Key considerations for legacy system transformation in the public sector

Digital transformation has long been recognized as a key to efficiency in the public sector, but it can be a large, complex operation, and technical debt incurred by disparate, disconnected legacy systems can create challenges that stifle modernization.

In Canada, almost a third of government agencies feel that technical debt accounts for 25-50% of their time, occupying a large portion of operational budget.1 While in the UK, nearly half of the IT budget in the public sector was spent on “keeping-the-lights-on” activities for outdated systems in 2019.2

Despite the clear implications on cost and efficiency, the consequences of technical debt go beyond the financial. It can seriously impact service delivery to citizens and residents, impacting public welfare and causing a decline in public trust.

At the recent Public Sector Innovation Show in Ottawa, senior government decision makers from across public service agencies came together in a roundtable hosted by Cúram to discuss strategies for legacy system transformation.

From RCMP to Treasury Board, Health, and Public Administration, technical debt was identified as a priority risk area that needs to be addressed. It is clear that agencies across the public service landscape in Ottawa face common challenges in their modernization and transformative initiatives, so let’s take a look at key areas that should be considered.

Getting started

The procurement procedures and constrained timeframes further complicate the execution of complex transformation projects. The resistance to change within public sector organizations can also contribute to the complexity and difficulties in transforming their business processes.

The group discussed 3 critical success factors for progress:

  1. Technology paradigms
  2. Human capital
  3. Opportunities for AI

Technology paradigms

Incremental transformation of legacy systems is usually constrained by the monolithic current state and organic growth of software, data, and business processes in the past. In this environment, there are certain technology strategies, alongside agile monitoring and tracking that can be used to overcome some of the risk.

The custom development approach for large and complex public sector legacy replacement projects historically faced a wide array of challenges. The agencies that have standardized their business processes and data definitions are successful in leveraging Software as a Service (SaaS) platforms, but this is not the case in the majority of the agencies. Commercial off-the-Shelf (COTS) platforms provide a head start, and can be a middle ground between custom and SaaS.

Excessive customizations and uncontrolled workarounds must be avoided to fully leverage COTS platforms. Commercial Open-Source Software (COSS) is the recent paradigm for agencies to leverage SaaS/cloud-based platforms where they can collaboratively contribute and meet their custom needs while minimizing vendor lock-in.

Independent of technology choices, key factors to consider include data governance, program stewardship, and policy agility. A meaningful public-private partnership can support agencies to prioritize and address many of these challenges.

Human capital

Large scale legacy transformation projects require change in organizational culture, and new ways of doing things. Often, the implementation cost overruns, and tight schedules mean that workforce transformation and skills enablement is compromised. Transformation projects can only fully deliver if they are deployed by skilled, adaptable teams who are committed to continuous improvement.

In its 2023 report, the World Economic Forum positions the effective reskilling and upskilling of a workforce as one of the top practices needed in government and public sector workforce strategy.3

The role of AI

Public sector agencies are actively talking about the potential use of artificial intelligence (AI) in their transformation efforts. Of course, careful consideration must be given to constraints around data sharing, data privacy, and data residency. As we strive to know more about the journey of each data element while taking the AI flight, the practical KPI is going to be the positive and sustained growth of trust.

Potential opportunities for AI in legacy transformation in the public sector can be seen in enablement and support functions as a starting point. Unproven and aggressive use cases bear the risk of data residency and privacy challenges and pose questions around Intellectual Property of software assets.

When it comes to legacy modernization, AI enabled accelerators are seen to be playing an important role in improving automation in testing, improving robotic workflows, and enhancing customer experience and services. Generative AI will continue to buzz in the public sector eco-system as the large language models (LLMs) evolve and mature.

Read the whitepaper on the opportunities for AI in the public sector.


Legacy transformation involves many moving pieces that are all essential in ensuring a large undertaking such as this is successful. During our roundtable, we were able to highlight three factors that continue to play a large role in how government agencies plan for their future, to be able to best serve the needs of their citizens. Concluding comments of experts from multiple subject areas and government agencies echoed the need for actionable plans to deal with technical debt and a balanced focus on workforce enablement during technology and business transformation.

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