Digital Transformation in Government: Priorities, Challenges, and What's Actually Working in 2026

What is Digital Transformation in Government?

Digital transformation in government is the ongoing process of using modern technology to fundamentally improve how government services are designed, delivered, and experienced by citizens, civil servants, and partner organizations. In the digital age, it goes well beyond digitizing forms. It means rethinking every touchpoint: how a modern citizen finds information, applies for a service, tracks a request, and reaches a resolution without compromising security or trust.

Most government agencies operate on legacy systems built decades ago and lack shared data or identity infrastructure across departments.

Three forces are driving urgency in 2026:

• Citizen expectations shaped by private sector customer experience (research shows 87% of citizens⁴ say their trust in government increases with a seamless digital experience)
• Budget pressure that makes efficiency non-negotiable (67% of government leaders⁵ say that their IT infrastructure is not built to handle emerging technologies; yet only 41% say modernization is a current priority.)
• Responsible AI governance moving from aspiration to legal requirement.

Government digital transformation addresses all three, but only when it connects what already exists rather than replacing it.

What Are the Six Priorities for Government Digital Transformation Leaders?

1. Citizen Experience

Most citizens still encounter fragmented, inconsistent digital government services, creating accounts on multiple platforms and repeating information across government departments. Over 50% of survey respondents⁶ reported frustration accessing government services, and only 36% describe government processes as intuitive. Half say they would use digital services more if they could access them from a single portal. A unified citizen portal offering one login, one profile, and access to all government services is the highest-impact first step. Getting there requires careful consideration of how digital solutions connect existing systems rather than replacing them.

2. Operational Costs and Efficiency

Legacy systems are expensive to maintain, slow to update, and incompatible with modern digital government services. Fragmented service delivery pushes citizens toward contact centers, driving operational costs higher and frustrating government employees who cannot share information effectively. Eliminating manual processes through automation delivers measurable efficiency gains. In Ontario, digitizing driver medical reviews reduced turnaround times from weeks to just a few days. This represents an 85% increase in efficiency, which is a practical example of what government agencies can achieve by focusing digital transformation on high-volume manual processes first.

3. Responsible AI and Algorithmic Governance

Public sector artificial intelligence decisions affect citizens' access to services, benefits, and justice, making governance non-negotiable. The EU AI Act⁸ introduced requirements for high-risk AI systems in public services: transparency, human oversight, and bias monitoring. As of 2026, leading government initiatives focus on agentic AI and modular modernization to increase efficiency and deliver proactive public services. Deploying AI on siloed data infrastructure is not just a technical risk; it is a public accountability failure waiting to happen.

4. Cybersecurity

Government agencies face cyber threats across different branches and levels of government, making them among the most targeted organizations globally. The 2026 NASCIO-Deloitte Cybersecurity Study⁹ found state CISOs' top initiatives include Zero Trust implementation and enterprise identity and access management; both harder to execute on fragmented legacy infrastructure. Advancing digital government transformation and reducing cybersecurity risk are, in practice, the same initiative.

5. Data Sovereignty

Governments require full control over where citizen data is processed and governed, not just where it is stored. Secure data sharing across government departments must happen within a governed, auditable platform. The EU Cloud Sovereignty Framework (October 2025) introduced eight enforceable sovereignty objectives for public sector cloud procurement, with automatic rejection for any offer failing minimum assurance levels. GCC governments face equally tightening data localization requirements.

6. Skills Shortage

Gartner research¹⁰ found 28% of government digital transformation leaders cite IT talent shortage as a major challenge, and 73% of the public sector workforce say they don't feel equipped with the right resources to learn crucial digital skills. Local governments and smaller government departments face this most sharply, where constrained funding makes recruiting and retaining digital expertise harder. A government digital strategy built on low-code platforms enables government employees to build and manage digital services independently, reducing dependence on scarce specialist resources.

Where do Government Digital Transformation Programs Stall?

The same obstacles exist in every country and agency type. For a deeper overview, see Key Challenges for the Public Sector.

Examples of Digital Transformation in Government and the Public Sector

The following organizations delivered measurable improvements in citizen experience and government operations without replacing the systems crucial for their day-to-day functions.

Across Europe and the Middle East, Principado de Asturias (Spain) shifted from reactive to proactive citizen service through miPrincipado, giving 8,000+ civil servants a unified workspace. In Salamanca (Spain), the City Council has introduced an AI chatbot that now manages 50% of all citizen inquiry calls to the 010 service, showcasing the responsible use of artificial intelligence in local government operations. Smart Dubai unified 20+ government entities on one platform, enabling trade license issuance in minutes.

Full case studies are available at https://www.liferay.com/resources-hub/customer-stories

What Are the Key Technologies Enabling Government Digital Transformation?

Digital Experience Platforms

A Digital Experience Platform (DXP) is the connective tissue of digital government: the single environment through which citizen portals, employee intranets, and public websites are built, managed, and governed. For government agencies, the critical requirements are legacy integration without forced replacement, role-based access for sensitive data, flexible deployment for data sovereignty, and open, auditable architecture. Modern DXPs also deliver:

• Low-code service development, helping non-technical government employees across government departments build and update digital government services without IT support
• Personalization, delivering contextually relevant information based on citizen profile and service history
• API integration (REST, SOAP, GraphQL) enabling secure data sharing across existing enterprise systems
• Single sign-on across all government services: citizens renew licenses, pay taxes, and apply for permits without re-entering information
• Unified analytics giving government leaders visibility into how digital services are actually being used

Responsible AI and Automation

The deployment of AI in government is rapidly increasing. Applications such as citizen service routing, eligibility assessment, and policy modeling are moving from pilot projects to full production. For instance, Salamanca's chatbot manages 50% of citizen inquiries, while Ireland's MyWelfare platform automatically awards 83% of illness benefit claims¹¹. The EU AI Act imposes requirements for high-risk public sector AI, including mandatory human oversight, bias monitoring, and auditability. This makes a governed platform layer a legal necessity rather than merely a design preference. The Liferay AI Hub provides the necessary governed integration layer for responsible decision-making.

Open Source and Sovereign Infrastructure

Open source is increasingly a sovereignty decision for government digital strategy. Governments on proprietary platforms have no independent verification of what those systems do with citizen data. Open source digital technology enables governments to inspect the codebase, deploy on infrastructure they control, and meet data residency requirements without vendor dependency. France became the first government to formally endorse the UN Open Source Principles, a direction that prioritizes transparency and digital sovereignty over vendor convenience. See 10 Keys to Building the Public Sector Technology Journey.

Cloud Infrastructure

Over 75% of governments now rely on hyperscale cloud providers for over half of their workloads. The EU Cloud Sovereignty Framework (October 2025) sets enforceable procurement standards. The UK's GovAssure regime requires demonstrated, not self-asserted, security resilience. FedRAMP remains mandatory for US federal clouds. Additionally, deployment flexibility—whether through SaaS, PaaS, or self-hosted solutions, is now a requirement for procurement rather than merely a preference.

How do Government Digital Transformation Requirements Vary by Region?

Strategic priorities are consistent globally. Compliance frameworks and procurement rules are not.

How Does Liferay Enable Government Digital Transformation?

The Liferay Digital Experience Platform is designed for the structural realities of government: connecting rather than replacing existing infrastructure, meeting security and accessibility requirements from day one, and delivering measurable progress within realistic timelines and budgets.

An Alternative to Rip-and-Replace

Large-scale replacement programs routinely overrun budgets and fail to deliver the service delivery improvements that justified the investment. UK Government Digital Service research consistently shows the most effective government digital transformation programs build incrementally on what exists.

Liferay's layered modernization approach maintains core systems such as case management, benefits processing, human resources, and finance, while a modern experience layer connects through APIs to deliver a unified interface. The NHS has successfully implemented this model for ten years, fully preserving the existing ERP system, which serves 1.9 million employees across more than 300 organizations. This approach enables continuous improvement without the need for system replacement. See Foundational Elements for Public Sector Digital Transformation.

Digital Self-Service That Gets Used

Self-service fails when it is not good enough to trust. City of Burbank's portal migration to Liferay DXP achieved full WCAG 2.1 accessibility compliance and a significant reduction in resident calls to city departments. This outcome serves as a direct indicator of the effectiveness of the self-service system.

Liferay's citizen portal capabilities enable agencies to build digital government services that genuinely work:

• Authenticated single sign-on access across all government services
• Real-time status tracking for applications and requests
• Personalized service recommendations based on citizen profile and history
• Accessible design meeting WCAG 2.1 AA standards as a default
• Low-code tools enabling government employees to update content and workflows without IT

See 6 Pillars for a Successful Citizen Relationship Management Platform.

Unifying Fragmented Government Services

Liferay provides the architectural solution to fragmentation: a single platform with shared identity management, shared content infrastructure, and API integration with departmental back-end systems. Government agencies present a unified front door to citizens while maintaining the departmental separation that regulations require. Data sharing across government departments and between different branches of government happens within a governed, auditable layer. The Council of Europe's consolidation of 150 websites into one platform, achieving a 22% increase in site visits, illustrates what platform unification delivers at scale.

Data Protection, Sovereignty, and Security by Design

Available as SaaS, PaaS, or self-hosted, Liferay give agencies full control over data residency. The open source codebase is fully inspectable by government security teams and elected officials. Certifications include ISO/IEC 27001, 27017, 27018, SOC 2 Type 2, and CSA Star Level 1 and 2. Liferay's identity verification at every access point, granular role-based permissions, and full audit logging reduces the fragmented attack surface that legacy multi-system environments create. See Liferay DXP Security Features for Government.

Accessibility Built In, Not Bolted On

WCAG 2.1 AA, Section 508, and EN 301 549 are foundational platform capabilities, not optional add-ons. The European Accessibility Act (EAA, June 2025 deadline) made compliance a legal obligation across EU member states, and government entities in most jurisdictions face equivalent requirements. Building accessibility into platform selection from the beginning is not only more effective but also significantly less costly than adding it later. Furthermore, this approach enhances service delivery for all citizens, including those with disabilities or limited digital access.

Ready to Transform Government Digital Services? Connect with Liferay's public sector team to discuss your agency's mandates, compliance requirements, and transformation timeline. Request a Custom Demo Explore the Public Sector Platform

Frequently Asked Questions

How are Governments Modernizing Without Replacing Core Systems?

The most effective strategy is layered modernization. This involves keeping back-office systems intact while implementing a modern digital experience layer that connects to them via APIs. Organizations such as the Principality of Asturias, Bristol City Council, and the Council of Europe have successfully adopted this approach to provide modern services to citizens without incurring the cost and disruption associated with complete system replacement.

How Does Open Source Technology Support Data Sovereignty?

Open source platforms let government security teams inspect the full codebase, deploy on infrastructure they own and control, and meet data residency requirements without dependency on a vendor's data center decisions. This is increasingly a procurement requirement, not just a cost consideration; France's endorsement of the UN Open Source Principles recognizes it as a structural sovereignty response.

How is AI Being Deployed Responsibly in Government Operations?

AI deployment requires a governed platform layer with clear audit trails, human review workflows for high-stakes decisions, and bias monitoring. Salamanca City Council's AI chatbot now handles 50% of citizen calls: this is a live production example, not a pilot. The critical enabler is a governed experience layer through which AI outputs are delivered and audited.

How Does Digital Transformation Address the Public Sector Skills Shortage?

Low-code tools allow content editors, service designers, and policy teams to build and manage digital services without developer involvement. This reduces dependence on scarce technical specialists and allows IT teams to focus on integration and architecture work that genuinely requires their expertise. This is a practical response for local authorities and agencies with limited IT resources.

What Accessibility Standards Apply to Government Digital Services?

WCAG 2.1 AA is the baseline requirement across major jurisdictions: mandatory under the European Accessibility Act (effective June 2025), UK PSBAR, and US Section 508. Building accessibility into platform selection from the start is significantly less costly and more effective than retrofitting it after launch.

References

1. 54% of government executives: https://www.deloitte.com/us/en/insights/industry/government-public-sector-services/2026-nascio-deloitte-cybersecurity-study.html
2. EU Cloud Sovereignty Framework (October 2025): https://www.kiteworks.com/regulatory-compliance/european-digital-sovereignty-procurement/
3. France's UN Open Source Principles endorsement: https://unite.un.org/en/news/france-becomes-first-government-endorse-un-open-source-principles
4. 87% of citizens: https://www.government-transformation.com/en/citizen-experience/building-trust-in-government-through-digital-transformation
5. 67% of government leaders: https://www.ey.com/content/dam/ey-unified-site/ey-com/en-us/insights/government-public-sector/documents/ey-2024-federal-state-and-local-trends-report.pdf
6. survey: https://www.nextgov.com/modernization/2022/10/over-half-people-are-frustrated-digital-government-services-survey-finds/378395/
7. digitizing driver medical reviews: https://www.infosyspublicservices.com/about-us/clients-speak/ensuring-road-user-safety.html
8. EU AI Act: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32024R1689
9. 2026 NASCIO-Deloitte Cybersecurity Study: https://www.deloitte.com/us/en/insights/industry/government-public-sector-services/2026-nascio-deloitte-cybersecurity-study.html
10. Gartner research: https://www.gartner.com/en/articles/5-key-digital-transformation-challenges-government-cios-must-tackle
11. 83% of illness benefit claims: https://www.gov.ie/en/department-of-public-expenditure-infrastructure-public-service-reform-and-digitalisation/publications/better-public-services-article-department-of-social-protection-delivering-digital-public-services/