EY Government 2025 Federal Trends Report

Federal IT leaders face legacy system hurdles, seek private sector innovation, and prioritize AI amid regulatory and security concerns.

In brief

• Modernizing IT is a top priority, but budget, trust in legacy systems, and leadership resistance slow progress.
• Federal IT leaders see value in private sector innovation, but funding and bureaucratic hurdles limit collaboration.
• AI adoption is rising, yet concerns persist over regulation, cybersecurity, and underused no-code/low-code tools.

The 2025 EY Government and Public Sector (GPS) federal trends survey, commissioned by the EY Center for Government Modernization, asked government IT employees who have decision-making power at the agency level about their thoughts on and experience with emerging technologies.

IT decision-makers value private sector innovation, yet bureaucracy and funding limit collaboration

Federal government IT DMs recognize private sector can bring vast benefits, such as improving agency enabling faster adoption of new technologies. They concern that their agency will become obsolete if with the private sector more often. Yet, many say challenging to do so, with a lack of funding being obstacles cited. What would make it easier, federal DMs say, are resources explaining how to navigate well as training staff on how to use new technology.

• The majority of federal government IT DMs say with the private sector can bring the best of both and public sector) (83%) and that private sector significantly improve their agency’s mission outcomes (79%).
  • In fact, about half (56%) of federal government IT DMs say they worry that their agency will become obsolete if it doesn’t partner with the private sector more.
• According to federal government IT DMs, the top benefits of government agencies effectively using private sector innovations include faster adoption of new technologies within government agencies (66%) and improvement of public services (56%).
• Yet, federal government IT DMs say one of the biggest challenges their agency faces in using private sector innovations is lack of funding (48%).
• Additionally, 53% percent of federal government IT DMs say that partnering with the private sector is currently too challenging to be worth the effort.
  • Seventy-one percent of federal government IT DMs say their agency would be more likely to use private sector innovations if fewer barriers existed.
  • About half of federal government IT DMs say training and resources on how to navigate partnerships with the private sector (49%) as well as training and resources for agency staff on how to use innovative new technologies (46%) would make it easier for their agency to use private sector innovations.

Leadership is open to new ideas, but change resistance and weak tech infrastructure understanding persist

While federal government IT DMs say their agency’s senior leaders are open to exploring new ideas from the private sector, they also identify senior leaders’ resistance to change as a challenge in using private sector innovations - similar to their resistance to the above mentioned modernization efforts. Additionally, they express concern about leaders’ understanding of the importance of up-to-date tech infrastructure. However, federal government IT DMs recognize the need for senior leaders’ support to make it easier to use private sector innovations.

• A majority (70%) of federal government IT DMs say their agency’s senior leaders are open to exploring new ideas and approaches from the private sector.
  • Yet a third (32%) of federal government IT DMs say one of the biggest challenges their agency faces in using private sector innovations is senior leaders’ resistance to change.
  • Fifty-five percent of federal government IT DMs are concerned about senior leaders not understanding the importance of up-to-date tech infrastructure.
• Federal government IT DMs say senior leaders’ support for collaboration with the private sector (43%) and clearer communication and expectations (31%) would make it easier for their agency to use private sector innovation.

Agencies are prioritizing AI, laying groundwork for broader use—though no-code/low-code options are often overlooked

Only about a third of federal government IT DMs say their agency uses no-code/low-code applications today, and its predicted use in the next five years is expected to remain largely at that level, signaling there may be untapped potential. Nevertheless, AI and generative AI are expected to be some of the top technologies federal agencies will use in the next five years. In fact, current AI priorities show that federal government IT DMs are already building the foundation of further AI implementation by upskilling/training existing employees and attracting new talent already trained on AI. This could lead to wider implementation and securing of more funding for AI initiatives, which are key priorities in the next five years.

• AI (53%) is one of the top technologies federal government IT DMs say their agency uses today; 46% also say their agency uses generative AI today. Some of the top technologies federal government IT DMs say their agency will use in the next five years include: AI (48%) and generative AI (41%).
• Federal government IT DMs say some of the top five priorities related to AI for their agency this fiscal year are:
  • Collaborating with other government agencies on best AI practices (48%)
  • Upskilling/training employees on AI (47%)
  • Attracting talent already trained on AI (46%).
• What’s more, some of the top five priorities related to AI in the next five years showcase how federal government agencies continue to move towards greater AI implementation:
  • Implementing AI platforms and tools across the agency (48%)
  • Securing funding for AI initiatives (48%).
• Federal government IT DMs say their agency uses no-code/low-code applications today (38%), this number has roughly tripled from 12% five years ago. And the predicted use of this technology in the next five years is expected to remain largely stable (37%).

Yet concerns around AI remain, ranging from a lack of regulations around its usage to the enhanced sophistication of cyberattacks

While AI implementation is clearly a priority for federal agencies in the near future, many federal government IT DMs also express concerns around AI. Most are concerned about the lack of regulations/government standards for development and use of the technology. Although federal government IT DMs report that their agency has implemented measures to address potential cybersecurity risks due to AI, many still worry about the role of AI in cyberattacks.

• Federal government IT DMs are concerned about the lack of clear regulations/government standards for AI development (69%) and AI usage (68%).
• About three-in-four federal government IT DMs are concerned about AI cybersecurity threats evolving faster than their agency can keep up with (78%), cyberattacks becoming more sophisticated due to AI (77%) and AI systems being manipulated by malicious actors (76%).
• Federal government IT DMs say the top measures their agency has implemented to address potential cybersecurity risks are data encryption and access controls for AI data (73%), regular security audits of AI systems (64%), collaboration with other government agencies or organizations on AI cybersecurity best practices (64%) and AI-specific cybersecurity training for staff (63%).