Why governments are done with GovTech pilots

Governments are no longer buying GovTech as software or pilots but as long-term service infrastructure, as public-sector IT spending has passed US$600 billion and procurement has shifted decisively towards outcomes rather than products.

Global government IT spending reached US$606 billion in 2025, while the wider GovTech market is projected to exceed US$1.4 trillion by 2034, according to a new report from Deloitte Ukraine and the Global Government Technology Centre (GGTC) Kyiv.

“Governments are now approaching GovTech with the same strategic seriousness as security or economic policy,” Zoya Lytvyn, Head of GGTC Kyiv, told Cities Today. “What Ukraine has developed is no longer a country-specific case, but a global reference point.”

Governments are now embedding AI into repeatable public-sector workflows, supported by cloud infrastructure, interoperable systems and digital public infrastructure designed to scale across departments and jurisdictions. The emphasis has shifted from experimentation to reliability, integration and delivery at scale.

Ukraine’s experience featured prominently as an example of how digital public infrastructure can function as core state capacity rather than a reform layer. Digital systems were described as having played a central role in maintaining public services under conditions of war, displacement and institutional strain, reinforcing the argument that GovTech has moved beyond optional modernisation.

“The transition from digital services to AI-enabled operations is no longer a long-term ambition–it is an operational expectation,” Lytvyn said. “Cities are being asked to move faster, but also more deliberately, grounding AI adoption in strong digital public infrastructure, interoperable systems and clear accountability for outcomes.”

Investment data released alongside the discussions reinforces that pressure. Nearly 75 percent of public-sector IT spending is now concentrated in services rather than hardware or standalone software licences, reflecting a move toward integrated platforms, cloud-based delivery and longer-term service contracts.

That has direct implications for how limited budgets are prioritised, according to Olena Boichenko, Partner, Head of Consulting at Deloitte Ukraine.

“I wouldn’t frame it as a choice between AI, cloud, or cybersecurity,” Boichenko said. “For cities, the priority should be cyber resilience, digital infrastructure, and data readiness and modernisation, and only then should large-scale implementation of AI services follow.”

Boichenko warned that without this foundation, investments risk remaining fragmented and failing to deliver systemic impact. Modern city innovation programmes, she said, are increasingly focused on unified digital platforms that integrate infrastructure data, management processes and resident services, rather than standalone applications layered on top of legacy systems.

Fragmentation remains a key risk as departments and municipal enterprises pursue their own initiatives, often without shared standards or governance frameworks.

“The first thing a city should do is establish uniform rules of the game–how services are connected, how data is used, and what principles can guide decisions as they are scaled,” Boichenko said. “Each pilot project must include a realistic transition plan from development to productive operation, a calculation of support costs, and clear before-and-after indicators.”

Beyond delivery and efficiency, speakers stressed that cities are increasingly expected to demonstrate public value in ways that resonate with residents, not just finance departments.

“For cities, measurable public value in GovTech is no longer defined only by efficiency or cost savings,” said Kateryna Nahorniak, Head of GovTech Observatory, GGTC Kyiv. “It’s about whether digital investments improve residents’ everyday experience–faster response times, easier access to services and greater transparency–and whether they strengthen trust in local institutions.”

The report was released at the World Economic Forum, which hosted its first dedicated GovTech Day, marking the first time digital government has been given a standalone platform at the meeting.

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