Dive Brief:
- Nearly 70% of state and local government leaders reported seeing positive returns on investments in technology upgrades over the past two years, an Ernst & Young survey found, and 14% of respondents said they broke even.
- More than 95% of the 200 U.S. state and local officials surveyed reported having a technology modernization road map in place, but 39% said their plans are limited to certain departments.
- The biggest concerns over modernization, cited by more than 90% of respondents, include talent retention and unforeseen roadblocks such as budget cuts and political or leadership changes. Nearly 90% are concerned about a lack of dedicated modernization funding.
Dive Insight:
State and local government leaders are feeling the weight of legacy technology systems, the survey found.
Nearly 40% of respondents said their agency spends more of its annual IT budget on legacy system maintenance than on upgrades, and 75% said continued reliance on legacy technology could lead to operational failures.
Nearly three-quarters of respondents also reported feeling overwhelmed by the volume or scale of replacing older systems.
“Modernization requires agencies to plan beyond individual technology investments and consider the capabilities needed to execute and sustain those efforts,” Justin Fishman, EY Americas government and public sector state, local and education leader, said in an Oct. 29 news release. “That includes understanding how funding, talent, legacy environments and organizational changes can affect the ability to move from individual initiatives to broader modernization efforts.”
Respondents reported widespread AI piloting and use within their agencies, and most are seeing benefits. However, they are concerned about AI funding, infrastructure and data readiness.
A Euna Solutions survey earlier this year found AI adoption and interest is outpacing readiness within the public sector. The Ernst & Young survey found 94% of respondents had an AI governance policy or strategy in place, but only 51% said that approach is comprehensive and unified.
“As agencies move toward generative and agentic [AI] systems that can perform increasingly consequential work, they need governance that defines accountability, establishes appropriate boundaries, and produces evidence that the technology is operating as intended,” Steve Harvey, principal and government & public sector SI leader for state, local and education at Ernst & Young, said in a statement. AI governance “must become a core pillar of government modernization,” he said.
SI refers to “super intelligence,” a term referring to artificial intelligence used in President Donald Trump’s Sept. 20 executive order.
