May 27, 2026 – Australian government and critical infrastructure organisations are under growing pressure to modernise technology ecosystems while maintaining operational control, accountability, and resilience with new research suggesting the gap between ambition and execution is widening.

The Sovereign Technology Report: From Complexity to Confidence, released today by Kinetic IT, in partnership with research firm ADAPT, draws on surveys and executive interviews with leaders across the public sector and regulated industries. Its central finding: sovereignty is no longer a policy or procurement question. It is an operational one, defined by whether organisations can maintain visibility, accountability, and control across critical systems when it matters most, particularly during disruption or periods of heightened risk.

The research confirms what many technology leaders privately acknowledge: they are expected to simultaneously deliver transformative programs, including embedding automation and artificial intelligence, while running day-to-day operations and delivering essential services for Australians, without an increase in budget or resources.

As a result, questions that were once considered operational such as who responds during an incident, where accountability sits across complex delivery environments, and how quickly organisations can recover, have become central to transformation itself, the report has found. How leaders answer these questions is increasingly what separates organisations that modernise with confidence from those that modernise and lose control in the process.

Kinetic IT, one of Australia’s largest privately owned technology services providers, commissioned the report in response to growing scrutiny of how public sector, defence, and critical infrastructure organisations are managing the compounding pressures of modernisation, cyber resilience, AI adoption, and operational accountability.

The research draws on ADAPT’s 2025 Government Edge research series as well as executive interviews with senior technology, cyber, digital, and operational leaders across government and critical infrastructure sectors, conducted in partnership with Kinetic IT thought leaders.

The report identified five key shifts shaping Australia’s current operating environment, adding greater complexity into the roles CIOs, CTOs, CDOs, and technology leaders play in delivering trusted citizen services for Australians:

1. AI adoption is amplifying foundational weaknesses

The report identified a major shift in how leaders view transformation. While digital modernisation remains a strategic priority, the research found the biggest challenge is execution under pressure, not ambition.

The research also found that while 60 per cent of agencies identified agentic AI as an investment priority, only two per cent believed they currently had the governance, data maturity, and assurance mechanisms required to support safe AI deployment.

In addition, 74 per cent of leaders reported a severe or significant capability gap in data, analytics, and AI, making it the single largest capability gap identified in the research.

Jacqui Adams, Head of Digital Transformation  at Kinetic IT, said, “The report highlights an opportunity to close the gap between ambition and readiness. Digital capabilities have the potential to enhance productivity, strengthen decision-making, and improve the way citizens and business engage with government.
“Leaders are fo cussed on identifying and addressing the barriers to adopt and scale these technologies. For example, the need to co-design and deliver a cohesive AI strategy and operating model that is aligned to and enables enterprise priorities. Of note is the establishment of robust and responsive governance and data frameworks to ensure speed is balanced with trust, resilience, accountability, and long-term flexibility.
“The research shows that digital technologies amplify the underlying characteristics of a system. 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.
“This confirms what we see every day: agencies that embed sovereignty by design into their AI strategy and operating model are establishing the foundations to build trust, strengthen resilience, improve accountability, and retain control over their digital capabilities.”

2. Execution risk is increasingly limiting transformation scale

One of the report’s most significant findings was that many agencies operate without a formal reinvestment model for maintaining technology assets, despite technology now underpinning essential public services and critical infrastructure operations.

According to the findings, 73 per cent of Australian public sector leaders identified funding and resourcing constraints as the primary barrier to transformation. The report argues that organisations are now being asked to modernise faster, strengthen cyber resilience, adopt AI, and maintain uninterrupted services, often without additional resources or tolerance for operational disruption.

Murray Thompson AM CSC, Chief Strategy Officer at Kinetic IT, said, “The report introduces the concept of ‘sovereign execution’, which 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.
“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. 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.”

3. Delivery confidence is becoming more important than delivery speed

The research reflects a growing operational reality across government and critical infrastructure sectors.

Jacqui Adams said, “Modernisation is no longer a future-state conversation. It’s happening now, with agencies also managing legacy platforms, workforce pressures, regulatory obligations, and increasingly complex delivery environments.
“As platforms, data and AI move closer to the core of how government and critical services are designed, managed, and delivered, public trust is increasingly a key success measure of transformation. Success isn’t just ‘does the technology work?’ it is ‘do citizens trust the outcome, and can we maintain operational control, flexibility, and accountability?'”

4. Hybrid operating models are likely to persist for years

The report found that hybrid operating environments are now the norm across government; however, many agencies report that cloud migration programs are only partially complete. Larger and more complex organisations were often significantly further behind, creating extended periods where legacy systems, cloud environments, operational technologies, and multiple service providers must operate together.

Murray Thompson said, “Hybrid environments are no longer a temporary transition state for government agencies. 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.”

5. Partner expectations are shifting toward accountability and operational continuity

The research also highlighted growing concerns around fragmented accountability in multi-vendor environments, particularly during incidents or periods of disruption.

Organisations are increasingly shifting their focus from innovation speed toward operational assurance and accountability. Public sector and critical infrastructure leaders are operating in environments where service disruption carries economic, societal, and sometimes national security consequences.

Murray Thompson said, “This changes how technology decisions are made. Leaders want confidence that systems can be governed, secured, and operated under pressure, not just modernised quickly.”

The report’s findings reinforce the need for stronger operational governance models as organisations continue to modernise.

Murray Thompson said, “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.”

Sovereign execution becomes a defining operational requirement

The report argues that sovereign execution is becoming a key requirement for organisations operating in high-consequence environments, particularly under increasing obligations associated with the Security of Critical Infrastructure Act, Australian Government AI guardrails, and broader cyber resilience frameworks.

Jacqui Adams said, “The research is intended to help organisations navigate the operational realities shaping transformation efforts, and offer practical insights for modernising sustainably, ethically and safely in today’s environment.
“Public sector organisations are required to concurrently balance technology transformation, operational continuity, cyber resilience, and staff and citizen experience.  The leaders making progress are transforming with intent to build trust, resilience and accountability.”

The full report, The Sovereign Technology Report, is now available: SovTech.Report

About Kinetic IT (www.KineticIT.com.au)

Kinetic IT is an Australian-owned technology services provider delivering secure, sovereign ICT solutions to government, defence, and critical industry sectors. With a national workforce of over 1,500 employees, Kinetic IT partners with organisations that underpin Australia’s essential services, economic resilience, and national security. The company provides end-to-end capabilities across digital infrastructure, cyber security, intelligent workplace, and service integration, underpinned by onshore expertise and a security-first approach. Founded more than 25 years ago, Kinetic IT has helped customers navigate complexity, manage risk, and deliver meaningful outcomes through technology.