Public sector CIOs in Australia and New Zealand are facing a “tough 12 months” in managing their technology estate amid cost constraints, according to a Gartner regional analyst. However, there is optimism that investments in AI will deliver the productivity gains that many anticipate.

Gartner recently published the public sector results CIO Technology Executive Survey. The firm found that 94% of ANZ government CIOs named data analytics as their top technology investment for 2025, followed by investments in cyber security (91%) and application modernization (85%).

Dean Lacheca, a Gartner VP analyst, told TechRepublic that an austerity mentality is at play within government agencies. “Frustrated” CIOs faced another year of relatively flat budgets when accounting for inflation, with little appetite to undertake large ICT projects.

“Right now we’re probably in one of the weakest periods of austerity,” he said. “There is a realization that this is not going to be a period of massive, accelerated technology adoption.”

Productivity is rising to become a key outcome for government CIOs

Lacheca said the prioritization of investments in data analytics and cybersecurity has remained constant in recent years. However, this reflects slow progress, investment in these areas faces challenges such as keep up with the changing threat vectors affecting cybersecurity professionals.

“It’s been a great job by the Australian federal government with their cyber security efforts,” Lacheca noted. “But if you look at the Essential Eight and the movement towards the Eighth Essentialit’s still…relatively slow in that particular space.”

SEE: Private sector technology investment to be led by cyber security in Australia in 2025

The constant focus on data analytics and cybersecurity is now joined by a growing desire for “human capital effectiveness,” as 94 percent of CIOs surveyed by Gartner prioritize productivity-based outcomes, up significantly from last year. The productivity boost comes as IT and the rest of government are driven to increase efficiency.

“We see a real contrast,” added Lacheca. “We see some of the government’s high-profile projects and efforts and modernization continuing to be funded; but if you look at global IT investment from governments, they (CIOs) have been really squeezed in recent years.”

Government CIOs name AI among their top three technologies

According to the Gartner report, the top three technologies ANZ government CIOs said they have implemented or plan to implement in the next 12 months are:

• Industry cloud platforms (59%).
• Generative AI (56%).
• Low-code/no-code platforms (53%).

Industry cloud platforms

Lacheca said the prominence of cloud platforms in the industry reflects a shift toward the adoption of more common platforms in the public sector. While there is no significantly differentiated technology such as more advanced financial services industry clouds, this shift promotes greater standardization across agencies.

SEE: How a sovereign cloud boom is happening in APAC

AI and Generative AI

Lacheca said the “surprisingly high levels of interest in artificial intelligence” seen in government is driven primarily by the hope that it can help with the productivity demands of agencies. However, after a period of hype around generative AI, CIOs have become more realistic about implementation challenges.

Although CIOs want AI to deliver more productivity, Lacheca said their current role is often one of “risk mitigation” in that space.

“They have to be the ones slowing this down because they’re trying to make sure we approach this with a balanced view of risk,” he said.

SEE: Generative AI could be a source of costly mistakes for tech buyers

Low code and no code

According to Lacheca, low code has been an area of ​​great growth in recent years. He said the main reason for this is that government CIOs have been trying to “undo the mistakes of the past,” which has created “a bunch of traditional custom technology,” causing a problem they now have to deal with.

Low-code platforms can also help IT teams bridge talent gaps, he said: “It’s very hard to find IT professionals in certain technologies. So I look at reduced code as an opportunity for them to address some talent gaps where they can leverage their own internal skills.”

CIOs to continue to champion the value of IT

Along with managing technology risk (82%), CIOs’ highest priority is demonstrating the business value of IT in government (68%). Lacheca said ANZ government CIOs were still trying to change the “corporate services mindset” that comes from IT’s past.

“They’re still really trying to educate or communicates the value they contribute to the organization itselfhe said.

Looking ahead to 2025, Lacheca said he hopes there will be a continued shift in government mindset about what legacy technology really costs. He said there is a lot of fear about making big investments and projects in IT, which can lead to governments “kicking themselves down the road”.

“I think there’s going to have to be some level of ownership of how we start to mitigate that risk and how we do that in a way that actually creates some of that productivity gain,” Lacheca explained. “There’s a real business case for the gains we’re going to make if we start releasing some of the legacy (technology) that we have.”