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Australian government agencies and critical infrastructure organisations are struggling to deliver on transformation ambitions while maintaining operational control, with new research highlighting a growing disconnect between what leaders want to achieve and what their organisations are equipped to execute.
The Sovereign Technology Report: From Complexity to Confidence, produced by Kinetic IT in partnership with research firm ADAPT, draws on surveys and executive interviews with leaders across the public sector and regulated industries. It identifies five shifts reshaping how government technology leaders approach modernisation, AI adoption and cyber resilience.
The report’s central argument is that sovereignty is no longer a question of policy or procurement. It has become an operational concern, defined by whether organisations can maintain visibility, accountability and control across their systems during disruption or periods of heightened risk.
AI investment appetite far exceeds governance readiness
The research found that while 60 per cent of agencies identified agentic AI as an investment priority, only 2 per cent believed they currently have the governance, data maturity and assurance mechanisms needed to support safe AI deployment.
That gap is compounded by a broader capability problem. Seventy-four per cent of leaders reported a severe or significant capability gap in data, analytics and AI, making it the single largest capability shortfall identified in the research.
Jacqui Adams, Head of Digital Transformation at Kinetic IT, pointed to the risk of layering AI on top of fragile foundations.
“The research shows that digital technologies amplify the underlying characteristics of a system,” Adams explained. “Therefore, if an organisation’s strategy, services, customer journeys or practices are opaque, fragmented, poorly governed, badly designed or vulnerable, digital transformation will accelerate these challenges whilst making them harder to detect and more consequential.”
Adams noted that agencies embedding sovereignty by design into their AI strategy and operating model are establishing the foundations to build trust, strengthen resilience and retain control over their digital capabilities.
“Leaders are focussed on identifying and addressing the barriers to adopt and scale these technologies,” she added. “For example, the need to co-design and deliver a cohesive AI strategy and operating model that is aligned to and enables enterprise priorities.”
Funding constraints are the primary barrier
One of the report’s findings is that many agencies operate without a formal reinvestment model for maintaining technology assets, despite technology now underpinning public services and critical infrastructure operations.
Seventy-three per cent of Australian public sector leaders identified funding and resourcing constraints as their primary barrier to transformation. Agencies are being asked to modernise faster, strengthen cyber resilience, adopt AI and maintain uninterrupted services, often without additional resources or tolerance for operational disruption.
The research confirms what many technology leaders privately acknowledge: they are expected to simultaneously deliver transformative programs while running day-to-day operations and delivering services for Australians, without corresponding increases in budget or resources.
The report introduces ‘sovereign execution’
Murray Thompson AM CSC, Chief Strategy Officer at Kinetic IT, outlined a concept the report introduces: sovereign execution.
“Sovereign execution is the operational discipline of maintaining control, accountability, resilience and evidence across modern technology environments, regardless of which vendors, platforms or delivery partners are involved,” Thompson explained.
“Rather than being a question of ownership, vendor origin or compliance, sovereignty in this context is better understood as the ability to retain meaningful control over systems, data and capabilities where it matters most.”
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Thompson emphasised the need for deliberate early choices in strategy and operating model design.
“This requires leaders to make deliberate choices early in the design of their strategy and operating model to ensure they can balance speed with trust, resilience, accountability and long-term flexibility.”
Delivery confidence overtaking delivery speed
The report reflects a shift in how success is measured across government and critical infrastructure. As platforms, data and AI move closer to the core of how services are designed and delivered, public trust is becoming a key metric.
“Modernisation is no longer a future-state conversation,” Adams noted. “It’s happening now, with agencies also managing legacy platforms, workforce pressures, regulatory obligations and increasingly complex delivery environments.”
“Success isn’t just ‘does the technology work?’ It is ‘do citizens trust the outcome, and can we maintain operational control, flexibility and accountability?'”
Questions that were once considered purely operational – who responds during an incident, where accountability sits across complex delivery environments and how quickly organisations can recover – have become central to transformation itself.
Hybrid environments are the long-term reality
The report found that hybrid operating environments are now the norm across government, but many agencies report their cloud migration programs are only partially complete. Larger and more complex organisations are often further behind, creating extended periods where legacy systems, cloud environments, operational technologies and multiple service providers must operate together.
“Hybrid environments are no longer a temporary transition state for government agencies,” Thompson observed. “For many organisations, they are becoming the long-term operating reality.”
“Agencies are modernising while simultaneously maintaining legacy platforms, managing complex cloud setups, supporting operational technologies and coordinating multiple delivery partners.”
Accountability gaps in multi-vendor environments
The research highlighted growing concerns around fragmented accountability in multi-vendor environments, particularly during incidents or periods of disruption.
Organisations are shifting their focus from innovation speed toward operational assurance and accountability. Public sector and critical infrastructure leaders operate in environments where service disruption carries economic, societal and sometimes national security consequences.
“This changes how technology decisions are made,” Thompson noted. “Leaders want confidence that systems can be governed, secured and operated under pressure, not just modernised quickly.”
“Sovereignty is now about who holds privileged access, who can respond in the first hour of an incident, how accountability is maintained across multiple providers and whether organisations can evidence control under pressure.”
Navigating compounding obligations
The report argues that sovereign execution is becoming a defining requirement for organisations operating in high-consequence environments, particularly given increasing obligations under the Security of Critical Infrastructure Act, Australian Government AI guardrails and broader cyber resilience frameworks.
“Public sector organisations are required to concurrently balance technology transformation, operational continuity, cyber resilience and staff and citizen experience,” Adams observed. “The leaders making progress are transforming with intent to build trust, resilience and accountability.”
Kinetic IT is one of Australia’s larger privately owned technology services providers. The research draws on ADAPT’s 2025 Government Edge research series and executive interviews with senior technology, cyber, digital and operational leaders across government and critical infrastructure sectors.
The full report is available at SovTech.Report.
Last Updated on May 27, 2026 by Nick Ross
