Overcoming digital transformation challenges in local government

March 4, 2022

For local government organizations, the challenges of digital transformation also highlight the opportunity and the value of accelerating their transformation journey. In this article, we touch on the most common challenges and how they can be overcome.

Katie Hayes

Katie Hayes is a Manager with the MNP Digital Advisory team in Edmonton. She is an accomplished innovation and transformation leader who works with organizations to transform complex challenges into opportunities for growth. Katie is passionate about bringing people and technology together to solve problems and enhance organizational effectiveness.

Local governments are currently in a period of momentous change: Digital platforms are rapidly becoming a critical lifeline to streamline and sustain operations, while data is emerging as a powerful asset to drive timely and targeted decision-making. These evolving capabilities are reshaping expectations for all levels of government and redefining the public sector’s role in enabling healthy, vibrant, and thriving communities.

Many government organizations are recognizing the opportunity for citizen-centric service delivery models to expand access, improve public engagement, and spur economic growth. The COVID-19 pandemic has accelerated the need for public-sector modernization and pushed government organizations to shift services and operations, wherever possible, to a digital environment.

Yet, despite the urgency, many government organizations still lack the robust technology infrastructure required to provide seamless digital experiences for citizens and other stakeholders — particularly at the local level. Looking ahead, local governments must prioritize advancing their digital maturity by identifying stakeholder needs and catering programs and services to deliver a consistent experience.

However, there are numerous internal and external challenges ahead on this digital transformation journey; each having the potential to inflate costs, distort focus, and slow forward progress. Here, we outline some of the most pervasive concerns and recommendations to smooth the path ahead.

Internal challenges

Many existing challenges within local governments stem from legacy decisions and historical practices, including maintaining a traditional approach to the management of information technology, including:

Outdated legacy systems: Decades-old software, technology infrastructure, and processes both hinder effective and efficient service delivery and limit an organization’s ability to digitize. Transformation often requires systemic change which is both costly and time consuming.

Complex technology contracts: Vendor management can be challenging due to a lack of skills in negotiation and the complexity of vendor relationships and contracts. The contemporary technology marketplace requires a broad understanding and varied skills to negotiate with and manage vendors.

Lack of innovation skills: Significant skill gaps in data governance / analytics, innovation, and continuous improvement make it challenging to make the most of technology transformations. Upskilling of current team members as well as strategic recruitment for in-demand digital skills is critical to prevent the gap from widening even further.


Increasing breadth and depth of services: Governments are no longer just utility providers; many have taken responsibility for addressing complex societal challenges. This increases the need for digital channels — but also the challenge of delivering and managing stakeholder services and deciding which to prioritize in digital transformations.

External challenges: Trends

Local governments also face increased pressure from citizens, businesses, other levels of government, academic institutions, non-profits, and community organizations, which can slow transformation plans, including:

Demand for accountability and transparency: Stakeholder expectations have shifted with the rise of digitization. Transparency and accountability are paramount. Citizens want to understand the value of programs and services being provided by their governments.

Partnerships: Many sectors and industries are beginning to realize the importance of cross-collaboration to achieve community and economic outcomes faster and more efficiently. This can support positive outcomes, but also introduces new layers of complexity with added decision-making hierarchies and possibilities for disagreement.

Digital experience: Citizen are showing heightened demand for convenient, user-friendly, and accessible digital services. Governments must pivot to more citizen-centric approaches in order to meet the needs of their diverse community members.


Privacy and security: Local governments must protect the digital rights of their citizens and ensure maximum cybersecurity. Citizens and other stakeholders have little tolerance for their data being compromised due to cyberattacks, data breaches, etc.

External challenges: Environment

Lastly, local governments face challenges based on environmental and societal factors, some of which may be specific to their geographical area. A few notable environmental factors include:

COVID-19 financial pressures: The pandemic has introduced significant financial constraints for public sector organizations. Governments are struggling to deliver timely, cost-effective, and high-quality programs and services.

Evolving security environment: As cyber security risks grow, so does the demand for skilled workers who can effectively monitor and manage potential security threats. Local governments face challenges both as a primary target for attacks, as well as in competing for top talent.

Duty to safeguard technology infrastructure: In addition to safeguarding stakeholder data and information, governments must also protect critical technology infrastructure to ensure business continuity in the event of a natural disaster. The more public sector entities depend on digital assets, the greater the importance (and cost) of protecting it becomes.


Complex societal challenges: Limited resources will challenge many governments to balance the needs of growing populations (e.g., homelessness, climate change, civil equality and community health and well-being) and demands for equitable and convenient digital service delivery.

Overcoming challenges through digital transformation

While the above challenges are indeed potential barriers to digital transformation, the obstacle in this case also happens to be the best way forward: Digital transformation is undoubtedly the most effective solution for local governments to navigate change, mitigate risks, and efficiently deliver effective programs and services. The key is to work with a skilled advisor who can help you execute a comprehensive baseline analysis, identify key risks and opportunities, and create a customized transformation roadmap.

For local governments and public sector organizations, this should include experience with digital strategy and scenario planning, change management, and implementation. The right advisor should bring together an interdisciplinary skillset which includes familiarity with:

  • Digital Transformation
  • Municipal Innovation
  • Data Governance, Strategy and Analytics
  • Citizen Experience Transformation

Most importantly, they should prioritize working collaboratively and in partnership with you from the outset — helping you advance on your digital journey by focusing on key outcomes and defining success. After all, this transformation needs to meet your needs not only for today but support your ability to innovate, adapt and evolve for many years to come.

Connect with us to get started

Our team of dedicated professionals can help you determine which options are best for you and how adopting these kinds of solutions could transform the way your organization works. For more information, and for extra support along the way, contact our team.