How strategic enterprise modernization can transform the public sector

Challenges for the public sector in a digital age

In modern society, consumers and commercial businesses alike are dependent on digital technology. We can read up on current events, order groceries, pay bills, and instantly access information, all from our smartphones—and that’s just the tip of the iceberg. In the private sector, the majority of business intelligence, operational tools, and resources live online, in the cloud, or in another form of digital repository. Because of how these tools have changed and streamlined business operations, consumers have high expectations from the organizations they engage with. For instance, self-service options and fast resolution with customer service have become the norm. Companies that can’t offer these inevitably fall behind their competition.

Agencies within the public sector must navigate similarly high expectations from constituents. The pressure is on to perform at the same level as the most notable commercial companies, all while delivering an exceptional service experience. Many public sector organizations are going through a digital transformation, radically changing the way they deliver services to the citizens they serve, whether it be by transitioning to cloud-based services or by implementing innovative technologies that will enhance their response capabilities.¹ But for many public agencies, this remains an immense challenge.

How can they hope to keep pace? Strategic enterprise modernization.

What is strategic enterprise modernization?

Strategic enterprise modernization (SEM) is a long-term method and mindset to optimize organizational culture, processes, and tools. It’s not about simply ditching legacy systems, upgrading a tech stack, or digitizing records.

It’s a way for organizations to anticipate and adapt to changes in the market. It’s how agencies and enterprises can protect their legacy systems and data. Strategic enterprise modernization provides a way to plan and ensure institutional knowledge isn’t lost when people retire.

Successful modernization efforts must also enhance efficiency, ensure organizational sustainability, and improve the delivery of public services to citizens. In this digitally-centric age, public agencies must adopt modern tools and approaches to stay in step with rising constituent expectations and maintain a positive reputation.

Elements of strategic enterprise modernization and their impact

Starting a modernization journey in the public sector requires a holistic approach, where every aspect of the organization is thoughtfully considered. This can be distilled into three critical components: innovative technology and tools, streamlined processes, and a dynamic organizational culture.

Each component is essential, but when they converge, a cohesive and efficient enterprise ecosystem is born. This framework ensures that modernization efforts are comprehensive, positively impacting the public sector and facilitating a more responsive government.

Let’s break down the main elements of SEM:

Technology and tools

Many agencies have more applications than they might be aware of, including both enterprise-supported tools and shadow IT. For example, before it started modernizing its app portfolio, the Defense Logistics Agency had more than 1,300 systems and 194 applications.² Modernization presents a necessary opportunity to prune the dead wood in a tech stack, reducing the total cost of ownership for operating and managing applications which might be obsolete or falling short of the return on investment.

When technology and tools are modernized, the full potential of systems can be harnessed for improved communication, operations, and IT systems management. SEM can also enable more seamless integrations between tools and give greater versatility to the teams using them.

Processes

No agency can function without processes and procedures to support efficient operations. But there is nothing to gain from continuing with stale processes simply because “it’s how we’ve always done it.” Just as it’s important to leverage best practices for your digital assets, it’s equally important to develop and enforce processes that derive the most value from this technology.

True modernization requires an intentional examination and overhaul of the IT processes that are fundamental to business operations. SEM goes above and beyond mere tool upgrades; it also facilitates key process optimizations, such as streamlining incident management, knowledge management, knowledge sharing, training, collaboration, and data analysis.

Culture

The latest and greatest technology with streamlined and documented processes will fall flat unless you have enthusiastic, motivated people to embrace these changes. Building a forward-thinking culture that embodies a collective, continuous improvement mindset is another crucial aspect of SEM.

Upskilling existing employees and finding the right talent to champion modernization efforts is essential here, so communication skills and transparency should be prioritized alongside technical expertise. Exploring additional pools of prospective talent can also help to modernize organizational culture.

How strategic enterprise modernization benefits the public sector

There are numerous benefits to SEM, but these three will have the greatest potential to transform the public sector:

Improved efficiency and service delivery

Citizens expect their interactions with government entities to be on par with any other commercial business or institution. As many of us know, using government services often means long waits and convoluted processes, and this is partly because of reliance on legacy technology. Modern applications can offer more personalized responses and expedited processing times. Modernizing legacy technology and incorporating cutting-edge solutions, like artificial intelligence (AI), can create more intuitive and individualized experiences for constituents. This translates to improved service delivery and greater user satisfaction. With AI, agencies can introduce smart automation for everyday tasks, enabling efficient chatbot interactions and swift responses to resident inquiries, streamlining the service pipeline.³

Sustainability

Many agencies are dealing with the compounded issue of an aging workforce and managing legacy mainframe technology. As people are retiring, institutional knowledge is being lost. Public agencies are bracing for the worst: a sizable gap between the professionals ending their careers in the public sector and the new generation of talent that could start their careers there. According to a 2024 survey of government leaders in the United States, attracting top talent in a highly competitive labor market is a growing challenge for government agencies, and 85% believe that adopting emerging technologies will make agencies more attractive for future talent.⁴

Recent graduates will have been educated on the latest and greatest tools and applications, and they won’t have any familiarity with how to manage legacy systems. Modernization can not only help recruit new talent, it can also help with attrition and maintaining institutional knowledge during these fluctuations and changes in staff. Adopting newer technology can attract younger professionals to the public sector and ensure the sustainability of these organizations. It’s worth it to invest in the resources necessary to upskill and train your existing teams when you migrate to newer applications, as well. This will provide them with career growth opportunities within their current role, and help to minimize turnover.

Enhanced security

Unlike modern applications, legacy systems do not include critical security features like multi-factor authentication, end-to-end encryption, and continuous monitoring. Outdated applications are often the weakest link in an organization’s digital infrastructure, and they become easy targets for cyberattacks. Despite recognizing the benefits of tech modernization and its crucial role in protecting against cybersecurity risks, less than half of government agency leaders surveyed say training or upskilling employees on emerging technologies (42%) or cybersecurity challenges (43%) is a top priority over the next five years.⁵

Another issue with legacy systems is that they’re rigid and unable to handle a sudden increase in requests. A great example of this is the system for filing unemployment claims and the huge spike in fraud that occurred during and immediately after the COVID-19 pandemic. Modern systems have better security measures in place to protect against fraud while also guarding sensitive data that many government organizations manage and have access to.

How your agency can get started with strategic enterprise modernization

Strategic enterprise modernization requires significant investments, both in time and agency funds. To set yourself up for success, develop a holistic understanding of your agency’s digital infrastructure, whether through an audit or some other form of reporting. This ensures you will be able to identify which systems are and are not supporting the agency well, and which areas of the business require extra effort and additional resources because their IT systems are technically deficient.

From there, it’s helpful to work with an IT services provider or partner with an organization that offers application modernization and enterprise service management. They can help define business drivers and goals that will impact and improve IT within the agency and work to improve self-service models, reduce fraud, streamline new processes, and create better customer journeys.

CAI has a long history of partnering with agencies in the public sector to improve their operational efficiency and take manageable steps toward modernization.

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