2022 KPMG U.S. Technology Survey Report

Government
and publicsector industry
insights

Looking to technology to improveagility and customer engagement
Government and public sector organizations
spend about the same percentage of theirbudgets on technology as their private sector
counterparts and generally reap similar rewards.
They are investing in digital transformation
to improve agility and accelerate customer
centricity and engagement.

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Government and public sector industry insights| 01

Actively migrating to the cloudGovernment and public sector executives
report strong progress against their cloud
agendas. Eighteen percent—the second
most in any industry group—say theirorganization has completed its migration tothe cloud and is now focused on continuous
optimization and modernization of its cloudcapabilities, according to the 2022 KPMG
U.S. Technology Survey.1 By comparison,
13 percent of all executives say the same.
Forty percent of government and public sector executives
also say their organization’s ERP/application portfolio isfully in the cloud or, if not, is moving toward that state
but is nonetheless already integrated and seamless.
That compares with 31 percent of all organizations. In
addition, 55 percent of executives in this sector say
their organization is proactive in progressing against its
cloud strategy. That’s the second highest in any sector
and compares to 48 percent across all organizations.
Finally, government and public sector executives are
the most likely to say moving to the cloud has lowered
their organization’s total cost of IT ownership (42 percent
versus 34 percent at all organizations).(See Figure 1.)“Government and public sector organizations are making
good progress on their cloud agendas, but it’s an area
where they must continue to march forward,” says Viral
Chawda, principal, head of Government Technology, for
KPMG in the U.S.
Chawda notes that while a small minority oforganizations may consider their migration complete,return on investment so far has varied widely from one
organization to the next.

Figure 1:A strong start on moving to the cloud
Nearly one in five government or public sector organizations are operating fully in the cloud.

Government/public sector
organizations

Allorganizations

Proactive in progressing
cloud strategy andcontinually evolving

55%

48%

+ 7 pts

Cloud has lowered
total cost of ownership

42%

34%

+ 8 pts

ERP/application portfolio
is fully cloud or moving
toward fully cloud, but
integrated and seamless

40%

31%

+ 9 pts

More than 60% of
enterprise workloads
in the cloud

31%

30%

+ 1 ptHave completed migration
to cloud and are now
focused on optimizationand modernization

18%

13%

Difference+ 5 pts

Source: KPMG U.S. Technology Survey Report, KPMG LLP (U.S.), 2022.

1 In May and June 2022, KPMG U.S. surveyed 1,052 U.S.-based, executive-level technology leaders across eight broad industry sectors about the current state of theirorganization’s digital transformation journey, the challenges they are facing along that journey, and their planned technology investments. This report highlights themost significant differences in the survey findings for the government and public sector relative to all sectors represented in the survey.
© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Government and public sector industry insights| 02

ACTIVELY MIGRATING TO THE CLOUD continued“In many cases, moving to the cloud has been a net
positive for these organizations from a speed and agility
perspective, but not from a cost perspective,” he explained.
“The challenge now to is improve how they manage theiruse of the cloud and extract the most value from it.”Figure 2:Demands for agility and customer engagement are driving
digital transformation

Fifty-five percent of executives in this sector cite
improved enterprise agility and modernization as a
key driver of their organization’s digital transformation(versus 45 percent at all organizations). Fifty-five percent
also identify accelerating customer centricity or customer
engagement as a key driver (versus 52 percent at allorganizations). (See Figure 2.)

Difference

Compared to how they are doing in the cloud, successon the data and analytics front has been more elusive
for government and public sector organizations. On
a positive note, 60 percent of sector executives saytheir organization is proactive in progressing against
its data and analytics strategy, versus 51 percent at allorganizations. But executives in this sector also are themost likely to say suboptimal data management is a”In many cases, moving
to the cloud has beena net positive for theseorganizations from a
speed and agility perspective, but
not from a cost perspective.“— Viral Chawda, Principal, Head of Government
Technology, KPMG in the U.S.

What are the key drivers of your organization’s digital transformation and corresponding
investments?

Government/public sector
organizations

Allorganizations

Improve enterpriseagility andmodernization

55%

45%

+10 pts

Accelerate customer
centricity/engagement

55%

52%

+3 pts51%

56%-5 ptsReduce risk

43%

42%

+1 pt

Increase revenue

38%

36%

+2 ptsAdvance ESG(environmental,social, governance)
priorities/commitments

33%

27%

+6 ptsDrive growth, efficiency,and resiliences

Source: KPMG U.S. Technology Survey Report, KPMG LLP (U.S.), 2022.

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Government and public sector industry insights| 03

ACTIVELY MIGRATING TO THE CLOUD continued
challenge for their organization in adopting new digitaltechnologies (34 percent agree, versus 25 percent of all
executives).

Figure 3:Struggling to generate a positive return on tech investments
Percentage of organizations deploying the indicated technologies and seeing a positive return on
their investment in it.

Government/
public sector
organizations“When you’re suboptimal in data management, you can’t
be ahead in analytics because analytics doesn’t workwithout optimal data management,” notes Chawda.
“Organizations in this sector are having pockets of successwith advanced analytics but it’s nowhere close to being
evenly distributed yet.”
When asked how well they’re making out with specificadvanced technologies, executives in this sector again
report challenges. They are only slightly behind theprivate sector in successfully deploying technologies
enabled by artificial intelligence (AI), such as machinelearning and natural language processing. But they aremuch less likely to be using natural language processing(NLP) or computer vision and earning a positive returnon their investment in those technologies. In fact,
when asked in which of five areas they’ve invested
in technology and generated a positive return, thegovernment/public sector trails the average for allindustries in each case. (See Figure 3.)
Looking ahead, government and public sector
organizations are prioritizing investments aimed atimproving the customer and user experience, with 59
percent of sector executives saying this will be a top-fivearea of investment for their organization over the next 12months, versus 56 percent at all organizations. They’realso prioritizing AI/machine learning (47 percent versus 48
percent), as well as application modernization (41 percent
versus 42 percent) and intelligent automation (41 percent
versus 35 percent).

Robotic process
automation

Vision systems

Allorganizations

Difference

21%

50%

-29 pts

18%

30%-12 pts

Machine learning

77%

82%

-5 ptsNatural language
processing

59%

61%

-2 ptsCase-based
reasoning

19%

20%

-1 pt

Source: KPMG U.S. Technology Survey Report, KPMG LLP (U.S.), 2022.

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Government and public sector industry insights| 04

Building a digital future
Government and public sector
organizations face numerous challenges
in prosecuting their digital transformation
agendas, led, the survey shows, by a lackof capable talent.
Thirty-seven percent of sector executives cite thisas a significant hurdle, although the number is evenhigher—44 percent—among all executives. Theirorganizations also are hamstrung by their previously
mentioned deficits around data management, and by
the high cost of purchasing and implementing new
systems and adding the necessary talent (a challenge
for 32 percent of them, versus 30 percent of allorganizations).

entities sometimes have an advantage overtheir private sector counterparts in that they
are often willing to try new things. “They areopen to innovation and experimentation,”
Chawda says.
Chawda cites the example of a Federal
Defense Agency that opted to implementa proposal from KPMG to use a variety ofAI-enabled solutions, including computer
vision, to automate what had been an

At KPMG, our extensive fieldwork with government
and public sector organizations reveals anotherbig challenge—the sector’s use of large and highly
complex legacy information systems and applications
that in some cases have been cobbled together overthe course of three or more decades.
“Converting systems and applications of that age, scale,and complexity to modern cloud-based solutions isnot easy,” notes Chawda. “Finding the right talent toorchestrate the change isn’t easy, either, because noneof these transformation programs are technology-only
undertakings. You need people within the organization
who have a lot of domain and functional expertise,including an understanding of why things are being
done the way they are, what the interdependencies
are between different systems, and what the impactof changing those systems will be. There aren’t many
people who understand all that.”extraordinarily manual process of conducting
inventories of weaponry and other sensitive
items across number of warehouses. Beyond
speeding up the inventory process by ordersof magnitude, the project also improved
inventory accuracy by more than 20 percent.
“That was a very bleeding edge applicationof technology that went from proposal toproduction capability over a very short periodof time,” Chawda says.

37%

of government andpublic sector executives
cite a lack of capabletalent as a significant
hurdle to their digitaltransformation.

On the other hand, government and public sector© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Government and public sector industry insights| 05

BUILDING A DIGITAL FUTURE continued

To continue to realize potential
benefits from digital transformation,
Chawda and Andrew Gottschalk,
partner, Health and Government
Solutions, for KPMG in the U.S.,
recommend that government andpublic sector agencies adopt five
strategies moving forward.

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

1
2
3
4

Have a customer-centric design mindset when introducing
new technology so that users will find new platforms andapplications easy to use and will embrace them.

5Embrace
modularity and containerization to help withthe challenge of modernizing large and complex legacy
systems and applications. Modularity refers to dividing
large software applications into smaller modules, whilecontainerization refers to running those applications in
isolated environments.

Begin treating data like a product to be shared enterprisewide rather than continually duplicated in siloeddepartments.
Accelerate the use of a development, security, andoperations (DevSecOps) approach to creating new software
applications, embedding security into them from the outset.
Continue to modernize technology stacks to include
SaaS platforms, advanced cloud, AI, and edge computing
capabilities—as well as strong data management
capabilities—and make it easy for end users to access thedata insights they need for decision-making.

Government and public sector industry insights| 06

How KPMG can help

Contact us

At KPMG, we know business technology. Over the last dozen years, we’ve
built a leading technology organization designed specifically to help
technology leaders succeed at the accelerated pace business now demands.
Unlike business-only consultancies, our more than 15,000 Technology
professionals have the resources, the engineering skills and experience, thebattle-tested tools and solutions, and the strategic alliances with leading
technology companies to help achieve your vision quickly, efficiently, andreliably. And unlike technology-only firms, we have the business credentials
and sector experience to help you deliver measurable business results, notjust blinking lights. We’re recognized by industry analysts as a leader inadvanced technologies: AI and automation, data and analytics, cyber, lowcode, and more.
Our experience deploying Microsoft, Oracle, Salesforce, Workday, and otherleading cloud solutions, combined with our preconfigured cloud solutions,means we’re already 80 percent done before you even pick up the phone.
Whether we’re helping you deploy a new technology, migrate to a new
cloud platform, or outsource challenges with our managed services, you cancount on us to deliver—fast.
That’s speed to modern technology.

kpmg.com/socialmedia

Viral Chawda

Andrew GottschalkPrincipal,
Head of Government
Technology,
KPMG in the U.S.
+1 832 535 8712
vchawda@kpmg.com

Partner,
Health and Government
Solutions,
KPMG in the U.S.
+1 312 665 2883
agottschalk@kpmg.comClick here to learn how KPMG can help your organization
reap the full promise of a tech-enabled transformation.

Download the full report and discover
how KPMG can help you with digitaltransformation.

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate andtimely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon suchinformation without appropriate professional advice after a thorough examination of the particular situation. The views and opinions expressed herein are those of the interviewees and survey
respondents and do not necessarily represent the views and opinions of KPMG LLP.
© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, aprivate English company limited by guarantee. All rights reserved.
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