In Q1 2025, a webcast hosted by the Center for Digital Government and Presidio titled “Navigating Modernization Amid Fiscal Pressure” brought together public sector leaders to explore how agencies are modernizing their IT environments despite shrinking budgets and rising service demands.
Moderated by Government Technology’s Chief Innovation Officer Dustin Haisler, the discussion featured John Quinn, CIO for the state of Vermont, and Rob Kim, CTO of Presidio. Together, they explored how government agencies are adopting emerging technologies—particularly AI—to improve service delivery, automate operations, and deliver value while navigating constrained fiscal environments.
AI in the Real World: Public Sector Use Cases Are Growing
AI has gone from proof-of-concept to production in many government IT environments. Quinn and Kim emphasized that success depends on strategic alignment, incremental adoption, and robust governance.
“The workforce is at capacity. AI helps us do more with the same,” said Quinn. “But it must be implemented in a way that’s structured and sustainable.”
Live poll results from over 150 webcast attendees revealed the top barriers to AI adoption:
- Skills and workforce gaps
- Governance and ethical concerns
- Integration with existing systems
Each of these factors was cited by more than 25% of respondents, underscoring the need for AI strategies that are both innovative and grounded.
Three AI Trends Reshaping Public Sector Modernization
Kim outlined three key AI trends that are reshaping government IT strategies:
- Cloud-Based AI Services: The adoption of curated, cloud-based AI platforms (such as AWS Bedrock, Azure OpenAI Service, and Google Vertex AI) is accelerating. These tools allow agencies to experiment with AI use cases while ensuring security, compliance, and data governance.
- AI-Augmented Workflows: Agencies are increasingly embedding AI into core workflows—automating tasks like routing public inquiries, flagging fraud, and predicting maintenance needs. These applications reduce manual effort and improve service quality.
- Agentic AI and Multistep Automation: The next frontier is “agentic” AI—autonomous software agents that can execute multi-step processes, such as onboarding vendors, generating compliance reports, or coordinating emergency responses across systems.
“We’re moving beyond chatbots to orchestrated, outcome-driven AI agents,” noted Kim. “They don’t just respond—they take initiative.”
Procurement Reform is Key to Scaling Innovation
Budget constraints remain a challenge, but many agencies are rethinking procurement models to unlock flexibility and speed. That includes:
- Leveraging marketplaces like AWS Marketplace or Azure GovCloud to access pre-vetted solutions
- Using modular contracts to scale AI adoption iteratively
- Integrating procurement systems like SAP Ariba to streamline sourcing and vendor onboarding
“It’s not just about buying cheaper—it’s about buying smarter and faster,” said Quinn.
Modern procurement enables agencies to shift from capital expenditure (CapEx) to operational expenditure (OpEx), spreading costs while speeding time to value.
The People Factor: Empowerment Through Technology
While AI is a central theme, both speakers underscored that modernization is ultimately about people—not just platforms.
- For staff: AI frees employees from repetitive tasks so they can focus on high-value work
- For constituents: Modernized systems enable faster, more personalized services
- For leadership: It’s an opportunity to build resilient institutions while managing fiscal risk
“Modernization is about empowering teams, securing infrastructure, and serving people better,” Kim concluded.
The Path Forward
Public sector IT leaders today face a paradox: rising expectations with flat or declining resources. But by aligning modernization efforts with strategic goals, deploying AI responsibly, and reforming procurement processes, agencies can do more than survive—they can lead.
Resilience, innovation, and trust will be the guiding principles for the next phase of government transformation.
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