Governments across the globe are spending trillions of dollars annually on technology. Yet despite the vast investment, most of these projects are falling short—overshooting budgets, missing deadlines, and ultimately failing to deliver the promised results.
At the center of this challenge is one key issue: broken digital transformation strategies. According to Third Stage Consulting, government entities are especially prone to failure in ERP and technology implementations due to systemic missteps that start well before a single line of code is written.
Here’s a closer look at why governments technology projects fail—and what needs to change.
The Scale of the Problem
The United Nations reports that 50 developing nations spend a combined $5 trillion annually on technology initiatives. In the U.S. alone, the federal government invests about $500 billion per year on digital programs. These figures signal a massive global commitment to modernization—but also a monumental risk when these projects veer off course.
As Kimberling explains, more than 80% of public and private sector ERP initiatives fail. But for governments, the failure rate is especially high due to unique organizational and political factors.
Problem #1: The Flawed Procurement Process
One of the most common traps for public sector projects begins in the procurement phase.
Government agencies typically issue public Requests for Proposals (RFPs), evaluate submissions via committee, and often select vendors based on the lowest cost. While this process is designed to ensure fairness and transparency, it opens the door to several vulnerabilities:
- Lowball Bidding: Vendors often underbid to win the contract, only to make up the difference later through change orders and scope creep.
- Overreliance on Fixed Bids: Fixed-bid contracts can give a false sense of security. In reality, vendors often bake in high buffers—or tightly define assumptions that later trigger additional charges.
- Lack of Organizational Insight: At the RFP stage, many agencies don’t fully understand their needs or the complexities of the project. This leads to unrealistic proposals and, eventually, implementation failures.
As Kimberling notes, Third Stage Consulting often declines to respond to RFPs unless they already have a strong understanding of the organization—because responding blindly is a recipe for inaccuracy.
Problem #2: Technical Skill Gaps
Many government agencies still operate on outdated, homegrown systems. Transitioning to modern, cloud-based ERP platforms requires a level of technical skill that many internal teams don’t yet have.
This knowledge gap leads to two major issues:
- Inability to Guide the Project: Without technical knowledge, internal teams struggle to manage vendors or understand what’s realistic.
- Overdependence on External Vendors: A sense of helplessness sets in, and organizations defer decision-making to vendors and system integrators—often without fully understanding the implications.
Problem #3: Lack of Ownership and Oversight
Third Stage emphasizes that public sector projects are often plagued by a lack of internal accountability.
Government institutions tend to rely on decision-by-committee structures. Instead of clear leadership, many projects suffer from diffused responsibility. This creates a dangerous dynamic, especially in politically influenced environments where “CYA” (cover your ass) culture takes precedence over decisive leadership.
Problem #4: Unrealistic Timelines and Budgets
Because public institutions move more slowly and face more red tape, their digital transformations inherently require more time and resources. Unfortunately, vendor proposals rarely account for this.
Most proposals are built with aggressive timelines and budget figures that look good on paper—but are nearly impossible to execute in reality. This leads to scope creep, delays, and ballooning costs.
Third Stage Consulting’s recommendation: bring in an independent, tech-agnostic advisor at the beginning to help adjust assumptions and align the project to real-world conditions.
A Case in Point: Birmingham City Council
A cautionary tale emerged in 2025 when Birmingham City Council—the largest municipal authority in Europe—attempted to implement Oracle’s Human Capital Management software. The original budget quickly quadrupled, and the project remains incomplete.
The council’s external auditor, Grant Thornton, issued a damning report pointing to:
- Unrealistic expectations from the start
- Ignored internal and external risk warnings
- Technical complexities that slowed the project
- Slow decision-making and lack of project ownership
These are the exact pitfalls Kimberling warns about—and ones that could have been avoided with better planning and independent oversight.
The Path to Success: Realistic Planning and Independent Guidance
Governments don’t need to stop investing in technology—but they do need to be smarter about how they do it.
Third Stage Consulting’s advice is clear:
- Set realistic expectations based on your internal capabilities and political constraints
- Don’t rely solely on vendor proposals—seek an unbiased second opinion
- Build internal project ownership and oversight early
- Understand that successful digital transformation takes time, effort, and the right people in place
For governments determined to get it right, these changes could mean the difference between a historic transformation and a billion-dollar failure.
Free Resource: Lessons from 1,000 Digital Transformations
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