AI adoption in public sector lags despite 64% seeing cost savings potential, survey finds

A new survey from EY has revealed that only 26% of public sector organisations have integrated AI thus far. (Photo: Iryna Rahalskaya/Shutterstock)

A new survey involving nearly 500 senior government executives across 14 countries reveals that only 26% of public sector organisations have integrated AI across their operations. According to the study by EY, despite 64% of respondents recognising AI’s potential for significant cost savings and 63% acknowledging its capability to enhance service delivery, its implementation across public sector departments remains limited.

The survey, conducted in collaboration with Oxford Economics, highlighted a substantial gap between awareness and execution, with only 12% of respondents having adopted generative AI solutions. This gap has prompted 58% of executives to advocate for an accelerated pace of AI and data adoption within the public sector.

According to the study, organisations already using data analytics and AI are experiencing numerous benefits. These include improved citizen experiences through better access and personalised services, efficiency savings, reduced fraud, and enhanced security. Additionally, 58% of these organisations report improved workforce productivity and satisfaction, alongside more informed, data-driven decision-making.

Pioneers lead the way with strategic AI adoption

A group of so-called pioneers – defined by EY as organisations ‘that are significantly outpacing their peers not just in implementation progress but in their strategic approach’ – comprise the top 20% of survey respondents. This group have made significant progress by establishing strong foundations before deploying advanced AI technologies. Notably, 88% of pioneers have implemented data and digital infrastructure, compared to 58% of so-called ‘followers’ (80% of the total number of respondents). Moreover, 76% of pioneers have digitised or automated existing processes, while only 33% of followers have achieved this.

“The initial focus has paid off for pioneers who have developed a more effective digital and data foundation, and in some cases, data platforms that embrace cloud technologies,” said EY global government & public sector digital modernisation leader Permenthri Pillay. “They have made faster progress in embedding data capabilities organisation-wide, rather than just in specific teams and departments. This helps maintain high standards of data quality and consistency, breaks down organisational silos and provides a unified approach to data governance and regulatory compliance.”

Government organisations face several challenges in implementing AI and data analytics technologies. Data privacy and security concerns are cited by 62% of respondents as significant constraints. Additionally, 51% point to a lack of data and digital transformation strategy, and 45% highlight inadequate data infrastructure. Government organisations, unlike the private sector, manage vast amounts of legally protected data, making data sharing difficult due to privacy laws and legislative restrictions.

Furthermore, the survey underscores the need for a transformative response to address challenges such as resource constraints, demographic shifts, and rising citizen expectations.

Another recent report by Capgemini has shown increasing interest among public sector organisations in adopting agentic AI technologies. The study indicated that approximately 90% of surveyed entities intended to explore, pilot, or implement agentic AI within the next two to three years. Despite this enthusiasm, the report highlighted significant obstacles to the practical implementation of agentic AI strategies in public institutions, particularly concerning data readiness.

Read more: Public sector’s AI aspirations hindered by data challenges, finds survey