Technology is the enabler for state government’s next chapter

State leaders must leverage technology as a strategic enabler of progress.

In brief

• Data-driven insights enhance decision-making in government, improving program performance, transparency and resource allocation through advanced analytics.
• Process automation and AI enhance government efficiency by streamlining tasks, improving service delivery and allowing staff to focus on other activities.
• Digital service delivery is essential for state governments to meet expectations, reduce costs and enhance efficiency through technology and automation.

States are at a pivotal moment of leadership and financial change. With new federal and state leaders taking office, this year brings a mix of reflection and renewed energy, vision and commitment to advancing government for the people. Key initiatives and principles aimed at improving the efficiency, transparency and responsiveness of government services seem to be moving to the forefront for policymakers. However, this enthusiasm will be tempered by the complex realities of dwindling federal funding streams and the growing responsibility placed on state resources to deliver more with less.

Furthermore, advanced data analytics plays a critical role in statewide fiscal management. By identifying inefficiencies and spotlighting areas for potential cost reduction, analytics can help allocate resources more effectively. Whether streamlining health care delivery, optimizing transportation infrastructure or pinpointing budget overages in state operations, data will inform strategies that align with both citizen priorities and fiscal realities.

Driving efficiency through automation and AI

The adoption of process automation and artificial intelligence (AI) technologies offers an opportunity to enhance efficiencies across both back-office functions and citizen-facing services. In government administration, automation can take on repetitive, time-consuming tasks such as grant processing, procurement and compliance reporting — freeing up staff to focus on higher-value activities that require human judgment. There are many proof points underway in states ready to be deployed enterprise-wide and at scale with proper investments.

When applied to citizen-facing processes, these technologies can significantly improve service delivery. AI-powered chatbots, for instance, can manage routine queries, allowing agencies to respond to residents more quickly while reducing operational costs. Automation can also accelerate processing times for applications, permits and benefits, reducing wait times and improving the overall citizen experience. The result is a government that functions more efficiently and feels more responsive and accessible to its constituents.

Expanding digital services to meet citizen demand

The shift toward digital service delivery is imperative. Citizens expect state governments to offer the same level of convenience and accessibility they experience in the private sector. Expanding the resource and investment in digital to progress from informational to transactional online services can quickly jump-start this imperative. Expanding the state’s portfolio of digital services will be critical to meeting these expectations while simultaneously reducing the costs associated with maintaining brick-and-mortar facilities.

Online services for payments, business licensing and other essential services can significantly cut costs by reducing reliance on physical office space and in-person interactions. These savings can then be reinvested in critical areas, like education, health care or infrastructure, thereby maximizing every taxpayer dollar. Moreover, the reduction in real estate reliance can unlock opportunities for repurposing state-owned properties for other public or private use, creating additional economic value.

State leaders must leverage technology as a strategic enabler of progress. Data and analytics will empower leaders to make smarter, evidence-based budget decisions. Automation and AI will enhance government efficiency, delivering better outcomes at a lower cost. Digital services will modernize how the state interacts with its citizens, meeting the demands of a rapidly evolving world.

The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.

Route Fifty first published this article on April 2, 2025.