Executive Summary: ISG Provider Lens™ Future of Work - Services and Solutions - U.S. Public Sector 2023

The individual quadrant reports are available at:

ISG Provider Lens™ Future of Work - Services and Solutions - Digital Service Desk and Workplace Support Services - U.S. Public Sector 2023 

ISG Provider Lens™ Future of Work - Services and Solutions - Employee Experience (EX) Transformation Services - U.S. Public Sector 2023

ISG Provider Lens™ Future of Work - Services and Solutions - Managed Workplace Services – End-user Technology - U.S. Public Sector 2023

Services and providers adapt as public-sector workspaces continue to evolve.

Since 2020, the use of digital workplace services by U.S. state and local governments and educational (SLED) agencies has seen significant changes and advancements. This shift, in large part, is due to pandemic-driven impacts in work environments, widespread staff retirements and shortages, and most recently, the availability of substantial funds from the U.S. federal government to upgrade IT and increase the operational efficiency and effectiveness of associated projects.

Key developments driving SLED digital workplace changes and disruptions include the following:

• Adoption of disparate capabilities growing from remote work enablement: With remote work evolving from experiment to necessity to part of the norm, agencies have embraced a widening array of digital services and tools to enable collaboration, communication and information sharing among employees.
• Cloud as de facto infrastructure: Prior to the COVID-19 pandemic, IT infrastructure challenges, application software costs, and staffing issues were slowly moving agencies away from traditional on-premise infrastructure toward cloud-based platforms and services. The COVID-catalyzed combination of digital citizen demands and remote and hybrid work environments accelerated and expanded this to the point where cloud IT became the norm for new capabilities while legacy IT still requires attention and skills.
• Mobile enablement and expectation: Most SLED agencies have embraced mobile applications and related web interfaces that allow employees to access workplace services via smartphones and tablets. However, rapidly achieved and loosely controlled implementations have plagued many agencies with IT security nightmares.
• Data security and privacy: The above changes brought a heightened focus on data security and privacy, resulting in more agencies struggling to implement effective, robust security measures in increasingly complex, hybrid IT and work environments.
• Automation and AI: An offshoot of the SLED staffing challenge has been increased interest in using automation and AI to augment and occasionally replace workers, especially within IT and related support organizations. Agencies are experimenting with AI-powered chatbots to automate employee and constituent support, data analytics to aid decision-making, and process automation to streamline repetitive tasks.
• Virtual training and learning: Virtual and remote employee training experiments have led to an influx of learning management systems, webinars and online training platforms in SLED agencies, enabling a continuous learning culture in environments formerly built on skill-plus-seniority hierarchies.
• Digital changes altering citizen service expectations and delivery: As with most recent digital changes, SLED constituents’ digital preferences were growing prior to COVID. Months-long inability to physically interact with many agencies heightened this to a point where online is now the default mode for most citizen-facing SLED interactions and transactions. Agencies still struggle with enabling acceptable levels of interaction, information and transaction, while constituents demand an increase in consistency of interface and service delivery.

SLED IT organizations, already under-resourced and short-staffed, thus struggle to enable adequate digital workplace environments in the face of overwhelming change. 

In this ISG Provider Lens™ study, we look at three important sets of capabilities that help overburdened SLED IT teams enable and support digital workplaces – many of which are still evolving. They also facilitate improved worker and constituent capabilities and satisfaction while reducing support costs. 

Critical capabilities

Digital workplace advancements in SLED organizations must rapidly and cost-effectively enable and support the digital service expectations of staff and constituents. Critical capabilities enabling this, and which must be delivered by service providers, include the following:

• Workflow automation: Routine tasks such as approvals, document processing and data entry should be streamlined and automated using tools such as RPA and workflow management systems.
• Collaboration and communication tools: Implementing adequate, adaptable communications and collaboration applications and solutions is critical, but the ability to unify these into a service or set of services (i.e., unified communications as a service (UCaaS)) will greatly improve the ability to use and manage such capabilities while reducing their cost of operation and use.
• Data analytics and reporting: The use of advanced analytics tools in every process is a core need. Leading-edge providers use advanced AI (e.g., large language models (LLMs)) to automate, augment and extend analytics and reporting relevancy.
• Cybersecurity: Cybersecurity remains a major challenge for SLED organizations. Integrated and readily used security within solutions, especially as part of managed services, enables much broader and more adaptable security capability.
• Mobile and remote productivity: Mobile practices and policies should be integrated with remote work solutions and policies. Providers and SLED agencies alike should be able to readily adapt to mobile and remote behavior changes and conditions.
• Training and change management: Digital work includes, and differs from, traditional work. Changes in policy, behavior, oversight, interaction and organizational structure and culture must be resolved for digital workplace efficiency and effectiveness.

Unique SLED provider and solution requirements

State and municipal government agencies and educational institutions have several sector-unique needs when contracting digital workplace services. Service providers and their offerings must meet and exceed these to minimize potential disruptions and maximize the agencies’ ability to procure services and solutions. These include the following:

• HR-centric vs. IT-centric approaches. Digital workplace providers tend to follow one of two approaches when developing and delivering services: HR-centric and IT-centric. HR-centric approaches emphasize client HR/ HCM organizations as most responsible for digital workplace strategy and management, using a strategic approach aligned with established and expected workplace strategy and management. IT-centric approaches, also called tech-plus-tools, tend to emphasize the capabilities of solutions and services, including performance and cost improvements. In our experience, both approaches are significant to SLED agencies, but HR organizations are most likely to dominate digital workplace requirements and provider/solution qualification.
• Workforce extension into constituencies. Many agency groups and functions extend well beyond the internal environment into citizen and constituent environments (e.g., taxation, licensing, health and human services). Ideally, digital workplace solutions address and improve the experience of both. 
• Regulatory compliance, including worker roles and data security. Agencies must comply with the expanding scope of regulations and standards related to data security, privacy, accessibility and transparency, along with function-, departmental-and agency-specific worker roles and rules.
• Integration with legacy systems. Even the most advanced SLED digital workplaces will rely on mainframes and other legacy IT types for years to come. When procuring digital workplace services, agencies must consider the compatibility and integration  capabilities of the service provider’s solution with their incumbent systems and data.
• Scalability and flexibility. Contracted digital workplace services should be able to accommodate increasing and decreasing workloads, data requirements and system usage over time. Flexibility is important to adapt to changing requirements and evolving technologies.
• Accessibility, inclusivity and sustainability. Government agencies must ensure accessibility and inclusivity for all workers and citizens when workplaces extend into constituent domains (e.g., licensing, revenue and/or taxes). An increasing number of SLED agencies also require commitment to and measurable evidence of ESG improvement.
• Procurement regulations and processes. Government procurement processes may involve competitive bidding, evaluation criteria, documentation and contract management. Government agencies may have additional criteria when evaluating potential providers, including transparency and public accountability requirements. Providers with established and extensive SLED procurement and contracting expertise can help reduce the time consumed and challenges faced during the selection and contracting processes.
• SLAs and contract terms. Given the criticality of digital workplace services, government agencies are working to establish clear SLAs that define performance expectations, response times, support availability and penalties for non-compliance. Contract terms should also address issues such as termination, data ownership, liability and dispute resolution.

Planning for future disruption and advancement

Which developments in SLED digital work environments will likely be the most disruptive through 2025?

While it is challenging to predict the future with absolute certainty, based on current trends and emerging technologies, several developments will likely disrupt digital workplaces through 2025. Here are some of the most prominent ones that should be enabled by  current digital workplace services and must be included in future offerings:

• AI advancements. AI technologies and applications will continue to evolve and transform digital workplaces. ML and LLMs will advance intelligent automation, predictive analytics, NLP and computer vision. Properly implemented and managed through provider services, each should enhance productivity, automate repetitive tasks and provide intelligent insights for decision-making.
• Remote and hybrid workforce models. Remote and hybrid workforce models will persist and expand to include more contract workers and freelancers or gig workers in many areas previously considered off-limits to such.
• Augmented and virtual reality (AR and VR). AR and VR technologies will enable remote training, virtual meetings, immersive simulations and enhanced collaboration. These technologies can reduce geographical barriers and provide engaging and interactive remote and temporary work environments.
• Internet of Things (IoT). IoT will continue connecting devices, sensors and objects, creating smarter workplaces. IoT data should improve operational efficiency, enable better resource management and enhance employee experiences (EX). For example, smart offices can adjust lighting, temperature and other environmental factors based on occupancy or individual preferences.
• Blockchain for trust and security. Blockchain technology will be crucial in enhancing trust, security and transparency in SLED roles and associated digital workplaces. Blockchain-based solutions will provide greater data integrity across and within increasingly complex workplaces, reduce fraud and streamline complex processes.
• Human-machine collaboration. As AI and automation evolve, these technologies will augment human capabilities, allowing SLED employees to focus on complex, creative and strategic tasks. Collaboration between humans and intelligent systems will become more seamless and intuitive.
• Ethical and responsible technology adoption. Though we have seen early advancement toward this, by 2026, there will be widespread and increased emphasis on ethical and responsible technology adoption. Organizations will prioritize data privacy, fairness in AI algorithms, diversity and inclusion, and responsible AI use. This will lead to the advancement of policies, regulations and guidelines that must be integrated into digital workplace solutions and services.

What makes a leader?

The providers positioned as Leaders in this study are those that demonstrate portfolio and competitive strengths most suitable to ISG client requirements.

Scope of portfolio, company size and market presence all shape perception of provider leadership. But the size, number, range and complexity of technology and services included in provider portfolios are usually secondary to whether and how the provider enables and delivers business value to client organizations in the manner(s) that they require. The number of resources, revenue amounts and number of locations also shape provider positioning. However, these must be weighed against how and how much these capabilities deliver measurable improvement to clients.

Ideally, Leaders combine key aspects of the above while positioning themselves to compete effectively in satisfying client needs that have yet to develop fully. Those emphasizing innovation in adopting technologies into more effective ways of working, or delivering value through new ways of working, are more likely to be recognized as Leaders. 

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