More than half of government Chief Information Officers (CIOs) expect their IT budgets to rise in 2026, driven by increasing demand for artificial intelligence (AI) and other digital technologies, despite ongoing fiscal constraints, according to new industry research. A survey of 284 government CIOs revealed that 52% anticipate budget increases specifically targeted at AI and related technologies.
Cybersecurity remains a top priority, cited by 85% of CIOs, while both AI and generative AI garnered similar interest, with 80% of CIOs highlighting their importance. Cloud platforms also emerged as a focus area for 76% of respondents. This data indicates that governments are committed to prioritizing digital initiatives that promise tangible outcomes in public service delivery. CIOs are feeling the pressure to justify expenditures by clearly linking technology projects to measurable mission objectives, including cost reductions and enhancements in user experience.
In terms of AI deployments, 74% of government CIOs indicated they have already deployed or plan to deploy AI solutions within the coming year. Interest in generative AI is even more pronounced, with 78% reporting current or imminent deployment plans. Nearly half (49%) of those surveyed have intentions to implement AI agents, such as digital assistants, within the next 12 months.
Arthur Mickoleit, Director Analyst at Gartner, remarked on the growing demand for agentic AI, which is seen as a pivotal factor in transforming government operations. However, he cautioned that the allure of newer technologies should not overshadow established methods: “Agentic AI is emerging as an enabler of government transformation, but CIOs must remain mindful of the hype that can distract from more mature technologies like machine learning and business process automation,” Mickoleit stated. He emphasized that the next wave of innovation is crucial for meeting public sector priorities, particularly as expectations rise following years of investments in digital government.
Increasing productivity is the foremost internal priority for government CIOs in the upcoming year, with 51% planning to concentrate on enhancing employee output. The development of new digital products and services ranks second at 38%, closely followed by initiatives aimed at improving citizen experience, which 37% of CIOs prioritize.
“CIOs should prioritize AI initiatives that rapidly improve internal efficiency and productivity,” Mickoleit advised. He also highlighted the importance of updating governance practices to modernize procurement processes, manage limited resources, and balance risks with opportunities in citizen-facing AI applications.
Amid ongoing geopolitical uncertainties and growing concerns surrounding digital sovereignty, 55% of government CIOs expect to modify their relationships with technology vendors. The geographical location of vendors has become increasingly significant, with 39% intending to engage more closely with providers based in their own regions rather than relying exclusively on global suppliers.
“Government CIOs are increasingly seeking to reduce dependence on global technology vendors to strengthen resilience,” Mickoleit observed. He noted that many CIOs are now factoring geopolitical risks into their vendor selection and long-term planning. By mapping risks and dependencies across public sector technology stacks, CIOs aim to ensure they can mitigate and endure future disruptions.
As governments navigate these complexities, the role of technology in enhancing public service delivery continues to take center stage. The anticipated budget increases for IT underscore a commitment to advancing digital capabilities, particularly in the realms of AI, cybersecurity, and cloud computing. The path forward involves not only investing in new technologies but also reassessing existing frameworks to remain resilient in an ever-changing landscape.
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