UK public sector faces hurdles as digital transformation slows

A new survey reveals that the UK public sector is still struggling to fully realise the benefits of digital transformation, with only 16% of organisations having fully implemented strategies across their whole organisations, down from 23% in 2023.

The 2025 State of Digital report, carried out by Vanson Bourne on behalf of Unit4, surveyed senior and mid-level management across the UK public sector as part of a wider study covering Canada, the Netherlands, and Sweden. In the UK, 100 respondents were drawn from sectors including central government, healthcare, and non-departmental bodies.

Ongoing frustrations

Respondents highlighted a number of persistent frustrations with existing IT systems. Seventy percent reported they struggle to access data in real-time, a situation worsened by an increase in manual data exports to 50% in 2025, up from 40% in 2023. In addition, 60% expressed scepticism that transforming back-office applications alone would deliver the expected interoperability.

There are also concerns about project delivery, with 53% of those surveyed not fully confident that digital transformation will be delivered within budget, and 45% admitting it will not be delivered on time. Just under six in ten respondents do not believe programmes so far have achieved value for money.

"At a time when the UK public sector is facing huge pressure to reduce costs but still improve citizen services, it is imperative that digital transformation strategies show tangible benefits in the shortest possible time," said Mark Gibbison, AVP Global Public Sector and Higher Education, Unit4.

"This is no easy task given the complexity of existing IT systems, but there is positivity when it comes to organisations remaining committed to modernisation. Now is the time for senior leaders to provide clear guidance on strategy, because implementing more innovative, Cloud-native applications will empower employees to be more agile and scale services rapidly while driving cost efficiencies."

Challenges to progress

Despite slow overall progress, the survey suggests there is little appetite to abandon transformation efforts. Eighty-nine percent of respondents remain positive about the future of the public sector, with 74% expecting to complete change strategies within two years, a significant increase on the 49% who felt the same in 2023. Eighty-five percent say that connected backoffice systems and shared data will have a positive impact, while 40% are already adopting artificial intelligence, indicating a willingness to pursue new approaches.

However, several obstacles remain. There has been a marked increase in the impact of bureaucracy, with 41% of respondents in 2025 citing red tape as a major factor, compared with 28% in 2023. A quarter of respondents say their organisations continue to be affected by challenges linked to the legacy of Covid-19. Shifting priorities and leadership resistance to change are noted as the two biggest hurdles, cited by 41% and 37% of respondents respectively. Notably, more organisations report lacking adequate plans for change, with this figure rising to 31% in 2025 from 24% in 2023.

Areas of focus

The survey identifies key areas where public sector organisations are concentrating their transformation efforts. A major increase was seen in adopting lower-cost solutions and driving efficiencies through collaboration. There was also a notable move towards Software-as-a-Service (SaaS) solutions to cut hardware and maintenance costs, as well as more frequent use of outsourcing services. This shift is linked to a significant rise in interest in joining shared services, up from 15% in 2023 to 29% in 2025.

The emphasis on reducing costs through cuts to citizen services is less pronounced this year, cited by 30% of respondents, compared with 37% in 2023. Short-term priorities include improving reporting capabilities, better integration of back-office systems, and achieving improved value for money.

Desired outcomes and measurement

If given the chance to redesign processes from scratch, organisations would focus on real-time data and reporting alongside better oversight of expenditure. Respondents also pointed to a growing need for improved data security and protection, as well as streamlining procurement and contract management processes. Measurement of the social value of services was cited as increasingly important, with the top metrics for impact being improvements in citizen wellbeing (45%), helping citizens improve personal circumstances (39%), and cost avoidance (41%).

The study indicates that while ambitions to improve digital transformation persist, substantial work remains to overcome organisational inertia, outdated systems, and resource constraints to achieve the intended benefits.