In the digital era, state and local government and education (SLED) agencies are increasingly leveraging new technological advances such as mobility, the cloud, and big data to better serve constituents while achieving cost efficiencies.

SLED agencies also face significant challenges to realizing the benefits of digital transformation. These include rigid budget constraints and procurement policies, the acceleration of ransomware and cyberattacks, consolidation and modernization of aging infrastructure, and organizational cultures that have traditionally been oriented toward “keeping the lights on” instead of innovation. But while the challenges are immense, we see many opportunities that agencies can capitalize on to accelerate their transformation. Here are some key trends in state and local government IT.

Increasing Investment in 5G, Cloud Migration, and Shared Services

Emerging initiatives will increasingly disrupt how the public sector invests in technology that drives efficiencies and delivers improved services to citizens. Technology-driven delivery models such as massive open online courses (MOOCs) and “digital backpacks” are already reshaping the way students access education services. Technology is also beginning to bridge the online and offline worlds when it comes to other constituent services.

According to IDC, spending on Smart City initiatives is projected to reach $158 billion globally by 2022, harnessing the power of real-time data for use cases such as intelligent traffic management and public transit. The implementation of 5G networks will also accelerate smart city applications by connecting mobile and Internet of Things (IoT) devices with much faster data speeds. AT&T, Verizon, and T-Mobile all have plans to deploy 5G services in several states in 2019.

We also see a significant shift in thinking toward IT modernization, powered by trends at the federal level that are shaping SLED agencies’ technology strategies and priorities. The Department of Homeland Security released an RFI in March 2019, expressing interest in investing in market-based innovations and new technologies in areas like automation, DevSecOps, cloud-native shared services, hybrid cloud investments to minimize data center footprints, and data analytics to improve strategic decision-making.

Budget Constraints and Talent Shortages Necessitate Operational Cost Efficiencies

SLED agencies often have funding shortfalls as well as tight budget and resource constraints, which can pose challenges in efforts to migrate from legacy systems. Only around 3.2%¹ of all SLED spending goes toward IT. And out of that small amount, the Government Accountability Office estimates that more than 75% of IT spending is allocated to the operation and maintenance of legacy systems that are rapidly aging.

Furthermore, budget constraints exacerbate talent and skills shortages. In a competitive labor market, public sector institutions have traditionally been at a disadvantage in attracting and retaining the skilled talent required to drive modernization. They are limited in being able to match private sector firms that offer highly competitive wages, innovation-oriented cultures, modern tools and technologies, and a wide breadth of opportunities.

As such, the focus for SLED agencies is rightfully on maximizing the efficiency of their limited resources. The Technology CEO Council released a report outlining ways that government can improve service quality and reach while simultaneously reducing costs by over $1 trillion over 10 years, by implementing commercial best practices around shared services, big data and analytics, IT modernization, and cybersecurity. Procurement strategies are moving beyond Lowest Price Technically Acceptable (LPTA) to those that improve mission objectives and outcomes via vendor-agnostic and best-of-breed technologies.

Cybersecurity Risks and Compliance

According to CIOs, cybersecurity remains the biggest IT challenge and area of investment for SLED agencies. The pace of cybersecurity attacks have been accelerating, with 44% of SLED agencies indicating that they experience cyberattacks at least daily. The costs associated with breaches and attacks have been accelerating as well. Two often-cited examples are the State of Atlanta and the City of Baltimore, Maryland.

The State of Atlanta was a victim of a ransomware attack that took many of the city’s services offline for nearly an entire week, hampering the functioning of the court system and preventing residents from accessing critical services like paying water bills, and more. Baltimore also experienced a breach that took its 311 and 911 dispatch systems offline for more than 17 hours, forcing emergency support functions to switch over to manual instead of automated operations.

Yet, SLED agencies are typically underprepared when it comes to cybersecurity breach detection and risk mitigation. According to the International City/County Management Association, 62.4% don’t know when a breach is happening, and between 40–50% fail to keep track of attacks, incidents, and breaches.

As referenced earlier, many of the barriers to better cybersecurity are related to budget, as SLED agencies face challenges hiring sufficiently skilled and trained staff. Additionally, strict compliance obligations often force SLED agencies into point solutions that require costly ongoing management while failing to address broad and rapidly evolving cybersecurity challenges. Investments in practices like DevSecOps to collaboratively build security into the application delivery lifecycle, and automation to speed up processes such as anomaly detection/resolution and installation of security patches, are critical.

Supercharge SLED Transformation

As technology increasingly shapes SLED agencies’ abilities to achieve mission objectives, it is crucial to identify solutions that improve the ROI of technology investments, drive process automation, reduce silos across internal and external stakeholders, and mitigate risks. That’s why hundreds of state and local government and education agencies have trusted PagerDuty to help them improve visibility across systems, and take smarter real-time action using intelligence and automation to optimize the reliability of technology-enabled services. To learn more, check out PagerDuty’s solution for SLED and get started with a free trial today.

¹ $103 billion IT spend out of $3.25 trillion total spend for state and local governments in 2018.