As we cover in the associated feature, a lot of market activity involves AI, as more companies integrate the technology into their tools and certain industry segments show potential and start to demonstrate real impact. In the last couple of years, government has spent the time laying the foundation for AI use, developing policies and establishing safeguards to keep the public onside as they test new ways to use it, hoping to uncover real value.
That value piece is key. Jurisdictions are confronting a number of challenging budget realities that demand an ever more watchful eye on the bottom line. That makes this a critical moment for AI use in government, one in which government and its partners must answer consequential questions: Can AI prove its value by helping organizations get leaner, more efficient and better at serving people? In short, can it scale in the public sector?
A recent report from the Massachusetts Institute of Technology found as much as $40 billion going toward generative AI, but noted so far that 95 percent of organizations don’t have anything to show for it, noting that “only a small fraction of organizations have moved beyond experimentation to achieve meaningful business transformation.”
Investors seem determined to find where the true value of AI lies for government. There’s a lot of financial support going toward public safety tech companies — many of which are leaning into AI. But there’s also some fresh interest in how it can help traditional areas of government frustration: process-heavy functions like permitting, compliance and procurement, to name a few.
The unprecedented investment in AI and related technologies seems ripe for some market correction. One of the questions we set out to answer in this issue is how a potential pinprick to the AI bubble would impact government. One expert pointed to the proliferation of startups that are trying to ride the AI wave without a solid business plan. “Some of those companies are going to go belly up. They’re just applying ‘dot-AI’ to their name and all of a sudden they’re a billion-dollar company. It’s clear that we’re in a bubble.”
Government should prepare by growing AI capabilities in-house so it can more easily adapt to a market that will continue to evolve. Another key recommendation is to balance its own investments between incumbents and newer companies. Vendor consolidation is all but assured.
Recalling recent history might be instructive here too.
Many people populating government IT offices or working closely with them remember the dot-com boom, some 30 years ago now. Many have pondered when the current momentum behind artificial intelligence would encounter a fate similar to what eventually befell Internet giants following those early, heady days when valuations reached the billions for the first time. In our feature Déjà Vu: Are There Throughlines from Dot-com to Dot-ai?, we consult a slate of experts on the parallels and the differences between these two eras, and importantly, the takeaways for IT leaders today.
“Back in the early days of the Internet, there were people who said, ‘This Internet thing is just a shiny toy and real IT at enterprise and large institutional scale will continue to be something completely different.’ They were wrong. That being said, the people in Silicon Valley who said, ‘Everything’s going to change overnight and everything’s going to be replaced’ … they were wrong too.”
AI is certainly transformative, but its legacy in government won’t be built around hype. The difficult work of proving tangible value has already begun.
