The execution gap: Why capacity is becoming government's defining transformation challenge

Ecosystem development leads by a wide margin, with 64% of government leaders seeing significant opportunity to expand strategic alliances and partnerships and only 3% disagreeing. Expectations for geographic expansion (31%) and revenue potential (26%) fell sharply. For capacity- and revenue-constrained agencies, partnerships are a way to add specialised skills, speed up delivery and share risk on pilots without adding headcount or lengthy internal builds.

Cyber threats are the clear top near-term risk for government leaders at 4.09 on a five-point impact scale, the only risk rated above 4.0, driven by rapidly evolving threats and nation-state actors. Third-party exposure is the gap to watch: investment in third-party risk management fell from second to ninth, even as its severity held steady. As agencies lean on partners for technology and skills, oversight needs to scale with the ecosystem.

Treat modernisation, security, compliance, privacy and data as one connected programme rather than competing projects. Legacy IT sits just outside the top five near-term risks at 3.57 and underpins many above it, and infrastructure modernisation is now the second-highest investment priority at 43%, behind cybersecurity (55%). Bundling these priorities into a coordinated modernisation programme with multiple business-case justifications can address several risks at once and reduce competition for funding.

Government leaders are focused on making AI accountable and safe to use, not on moving faster. Their top priorities are better equipping the workforce (59%), improving security of data used to train or run AI models (52%) and keeping AI use aligned with laws and regulations (48%). Workforce enablement leads because it must be built over time, including trust and buy-in from employees who may question how AI will affect their roles.

Security and privacy lead government leaders' 10-year outlook at 64%, as agencies digitize services and expand digital partnerships. The bigger shift is underneath: organisational resilience and culture rose 32 points to 53%, and talent challenges rose 22 points to 45%. Leaders expect the long-term constraint to be less about access to technology and more about whether their people and institutions can absorb and adapt to the pace of change.

Cybersecurity jumped from fifth to first as government's top investment priority at 55%, with infrastructure modernisation (43%) and regulatory compliance infrastructure (40%) close behind. These map directly to the leading near-term concerns: cyber threats, regulatory change, privacy, data limitations and legacy IT. Privacy and identity protection posted the largest risk increase in the survey, and data privacy fits naturally into a coordinated modernisation programme alongside security and compliance.