When you have the world’s richest man, who has used automation and AI to upend the electric vehicle, commercial space and social media industries, set his sights on government, it’s safe to say public sector 2025 will move in new and unexpected directions. The combination of the Department of Government Efficiency (DOGE) and AI is set to fuel more change in government than we’ve seen in decades. The impact is likely to resonate throughout the globe.
Here’s an overview of the trends I predict will most impact the public sector in 2025.
Generative AI will play a key role in modernizing legacy applications and reducing government’s technical debt
DOGE sent out a Dec. 9 tweet on X referencing a 2023 Government Accountability Office report: “The Federal government spends 80% of its annual $100 billion IT budget on maintaining outdated systems. Not only are older systems more expensive to maintain, but they are also more vulnerable to hackers.” This is an indication that the low simmer of public sector technical debt is poised to elevate to a full boil next year. With the right focus and wise deployment of GenAI tools, governments around the world will take a huge bite out of its technical debt next year.
Think of the traditional process of modernizing legacy government applications as hoisting a massive ship out of the ocean and methodically chipping away at the barnacles with a single chisel. If you wanted to go faster, you had to hire more scrapers. With GenAI being trained to generate translated code from, say, COBOL to a more modern programming language, you can effectively aim a power washer at the barnacles and blast most of them off the ship’s hull. Then the chiselers can deal with the ones left behind.
Outsiders will take a swing at government reform
The last time a true outsider made a serious impact around how the U.S. government operates was the Grace Commission, created by President Reagan in 1982 and led by retired chemical company CEO Peter Grace. The signature achievement of that commission was coming up with the idea for BRAC, a foolproof way to close military bases (in a group, without singling out a single base). We will see in 2025 how effective DOGE will be in discovering ways to cut government spending, but early returns show that its voice is considerable. Both parties in Congress have expressed openness to new ideas from DOGE, and a series of tweets by Elon Musk was enough to force modifications to a stopgap spending bill right before Christmas break.
Other global governments have taken an outsider approach and have seen considerable success. Australia’s New South Wales public sector app was developed the same way a startup would introduce new features – transparently and iteratively, with a feverish view of its audience overriding all internal bureaucratic inertia. The results were impressive – huge majorities of the population have downloaded the app and shared positive feedback.
Expect to see DOGE effectively serve as a feeder into the Office of Management and Budget throughout 2025, directing federal agencies to speed up and expand AI deployments and modernization efforts. With success will come imitation, and other western governments will be watching closely to apply lessons learned.
Information silos will melt away, boosting government productivity
According to a 2024 survey by the Global Government Forum, 91% of public sector workers say their organization faces a productivity challenge. A major reason for productivity issues revolves around availability of data. When a government employee has to spend much of her day trying to locate important information just to get her work done, results are low productivity and lower morale.
The key to unlocking higher government productivity is applying AI and technology to bridge different information silos throughout agencies. This isn’t rocket science; it’s not trying to connect a tax subsidy office with a health care benefit system running on different networks in different government agencies. This is simply making sure a departmental employee has access to all the information needed, no matter where the storage system may be on that same network. In other words, searching across databases from SAP, Microsoft Teams, Salesforce and a shared drive. AI-fueled enterprise search is helping Spanish public broadcaster RTVE realize productivity gains by reducing search times by 90%; expect this trend to take off in 2025.
Public sector will swap psychobilly Cadillacs with software bundling, giving agencies an edge with interoperability, reduced costs, and time to benefits
With budgetary pressures facing public sector organizations from all directions, there are some common-sense approaches that have not been pursued. First, department-wide licensing agreements should be standardized for cost efficiencies. Second, public sector contracting officials will look at companies that offer multiple solutions and create contracting vehicles that provide government maximum latitude. By bundling multiple software products to address various needs of a government agency, there are cost savings, easier integrations and much higher customer value.
The traditional way of software purchasing is one piece at a time. Reasons for this is efficacy; it’s easier to win a budget argument for a component part with a lower price tag. But the results of this approach can best be described as Frankenstein software, or a mish-mash of parts akin to the psychobilly Cadillac from the Johnny Cash classic “One Piece at a Time.” (“it’s a ‘49, ‘50, ‘51, ‘52, ‘53, ‘54, ‘55, ‘56, ’57, ’58, ‘59 automobile”). Unlike the Cash car, which was free, the traditional software purchasing approach costs governments multitudes more than making a strategic purchase of bundled software – i.e., buying a car already assembled.
International information-sharing becomes a focal point for digital communications and cybersecurity
Contrary to popular belief, AUKUS is more than a submarine purchasing deal. The trilateral security agreement was signed three years ago to strengthen the defense and security of Australia, the United Kingdom and the United States. With conflicts continuing in Ukraine and the Middle East and additional threats looming elsewhere, AUKUS and “Five Eyes,” its intelligence community complement which also includes Canada and New Zealand, are more important than ever.
The ability to share information among these allied defense and intelligence agencies is paramount, but remains a concern. Different systems, policies and standards continue to get in the way of real-time, secure collaboration. Creating trusted international information-sharing platforms will be a key driver for 2025 and could provide a blueprint for peace.
Agentic AI makes its debut in support of citizen experience
Gartner predicts that 33% of enterprise software will use agentic AI by 2028, making this one of the highest-growth trends in technology. Government will continue to prioritize a human in the loop when it comes to AI decision-making, but there are naturally decisions that won’t require a human to make – these will be handled by agentic AI.
One of the most complex issues that government face is supply chains for defense, health and emergency supplies. Each supplier must be analyzed against multiple variables including cost, quality, speed, dependability, source materials, cyber threat, and carbon footprint. In a future state, an intelligent AI agent could select a supply chain vendor from an approved list by weighing all the risks and benefits faster and more thoroughly than government personnel could.
Alternatively, some government transactions are so high-volume and predictable that agentic AI will ultimately be able to administer without oversight. For example, if AI can sufficiently verify that a driver’s license renewal request is legitimate and poses negligible risk, what is the argument to inserting a human to process that request?
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