IT in the New Reality for State & Local Government

Government sector spending accounts for 30–50 percent of GDP in the vast majority of countries and exerts influence over many commercial industries. Governmental support and stimulus packages have been critical to communities and industries through the COVID-19 pandemic, but there is likely to be unprecedented and lasting impact on public debt and future spending capacity. However, it has been a complex picture, with the pandemic impacting different parts of the government sector in different ways leading to a mix of economic recovery paths for state and local governments with 33 percent in ‘surge’ mode, 20 percent in ‘modified business as usual’, 40 percent in ‘transform to re-emerge’, and 7 percent in ‘hard reset’. Essentials such as digital healthcare, human/social services, defense, economic and stimulus spending have surged; infrastructure will bounce back quickly either because of its essential nature or its role in driving economic recovery; non-essential sectors such as elective healthcare and public transport volumes will take longer to recover; while harder hit sectors such as overseas development, airports, ports, and non-COVID-19 healthcare research are delayed indefinitely. National government will continue to influence state and local projects and priorities.

Looking forward, most governments will be undertaking the largest logistical challenge in the past 50 years as they mobilize and rapidly distribute a COVID-19 vaccine to their populations. At the same time, some capital projects will be delayed, but others are likely to be accelerated if they can help drive recovery and renewal such as ‘shovel ready’ infrastructure projects that will deliver rapid benefits to communities or business. Meanwhile, new and more remote working models mean that some assets and estate will no longer be needed, generating opportunities for cash release.

Depending on the speed and pattern of economic recovery, national and local government bodies are likely to face multiple challenges in an environment of slow economic growth and cash constraints. These include the pressure to rapidly redesign and roll out new, digitally enabled public services (such as virtual courtrooms and touchless driver’s license bureaus); sourcing and procurement functions will need to be restructured and modernized; middle and back office transformation will be needed to meet constituent expectations and enable the public sector workforce for the working practices of the future; the ongoing growth in digital and connectedness will escalate cyber and privacy considerations; while sustainability and ambitious carbon reduction targets will be a significant priority.

From this list, it is clear what a key role technology must play in the new reality. CIOs in the government sector will need to drive the push for digital acceleration and operational transformation across the enterprise to achieve economies of scale and to create better connected public services that improve the constituent experience, develop performance metrics that measure progress for digital transformation, plan for changes to operating model, create greater operating efficiency, empower the workforce, and link up different departments through common platforms and the better use of data.

Board priorities & investment

With constituents increasingly expecting public services to be delivered to them through online digital channels by default, significantly more focus on human-centric design of public services enabled through end-to-end delivery across departments will be at the center of government strategy. Shared technology and data platforms that span governmental agencies and enable the delivery of joined up services to constituents are key priorities with states immediately trying to consolidate to one portal. This is likely to mean increased migrations to the cloud, the development of modern business and enterprise architectures, implementation of RPA and intelligent automation, and the adoption of agile methods for software development. There has been a 15 percent increase in IT spend in national government compared to a cross-sector average of 9 percent — a sign of how key technological transformation is to the future delivery of government services. IT organizations in this sector will need to demonstrate that technology investments are having clear, strategic impacts on the business as the affordability of transformation programs will be challenged. Priorities center around workforce enablement through collaboration platforms as well as gaining insights from data and achieving operational efficiency. Cloud, constituent experience and security are the three top investment areas for national, state and local governments.

CIO Report pages State local government

How KPMG can help

While KPMG firms are some of the largest providers of services to state and local governments globally, we take a boutique approach to client issues with a focus on flexibility, adaptability, and innovation. We recognize that there are many on-ramps to supporting IT transformation and we’ve tailored our services accordingly:

Transform the business

  • Strategy and operating model
  • Organizational design
  • Enterprise architecture
  • Portfolio planning
  • Merger and acquisition
  • Integration and separation

Run the business

  • Scaling agile
  • Product management
  • DevOps tooling
  • IT financial management
  • IT service management
  • IT asset management

Modernize and protect

  • Cloud strategy
  • Data center strategy
  • Continuity and resiliency
  • Workplace transformation
  • Network modernization
  • Cyber, risk, and compliance