How AI is Transforming Government IT – and the impact on Digital Sovereignty

The emergence of artificial intelligence is reshaping how government agencies approach technology, collaboration, and data management. As agencies race to harness AI's potential, a critical question has emerged: How do we harness AI's transformative power without losing control over the data and systems that serve our citizens, mission and nation ?

The New Playing Field

Government IT has fundamentally changed. Problems once existed in swim lanes—where each department could manage its own processes, systems, and data in isolation. Today’s problems are like a water polo: dynamic - requiring team coordination, agility, and collective action.*  A game changer is Artificial Intelligence.

Today's AI initiatives can require collaboration across departments and stakeholders to combine diverse datasets, train large language models, and derive insights that inform policies, programs, operations and the allocation of increasingly scarce resources. But this transformation comes at a moment when digital sovereignty has surfaced as both a concern and a strategic imperative.

Digital sovereignty—the ability to maintain choice, control, and autonomy over digital infrastructure, data, software and technology systems—now stands at the intersection of national security, public trust, privacy, and operational efficiency and resilience. The rapid pace of AI evolution requires a collected and concerted response to realize the promises of AI, while mitigating and minimizing the risks and vulnerabilities. 

Current Reality

With AI-enriched applications, models, and new capabilities entering the market, government agencies face mounting pressures from multiple directions to innovate to improve productivity, efficiency and the constituent experience. Persistent security threats and unending data growth create ongoing challenges. At the same time, governments must fulfill their fundamental charter to preserve public trust, protect sensitive citizen data, and "do more with less." 

The question isn't whether to maintain digital sovereignty—it's how to strengthen or keep it without hindering innovation.

Each new AI capability requires careful evaluation:

• Where will our data reside? Who can access it? 
• What happens if a vendor relationship deteriorates, or a foreign jurisdiction demands access? 

Some government organizations are deploying "local AI" solutions in controlled environments—from secured on-premises infrastructure to air-gapped systems—prioritizing direct oversight of data access and security controls as fundamental to maintaining data sovereignty and public trust. 

The Risk of Erosion

The cumulative effect of vendor decisions across your IT estate may erode your digital sovereignty, impacting your ability to fulfill government's most fundamental obligation: protecting citizen and national data, delivering the benefits and services required, enabling mission success, and maintaining the integrity of public services.

The stakes extend beyond technology choices to fundamental questions of capability and mission continuity. Consider these findings from the Global Public Sector ECI Report (2025), 

• 94% of public sector organization respondents leverage GenAI applications today but 92% acknowledge gaps in securing AI models.
• 51% of respondents believe their organizations have the necessary skills to support these initiatives. 
• 83% of public sector organization respondents now manage multiple Kubernetes® environments, each potentially tied to different vendors with distinct security protocols, pricing models, and integration challenges. 

What this means: Government agencies are rushing to adopt AI but may lack the security controls or internal expertise to manage it safely. Complex, multi-vendor environments can fragment control and increase vulnerability. This gap between adoption and capability creates a perfect storm for sovereignty erosion—agencies become dependent on external providers while lacking the skills to oversee, secure, or migrate these critical systems if needed.

When outsourcing capabilities or choosing SaaS solutions, what began as a path to close capability gaps can quickly transform IT teams from builders and innovators into contract and vendor coordinators. This shift undermines the institutional knowledge, capabilities, and agility governments need, especially if those outsourced choices fail or when geopolitical tensions require rapid pivots.

The Path Forward

The solution isn’t to reject external partnerships or avoid AI innovation. Instead, the path forward requires a strategic hybrid approach that balances core internal capabilities with appropriate external expertise. This means:

• Maintaining internal control over IT management, governance, and technical architecture. These capabilities should never be fully outsourced, as they form the foundation of your digital sovereignty and mission continuity. 
• Leveraging external partners strategically to augment - not replace - internal capability. The key is selecting infrastructure partners that enable rather than constrain sovereignty: solutions that provide hardware choice, hypervisor flexibility, multicloud compatibility, and unified management across environments. 

In a landscape where new AI models and security threats emerge daily, the ability to adapt quickly while maintaining control over your data and infrastructure isn't just good IT practice—it's essential to preserving the public trust and operational integrity.

Strategic Choice, Not Isolation

Digital sovereignty in the age of AI isn't about isolation or complete self-reliance—it's about strategic choice and maintaining control over the capabilities that define your organization's mission and your obligation to citizens and nation.

As you reconsider your IT strategy for this new team-sport era of government technology, ask yourself: 

• Are my vendor relationships strengthening or weakening our digital sovereignty, including our ability to protect sensitive data and respond to emerging threats?
• Can we leverage the  AI models being released without compromising citizen privacy? 
• Do we control our critical data and infrastructure in ways that preserve public trust, or are we increasingly dependent on external providers whose interests may not align with our organization’s charter? 

The answers will determine whether your organization thrives in the AI era while maintaining the sovereignty essential to the integrity of executing your chartered responsibilities.

Ready to strengthen your digital sovereignty? Download our eBook on Digital Sovereignty to explore actionable strategies, proof points, and guidance for strengthening your organization's digital independence while embracing the transformative potential of AI and modern infrastructure that promises new capabilities, increased productivity, efficiency and overall, a better government.

* The extended metaphor is from Nutanix customer Rob Lloyd, Chief Technology Officer at The City of Seattle, developed from discussions at the American Leadership Forum.

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