Nearly Half of Governments to Deploy AI at Scale, but Face Execution Hurdles: KPMG Report

Why It Matters

Government AI roll‑outs affect public service efficiency, risk management and fiscal stewardship, making the identified gaps critical for policymakers and vendors alike.

Key Takeaways

• 48% of governments aim AI deployment at scale within 12 months
• 43% report roadblocks due to siloed data and coordination
• Only 38% have mature cybersecurity, despite 64% planning more spend
• 86% expect AI‑agent management skills to be critical within five years
• 75% plan to broaden tech ecosystems through external partnerships

Pulse Analysis

KPMG’s 2026 Global Tech Report underscores a pivotal moment for public‑sector AI. While nearly half of governments intend to transition AI projects from pilot to production within a year, the data reveal a widening chasm between ambition and operational reality. The survey of 115 senior officials shows that enthusiasm is tempered by entrenched structural issues, prompting policymakers to reassess timelines and resource allocation. This tension is reshaping budget discussions, as ministries balance legacy system upkeep with the need for innovative, outcome‑driven solutions.

The report isolates five core hurdles that impede scaling. First, fragmented data architectures and departmental silos prevent the unified insights AI requires. Second, roughly 40% of technology spend remains tied to maintaining outdated platforms, slowing transformative investment. Third, cybersecurity maturity lags, with only 38% of respondents rating their defenses as robust, even as 64% plan to boost spending. Fourth, data‑management maturity is low, with just 37% achieving high‑level integration. Finally, talent scarcity looms large—86% anticipate AI‑agent management becoming a vital skill set within five years. Together, these constraints create a bottleneck that could delay public‑service improvements and erode citizen trust.

To bridge the gap, governments are pivoting toward citizen‑centric, outcome‑focused strategies and seeking external partnerships. About three‑quarters of surveyed entities plan to expand their technology ecosystems, leveraging private‑sector expertise to accelerate data integration, bolster security and upskill workforces. This collaborative approach, however, must navigate cost, alignment and governance challenges. As AI becomes a cornerstone of public administration, successful execution will hinge on breaking down silos, modernizing infrastructure, and cultivating a skilled talent pipeline—elements that will define the next wave of digital governance.