelopingaroadmaptowardsthedesiredto-bestateofAIadoption

2020-2021

Datainfrastructure

Installrequiredinfrastructureforcentralisingandprocessingallinternalandexternaldatasources.

Source:Bruegelbasedon[4].

2.1.2Phase1:DevelopingAIproof-of-concepts(2017-2019)

Inthefirstphase,FITfamiliariseditselfwithAItechnologytodiscoveropportunitiesandinvestigatewhetheritwouldbeusefultoexplorefurther.AnexternalAIagency(Radix)setupa‘fastdiscoveryworkshop’forFIT’sAIleadtoscreenFIT’sbusinessprocessesforpotentialAIopportunities[7].ThisworkshopconsistedofaseriesofbrainstormingexercisesbetweentheAIdeveloperandtheorganisationlookingtoadoptAI.Firstalonglistofideaswasassembledbygatheringideasfromdifferentstakeholders;nexttheideaswereanalysedandprioritisedinlightoftheirtechnicalfeasibilityandbusinessvalue;finally,effortandvalueestimationsweremadefortheselectedopportunities[14].

Thisprocessgeneratedfiveproof-of-concepts(POCs)forusingAItosupportFIT’scorebusinessservices,namelythetradeandinvestservices.Theyrangedfrominformationgatheringonforeigncompaniesthroughwebscraping,leaddetectionofpotentialclientsthroughsociallistening,andpredictivemodellingformarketingbasedonlikelihoodstoinvestandtrade[4].Thislistofopportunitieswasprioritisedaccordingtotheirbusinessvalueandtechnicalfeasibility(effortandcomplexityofimplementation)(seeFigure1).ThePOCthatcameoutasa‘quickwin’(highvalue,low

6

Value

complexity)wasaquestion-answeringalgorithmforFIT’s‘tradecases’

3

,aimedatpartlyautomatingtheprocessofansweringtradequestionsfromFlemishcompaniesaboutforeignmarkets.Usingnaturallanguageprocessing,trainedonalargedatasetofpasttradequestionsandanswers,thealgorithmwasdesignedtoretrievepastanswerstofrequentlyaskedroutinequestions.The‘highvalue’wasestimatedbecauseofthelargesharethistasktakesupintheworkloadofcasehandlers(namely,60percentto70percentoftheirworkload).The‘lowcomplexity’wasestimatedduetotheavailabilityofhighquality‘offtheshelf’naturallanguageprocessing(NLP)modelsthatcouldbetrainedonFIT’slargehistoryoffiveyearsofpreviouslyansweredquestions(about10,000peryear).Finally,analgorithmwasdesignedtoretrievepastanswerstoroutinequestions,sothatFITadvisorscouldspendmoretimeonthecomplexquestions.TheapplicationactsasanAI-poweredsearchengine,notjustcomparingindividualwords,butinterpretingtheentirebodyofthequestionandfindingthemostrelevantpastanswer.

Figure1:Value-complexitymatrixforprioritisingAIopportunities

Highvalue,lowcomplexity

Quickwins

Highvalue,

highcomplexity

Strategic

initiatives

Lowvalue,lowcomplexity

Lowvalue,

highcomplexity

Complexity

Source:[7].

The‘tradecases’question-answeringPOCwasfurtherdevelopedintoacompleteAIproductbyintegratingthealgorithms’recommendationsintoFIT’sexistingCustomerRelationshipManagementsoftware(CRM),MicrosoftDynamics.Toevaluateandimprovethequalityofthisfirstminimumviableproduct(MVP),thedeveloperconducted10interviewsacrossseveralofFIT’sinternationalofficesandassessedtheresultsfor175newtradequestionsthatwerehandedtotheAI.Ineachcase,thealgorithmsuggestedfivepreviousanswers,meaningabout875AI-suggestedanswerswereevaluated.

3A‘tradecase’isaquestionfromaFlemishcompanyaboutaforeignmarket,thatconcernsservicesofFIT,forexampleinquiriesaboutthesizeorcustomsofalocalmarket,potentialforeignbusinesspartners,traderegulationsorbarriers,subsidies,ormarketopportunities.Seesection

3.1

belowformoredetailonthebusinessprocessandAIsupport.

7

Thedeveloperusedstaffmembers’personalmemoriesofpastcasesbyaskingthemifabetteranswerfromthepastexisted,andthenanalysedwhythealgorithmdidnotretrievethemostrelevantanswer.Justasworkerslearnhowtoimprovetheiranswersovertime,thealgorithmwasretrainedbasedonthecorrectionsofFITstaff.Reasonsformissingbetteranswersfromthepastincluded:unrecognisedsynonyms(sametopicbutdifferentwords),wronglanguage(sametopicbutdifferentlanguage,egEnglish,Dutchorotherlanguage),unclearlink(sametopicbutnotexplicitlymentioned),wrongfocus(AIdidn’tfocusonrightwords),andout-of-vocabulary(AIdidn’tknowcertainwords).Bytakingintoaccountstaffmemberfeedback,thehitrate(casesinwhichtheAIfoundarelevantanswertoaquestion)increasedfrom51percentto62percent[7].Involvingusersinthedesignofthealgorithmthusimproveditsquality(andthereforeuseability,see3.3.2)substantially.

2.1.3Phase2:BuildinganAIstrategy(2020)

ThefirstphaseshowedthatitwaspossibleandopportunetoexpandtheadoptionofAIinawiderrangeofFIT’sprocesses.Inthesecondphase,theytookastepbackfromtheoriginalfivePOCsandtookamorestructuralapproachtoAIbybuildinganAIvisionandstrategy(orAI‘blueprint’)fortheorganisation.Withthehelpofthreeexternalexperts,anAImaturityassessmentwasdone,followedbythedesignofafuturevisionandaroadmaptomovefromtheas-issituationtothedesiredto-bestate[4].

ThemethodologyforbuildingtheAIstrategyconsistedofthreebuildingblocks.First,anenterprisearchitecturewasdrawnup,mappingthecurrentbusinessprocessesonapplications,datalayersandtechnicalsystems.Second,anAImaturityassessmentwasconductedtoassessthe‘as-is’stateofAImaturityandtodevelopanAIroadmapofpotential‘to-be’statesofAIadoption.ThethirdpartoftheAIstrategyrelatedtotrainingandhumanresources.ItincludedsettingupanAIunitresponsibleforAIimpactanddisseminationatFIT,trainingeveryoneatFITonbasicAIliteracy,andspecifictrainingforthedigitalmarketingteamondata-drivenmarketingstrategiesandtools.

Theexternalexpertsclassifiedtheas-isstateofFIT’sAImaturityat‘AIready’,whichisthesecondlevelofmaturityintheirassessmentframework:

•AINovice:AInoviceshavenottakenproactivestepsontheAIjourneyand,atbest,areinassessmentmode.

•AIReady:SufficientlypreparedtoimplementAIintermsofstrategy,organisationalset-upanddataavailability.

8

•AIProficient:AreasonabledegreeofpracticalexperienceandunderstandingofhowtomoveforwardwithAI.Therearestillgapsandlimitations.

•AIAdvanced:AgoodlevelofAIexpertiseandexperience,withaproventrackrecordacrossarangeofusecases.Goodoperationalproceduresinplace.

TheAIroadmaptowardstheto-bestatewasdrawnuptomovethroughthreestates.Inafirststage,FITwoulduseself-servicebusinessanalytics

4

anddashboardingapps(suchasPowerBIandAzuredataservices)andready-madeAIsupportedinsights(forexampleOffice365workplaceanalytics)tobuildadatafoundationandsupportadata-drivendecision-makingculture.Inasecondstage,FITcouldusesolution-specificAIservicesandAI-basedcontentunderstanding(forexamplechatbotsandApplicationProgrammingInterfaces(APIs)toNaturalLanguageProcessing(NLP)models)tobuildanFITconversationalknowledgeplatform.Finally,inthethirdstage,FITcouldadoptadvancedcloudinfrastructuresandopenmachine-learningframeworks,aswellasdeveloptheirowncustomdatascienceanddeepAIcapabilitiestosupportthedigitalmarketingpipeline(forexampleontargetedads,leadsanddirectmarketing).

2.1.4Phase3:Settingupthenecessarydatainfrastructure(2020-2021)

Fromtheassessmentinphase2,itbecameclearthatFITlackedtherequiredinfrastructureforlarge-scaleAIprojectsthat,forexample,requiretheprocessingofunstructureddatainrealtime.Thefirststepintheroadmapthereforeconsistedofbuildingadatahub(ordatavault)forabsorbingdatafromdifferentinternaldatasources[4].TheseinternalsourcesincludedFIT’saccountingsystem,EnterpriseResourcePlanning(ERP)system,website,CRMsystemandtwooldlegacysystemsthatstillfedintotheCRM.Thedatahubwouldalsocentraliseandingestallpurchasesofexternaldata,likecompanydatabases.Ontopofthephysicalinfrastructureforstoringdata,anoperationaldatabaselayerwouldbebuiltaroundcustomers,products,accountsandtransactions.ThisdatalayerwouldfeedintoanAPIaccesslayerthatwouldgrantdifferentbusinessapplicationsaccesstoandmonitortheiruseofthedata.Thisset-upwouldserveasthebasisforallfuturedataconsumption(bothstructuredandunstructured),datasharingandexchange,datamonitoringandaccessmanagement.Bysupportingnearreal-timedataprocessingandreporting,itwouldserveasthefoundationforallfutureAIdevelopment.

4Self-serviceanalyticsisaformofbusinessintelligence(BI)inwhichline-of-businessprofessionalsareenabledandencouragedtoperformqueriesandgeneratereportsontheirown,withnominalITsupport.

(/en/information-technology/glossary/self-service-analytics

).

9

2.2Driversandbarrierstoadoption

Anorganisation’sdecisiontoadoptanewtechnologyisinfluencedbythetechnological,organisationalandenvironmentalcontext(Baker,2012;HoffmannandNurski,2021).AccordingtoaEurope-widecompanysurvey(EuropeanCommission,2020),themainreasonsforfirmstonotadoptAIarealackoffinancialmeans,humancapitalanddataavailability,bothwithinthefirmandfromtheexternalenvironment(HoffmanandNurski2021).Table2listsdriversandbarriersthatwereidentifiedinthiscasestudyineachofthethreecontexts,whilethefollowingparagraphsdivedeeperintoeachofthefactors.

Table2:IdentifieddriversandbarrierstoAIadoptionatFITinthetechnological,organisationalandenvironmentalcontext

Identifieddrivers&facilitators

Identified(overcome)barriers

Technological

context

Expectedproductivitygains

Dataavailability

Hightrialability

LackofcompatibleITinfrastructure

Organisational

context

Leadershipandmanagementsupport

Environmental

context

Competitivepressures

Accesstoskilledlabourand

externalfunding

Source:BruegelbasedonBaker(2012),interviews,documentsandwebsites(seetheannex).

2.2.1Maindriverofadoption:competitiveenvironment

Asasmall,openeconomy,internationalbusinessisakeyfactorintheeconomicdevelopmentofFlanders.In2021,Flandersimported€378.8billionworthofgoodsandservicesandexported€380.5billion,puttingtheFlandersregioninthetop20ofglobalexportercountries(WTOStatsdashboard).Topexportedproductsincludepharmaceutical,chemical,andmineralproducts,andmachinery,electronicandtransportequipment.ThemaintradingpartnersareneighbouringcountriesGermany,FranceandtheNetherlands,andintra-EUtraderepresentstwo-thirdsoftotalexportsfromFlanders[2].WhileseparatenumbersareunavailableforFlanders,exportfromBelgiumasawholesupports843,900jobsinBelgiumoutoffivemilliontotalemployment(Rueda-Cantucheetal,2021).

TPOsaroundtheworldcompeteforlocalinvestmentsbymultinationalcompaniesandneedsophisticatedapproachestoattract,andkeepforeigninvestors(Zanattaetal,2006).FITconsidersdigitalisationakeyfactorinitsstrategytostaycompetitiveinthisinternationallandscape[3].FIT

10

thereforeaimstobean‘earlyadopter’(Rogers,1983)indigitalisation.Theachievementofthisgoalisrecognisedbyitsenvironment,asFITisconsideredoneofthebestpracticesfordigitalisationandAIadoptionbytheEuropeanCommission[4and9].

ThedigitisationofFITreflectsthewiderdigitaltransformationoftheFlemishgovernmentandtheFlemishDigitalStrategy,buildingontheFlemishDataStrategythatwasapprovedon18March2022[5].Whilethedigitalstrategyisstillbeingbuilt,theFlemishgovernmentaimstoreachatop-fivespotintheEuropeanrankingofdigitalpublicservices,asmeasuredbytheDigitalEconomyandSocietyIndex(DESI)[6].

2.2.2Overcomingfinancialbarriers:externalfinancing

Foreachofthethreephases,externalprojectsubsidieswereacquiredforthespecificgoalofdigitalisationandAIadoption,eitherdirectlyorindirectlyfinancedbypublicfunds.Thefirststage(AIPOCs)andthirdstage(datainfrastructure)tookplacewithintheframeworkofFlandersAccelerates,whichisFIT’sinternationalisationstrategyfortheFlemisheconomy.TheexecutionofthisstrategyissupportedbyacombinationofEuropeanandregional(Flemish)funds.Fortheperiod2017-2022,FITreceived€1.8millionfromtheEuropeanRegionalDevelopmentFund(ERDF)and€1.6millionfromtheFundforAccompanyingEconomicandInnovationPolicy(HermesFund),managedbytheFlemishInnovationandEntrepreneurshipagency(VLAIO).BothfundswereawardedspecificallyforFIT’sdigitalisationstrategy.

Thesecondphase(buildingtheAIstrategy)wasspecificallyanddirectlysupportedbytheStructuralReformSupportProgramme(SRSP),managedbytheEuropeanCommission’sDirectorate-GeneralforStructuralReformSupport(DGReform),theEUbodythathelpscountriesdesignandimplementreformsaspartoftheireffortstosupportjobcreationandsustainablegrowth.TheCommissionprovidedsupportovera12-monthperiodintheformoftechnicaladvisoryservicesbyentitieswithsubstantialexperienceinthedevelopmentofblueprintsforAIforpublicadministrations[9].TheadvisoryservicessupportedthethreeelementsoftheAIstrategydiscussedabove,namely:(1)developinganAImaturityassessment;(2)recommendingafuturearchitectureandroadmapforAIdeployment;(3)proposingcurriculaforAI-relatedtrainingofFITstaff.DGreformfeaturestheprojectonitswebsiteasinspirationforotherEUcountries[9].

11

2.2.3Overcominghumanandorganisationalbarriers:hiringandtraining

FollowingFIT’sdigitalisationandinnovationstrategy(see2.2.1)themanagementteamdecidedthat“FITwantedtojointheAItrain”[10].Abusinessandinformationsystemsengineerwithsevenyears’experiencein

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