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The Sovereign Technology Report

Government leaders across Australia are being asked to modernise faster, strengthen resilience and adopt AI — all at once, without extra resources and with little tolerance for failure. This is the research that examines why progress keeps stalling.

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The Sovereign Technology Report

Government leaders across Australia are being asked to modernise faster, strengthen resilience and adopt AI — all at once, without extra resources and with little tolerance for failure. This is the research that examines why progress keeps stalling.

Sovereign execution, under sustained pressure.

Sovereignty isn't primarily about where data is stored. It's whether your organisation is in control of the systems that underpin essential services when something goes wrong. That kind of control either exists in practice, or it doesn't.

Kinetic IT partnered with ADAPT to survey 87 senior government technology leaders and conduct executive interviews across government, defence and critical infrastructure. What came back challenged some assumptions we held going in.

Watch our panel of industry leaders discuss the operational reality they face across Australia's public sector.

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Sovereign execution, under sustained pressure.

Sovereignty isn't primarily about where data is stored. It's whether your organisation is in control of the systems that underpin essential services when something goes wrong. That kind of control either exists in practice, or it doesn't.

Kinetic IT partnered with ADAPT to survey 87 senior government technology leaders and conduct executive interviews across government, defence and critical infrastructure. What came back challenged some assumptions we held going in.

Watch our panel of industry leaders discuss the operational reality they face across Australia's public sector.

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Five shifts defining a new operating reality

AI is amplifying foundational weaknesses

AI sits on 60 per cent of agency priority lists. But governance foundations — not investment intent — are the limiting factor. The mandatory AI guardrails and Essential Eight baseline are there. The readiness to meet them, across most organisations, isn't.

AI is amplifying foundational weaknesses

AI sits on 60 per cent of agency priority lists. But governance foundations — not investment intent — are the limiting factor. The mandatory AI guardrails and Essential Eight baseline are there. The readiness to meet them, across most organisations, isn't.

Operating model misalignment, skills gaps and diffuse accountability slow transformation more reliably than any technology constraint or funding shortfall. The problem isn't knowing what needs to change. It's delivering that change consistently, and making it hold.

The organisations making real progress aren't the fastest movers. They're the ones that can sustain what they build, govern it under pressure and maintain continuity when things go wrong. That shift is now showing up clearly in how leaders define success.

Cloud has been a government IT priority since 2014. Most agencies are still halfway through migration. Larger, more complex organisations are significantly further behind. Hybrid isn't a stepping stone to something simpler. It's the environment leaders will manage, govern and secure indefinitely.

Operational continuity, visible accountability and responsiveness under pressure now outrank innovation speed and cost efficiency in what agencies value from delivery relationships. Most procurement frameworks haven't caught up with that shift yet.

Leaders aren't reinvesting in their IT environment

Roads get resurfaced. Utilities get renewed. Buildings get maintained. But not one agency described a formal annual process for reinvesting in the value of their technology environment.

0%

IT ASSET VALUE REINVESTED

Source: ADAPT executive interviews conducted in partnership with Kinetic IT, 2025–26

0%

IT ASSET VALUE REINVESTED

Source: ADAPT executive interviews conducted in partnership with Kinetic IT, 2025–26

Findings that challenged our expectations

Six counterintuitive findings from research across government, defence and critical infrastructure.

Agentic AI ambition is outpacing readiness.

2%

2%

Agencies ready to deploy agentic AI safely

SOURCE: ADAPT Government Edge and CIO Edge Research, 2025

2%

Agencies ready to deploy agentic AI safely

2%

Agencies ready to deploy agentic AI safely

SOURCE: ADAPT Government Edge and CIO Edge Research, 2025

Cloud capability is still a constraint, more than a decade on.

64%

Report severe capability gap in cloud and infrastructure

Source: ADAPT Government Edge Survey, Oct 2025, N=87

64%

Report severe capability gap in cloud and infrastructure

Source: ADAPT Government Edge Survey, Oct 2025, N=87

The biggest capability gap isn't cyber. It's data.

74%

Report severe capability gap in data, analytics and AI

Source: ADAPT Government Edge Survey, Oct 2025, N=87

74%

Report severe capability gap in data, analytics and AI

Source: ADAPT Government Edge Survey, Oct 2025, N=87

Sourcing model is shifting away from headcount.

36%

Cutting staff augmentation

32%

increasing specialist capability bursts

Source: ADAPT Government Edge Survey, Oct 2025, N=83

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ERP is a top-three priority, but most agencies are still planning.

45%

Still in planning mode

18%

Live and optimising

Source: ADAPT Government Edge Survey, Oct 2025, N=85

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Coastal Graphic@2x.png e1779694966510

Sourcing model is shifting away from headcount.

36%

Cutting staff augmentation

32%

increasing specialist capability bursts

Source: ADAPT Government Edge Survey, Oct 2025, N=83

Kangaroo Graphic@2x.png e1779694924651

ERP is a top-three priority, but most agencies are still planning.

45%

in planning mode

18%

Live and optimising

Source: ADAPT Government Edge Survey, Oct 2025, N=85

Watch: Sovereign technology in practice across Australia’s essential sectors

How do you stay in control of systems you don't fully own?

Watch this industry leadership panel as they discuss sovereignty, risk and resilience for Australia's essential sectors: what stays local, what gets distributed, and what responsible AI adoption looks like when service continuity isn't negotiable.

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