Why government digital transformation stalls at integration

Government digital transformation is stalling but not for a lack of ambition. Across municipalities, regions and national agencies, strategies are in place, funding is allocated and expectations from citizens continue to rise. Yet results remain uneven.

According to the Organization for Economic Co-operation and Development (OECD), "the public sector needs to be “digital by design” to fully adapt to and reap the benefits of the digital age".

Despite years of investment, many digital government initiatives struggle to scale beyond pilots, deliver consistent services across organizational boundaries or fully replace manual processes.

The root cause is rarely strategy or technology choice, but integration.

The municipal reality: digital government runs across organizations

Unlike most private-sector transformations, government services rarely sit within a single organization. A single citizen journey may span:

• Municipal services

• Regional authorities

• National agencies

• Healthcare, education, social services and infrastructure

This makes government digitalization fundamentally a coordination challenge.

Data must move securely and reliably across organizational, legal and technical boundaries. When it does not, even well-designed digital services break down in practice.

Why government digital projects fail

Studies from McKinsey, BCG and national audit bodies consistently point to structural issues rather than execution errors when it comes to digital transformation falling short of its goals.

1. Long-lived legacy systems

Many government organizations still rely on systems that are 20–30 years old, originally designed for siloed, departmental use. These systems were never intended to support cross-agency data sharing, real-time services or modern security requirements.

The U.S. Government Accountability Office (GAO), for example, has shown that the majority of government IT budgets are spent maintaining legacy systems, leaving limited capacity for modernization.

2. Fragmented IT landscapes and system sprawl

Over decades, municipalities and agencies have accumulated large portfolios of systems:

• Different solutions per department or service area

• Separate platforms for finance, HR, healthcare, education, logistics

• Integrations added incrementally as point-to-point connections

The result is an IT landscape that few fully understand end to end.

A common refrain among public-sector IT leaders is:

“We no longer know exactly how our data flows work.”

What the public sector says about Frends? "We needed an API layer for our digitalization needs and at the same time, we wanted to take control of integration development and create order and structure." - Claes Öster, IT Manager at Höglandets IT, which serves several municipalities in Sweden.

3. Limited interoperability between organizations

Public services depend on information sharing:

• Between municipalities

• Between regions and municipalities

• Between government agencies

In practice, differences in data models, legal interpretations and technical standards make interoperability difficult.

The consequence:

• Manual handovers

• Duplicate data entry

• Delays in service delivery

• Lower service quality for citizens

The data often exists, but not where or when it is needed.

4. Security, compliance and risk aversion

Government organizations operate under strict regulatory frameworks, including:

• GDPR

• NIS2

• Sector-specific legislation (e.g. healthcare and social services laws)

At the same time, the cyber threat landscape is intensifying, and accountability is often split between IT, operations and legal functions.

This creates a familiar dilemma:

“We want to share data, but are we allowed to?”

Without clear visibility and governance, caution turns into inertia.

5. Lack of integration governance and ownership

In many municipalities and agencies, ownership of integration and data flows is unclear:

• Who owns integrations?

• Who governs APIs and data models?

• Who decides what should scale and what should stop?

Parallel initiatives across IT, digitalization teams and business units often lead to duplication rather than progress.

Everyone is acting with good intentions, but in different directions.

6. Skills shortages and consultant dependency

Modern government services require expertise in:

• Integration architecture

• Cybersecurity

• Hybrid and sovereign cloud environments

Public-sector organizations often struggle to recruit and retain these skills, leading to heavy reliance on external consultants.

A recurring risk emerges:

“When the consultant leaves, no one really knows how it works.”

Why legacy integration is the real bottleneck

Taken together, these challenges converge at one point: integration.

Many government IT landscapes are held together by a combination of:

• Custom code

• Point-to-point connections

• Undocumented scripts

This creates brittle dependencies, limited transparency and high operational risk. Every change becomes expensive and slow.

In regulated environments, this lack of visibility is no longer acceptable.

Transparency, compliance and the end of black-box automation

Modern government operations require:

• Full auditability

• Data sovereignty

• Clear accountability

• Explainable decision-making

With regulations such as GDPR, NIS2 and the upcoming EU AI Act, automation and AI-enabled processes in the public sector must be transparent by design.

Insights from the Agentic AI in Government & Public Sector whitepaper underline this clearly:
AI-assisted and autonomous systems cannot be deployed safely without a governed, observable integration layer. Automation without transparency does not scale and it does not comply.

This applies, of course, to future AI use cases, but also to today’s digital services.

How governments modernize without replacing everything

Leading municipalities and agencies are not attempting large-scale “rip-and-replace” programs. Instead, they are modernizing around existing systems by introducing structured integration layers.

What modern integration enables

Visual, low-code transparency
Standardized process modeling (e.g. BPMN 2.0) makes data flows explicit and self-documenting — supporting both operations and audits.

Hybrid and sovereign deployment models
Sensitive data can remain on-premises or in sovereign environments, while digital services are delivered securely via APIs.

Incremental modernization with lower risk
Reusable integrations reduce maintenance costs and allow new services to be delivered step by step, rather than through multi-year transformation programs.

Integration as the foundation of digital government

Integration acts, more and more, as the coordination infrastructure. A well-designed integration layer allows governments to:

• Connect departments without centralizing all data

• Automate services while retaining human oversight

• Respond to policy and regulatory changes without rebuilding systems

Municipalities across Europe have demonstrated that this approach:

• Reduces manual work

• Improves service quality

• Strengthens compliance and security

Where automation and AI fit next

AI in government will not arrive as a single, sweeping transformation. As outlined in the Agentic AI whitepaper, it will emerge gradually through narrow, governed use cases such as:

• Case handling and triage

• Permit processing

• Internal administrative automation

Crucially, these use cases depend on:

• Event-driven integration

• Clear process ownership

• Human-in-the-loop controls

Without a modern integration foundation, AI initiatives will remain stuck in pilots.

Why Frends addresses the real public sector bottleneck

The challenges facing municipalities and government agencies are not unique, but the constraints they operate under are. Any integration platform intended for the public sector must work with legacy systems, strict regulation and limited capacity.

This is where Frends fits the public sector context particularly well.

Built for legacy-first modernization

Frends is designed for environments where core systems cannot simply be replaced. It allows governments to modernize around existing platforms by creating structured, reusable integrations that reduce dependency on brittle point-to-point connections.

This enables incremental progress rather than high-risk transformation programs.

Transparency by design

Public sector organizations need to understand and explain how data moves across systems. Frends uses visual, standards-based process modeling (such as BPMN 2.0), making integrations explicit, documented, and auditable.

This supports:

• Regulatory compliance

• Clear ownership of data flows

• Easier collaboration between IT, operations, and legal teams

Transparency is not an add-on—it is part of the operating model.

Sovereign and hybrid deployment options

Data sovereignty is non-negotiable in government environments. Frends supports hybrid and on-premises execution models, allowing sensitive data to remain within controlled environments while still enabling modern digital services and APIs.

This makes it possible to balance innovation with security and regulatory obligations.

Reduced dependency on scarce skills

By standardizing and visualizing integrations, Frends reduces reliance on undocumented custom code and individual specialists. Knowledge moves from individual consultants into shared structures, lowering long-term risk and improving continuity.

This is particularly important in organizations facing skills shortages and high external dependency.

A stable foundation for automation and AI

As public sector organizations gradually introduce more automation — and, over time, AI-assisted processes —, Frends provides the governed integration layer required for safe adoption.

Automation and AI in government demand:

• Clear process boundaries

• Full traceability

• Human oversight

Frends helps ensure initiatives and projects can scale responsibly.

Integration as public infrastructure

Public sector digital transformation requires order, visibility and control across the systems already in place.

By addressing integration as shared infrastructure, rather than a collection of tactical fixes, Frends helps municipalities and government agencies move from fragmented digital efforts to coordinated, trustworthy public services.

That is how digital transformation becomes sustainable.

Order before innovation

Government digital transformation stalls because legacy integration cannot support transparency, coordination and change.

By modernizing integration first — rather than replacing systems — municipalities and agencies can:

• Extend the life of existing investments

• Deliver better digital services

• Meet security and compliance requirements

• Prepare responsibly for automation and AI

Before governments add more systems, they need order, visibility and control over what they already have.

Integration is where that work begins.