Government is big business in the Australian IT industry, with Gartner estimating that departments and agencies will spend more than $19 billion in 2024. That's an increase of 9.3 percent on the previous year and comes at a time when spending across all sectors will increase by only 7.8 percent.

Of that, more than half ($11.7 billion) will be spent at the federal level, making it the largest single group of IT purchasers, accounting for almost 10 percent of all IT spending.

With numbers like that, it is not hard to see why Canberra is the place where many IT companies focus their energies. According to Gartner, the top five government technology trends for 2024 encompass adaptive security, digital identity, AI for decision intelligence, digital platform agility, and programmatic data management.

But this encompasses only new investments – and not the 20 to 40 percent of budgets that will be tipped into maintaining legacy systems – meaning that determining exactly how those dollars will be spent can be a complex puzzle to unravel.

A universal challenge

As the CEO of the Digital Transformation Agency, Chris Fechner leads a group whose role is to drive government digital transformation that delivers benefits to all Australians. While Australia has traditionally been a global leader in government technology adoption, placing 5th in the Organisation for Economic Cooperation and Development's (OECD) 2023 Digital Government Index, many of the investments that helped get Australia to this position over the last two decades are now acting as an anchor that is holding back further transformation.

"We see developing countries that don’t have legacy debt starting to leapfrog some of the things that we can do," Fechner said.

Second on his list of challenges is one that has a direct impact on transformation activities – the availability of the skills needed to bring them to life. According to Fechner this challenge stretches beyond just technical roles.

"How do we get people with deep digital knowledge in policy, how do we get them in service delivery so that we can really accelerate these things," he asked.

For his third challenge, Fechner cited the need to deliver services that are organised around servicing the needs of citizens and organisations.

"We need in government to be able to orchestrate solutions, and where we can leverage things like digital identity, and leverage capabilities like MyGov, and surface them in a way that they really do what they're intended to do, to be the abstraction layer," he said.

Gartner’s vice president and research analyst for public sector and government, Dean Lacheca, said this shift is also resulting in government departments now readily adopting technology solutions that would have been looking on with scepticism only a few years ago.

"The next phase of government service delivery is going to be focused on agility, of being able to respond to natural disasters and meet the citizens at their problem," Lacheca said.

"Most government departments as a general concept now are happy to buy platforms in the cloud. What has been really ramping up rapidly has been low code, and an expectation that they will incorporate some degree of low code capabilities in their architecture.

More with less

Exactly how these challenges are overcome is a work in progress.

But despite the apparent growth in spending reported by Gartner, Lacheca said government IT decision makers will nonetheless have to contend with shrinking budgets and high expectations.

"We are in a period of unprecedented consistency of austerity, with some of the tightest challenges at the Federal level of several cycles," he said.

At the DTA, this pressure is being translated into efforts to better understand and demonstrate

the positive impact that technology investment is having. This need is also creating an across-the-board desire for a faster time to value, and the setting aside of old notions of lengthy monolithic program delivery.

It is a challenge that is being heightened by the ongoing need to direct more and more resources towards cyber security. Indeed, of all the money being pumped into IT spending announced in the 2024-25 Federal Budget, $1.8 billion will be spent over the next three years improving the cyber security environment, including $206 million for improving the cyber security of regulators and registers, $288.1 million for expanding Australia's digital ID system, and $472 million to be invested in quantum computing.

The intelligence community

Also prominent in conversations regarding new spending is the role of AI – a discussion that Lacheca believes is being driven as much from outside of IT teams as from within, as leaders seek to utilise AI to improve effectiveness and efficiency, as well as customer experience.

For the DTA, the hype surrounding generative AI has been looked at as something to be harvested and used to drive change. While much of the work in AI to date has been focused on grounding and experimentation, Fechner said now is the time to move forward with implementing low to medium risk models of AI.

The interest in AI also aligns to the priority within many departments and agencies to raise the quality of citizen experience.

This emphasis on citizen services is also noted by Forrester principal analyst Sam Higgins, who believes that much of the interest in AI is driven by a desire to find ways to improve service delivery that does not put too much pressure on budgets.

And he believes that this is one area where the political side of the public sector is in alignment.

"I think they are more aware now than they were a decade ago that judiciously applied technology in the right service delivery program is a vote winner," Higgins said.

The start of the journey

The DTA’s Fechner said that while Australia's track record suggests feats of modernisation and transformation are within our grasp, plenty of work remains.

"In the OECD survey our 'digital by design' was the world leader, so there are some incredible things that we are doing," Fechner said.

"We have been a big investor; we are a big adopter of technology. How do we maintain that momentum and bring that stuff that was built in the past into the future?"