When it comes to public sector predictions, the disruptions and upheavals in both government and AI in 2025 would have challenged Nostradamus. However, despite 2025 being marked by uncertainty, many SAS experts accurately predicted the evolution of AI in government in 2025. Will their 2026 predictions also be on point, or will the unknowns we face make the coming year too unpredictable? 

Government AI investments are increasing even though trustworthy AI efforts are not keeping pace. This was a finding from the recent IDC Data and AI Impact Report: The Trust Imperative, commissioned by SAS. Government agencies are using generative AI as much or more than other industries and are leaders in the use of traditional and agentic AI. And yet, public sector investments in trustworthy AI infrastructure and software lag behind the private sector.

So, what does that mean for technology in 2026? Will governments match their AI innovation with an equal focus on trustworthy practices? With an inconsistent regulatory environment, will agencies adopt stronger AI governance to guide their AI use? Will these investments spark the promised productivity and efficiency gains, or will there be a more pragmatic approach to adoption? 

Amid tumultuous change, government experts from global data and AI leader SAS get out their crystal balls to tell us what's in store in 2026.

Expensive consulting engagements begin to give way to a tech-empowered workforce

"Governments increasingly want to spend less on big technology that requires heavy consulting and customised solutions. The key will be using technology to accelerate analysis and workflow to enable government employees to do more with less. The fusion of industry knowledge, frictionless technology and workforce enablement will be key," ? Ben Stuart, Vice President, US Public Sector, SAS.

Transparency emerges as a critical factor in the evolution of AI and GenAI in government

"Government agencies will move from promising pilots to operational AI. This will often take the form of AI agents, which will increasingly make decisions and execute actions with little human intervention. Enabling algorithmic transparency will be crucial to ensuring these decisions are auditable, explainable and understandable to humans," ? Lucas Ermino, Systems Engineer, SAS Brazil.

AI governance takes centre stage as governments grapple with AI regulations and digital sovereignty

"Governments around the world will increasingly pursue "Sovereign AI" solutions to ensure control over data and compute resources within their borders, driving the creation of national AI ecosystems and regional data centres," ? Vrushali Sawant, Data Scientist, SAS Data Ethics Practice.

"With more EU AI Act deadlines approaching and regulators preparing for the first enforcement actions, as well as the emergence of more AI regulatory frameworks globally, in 2026, organisations will increasingly be looking at AI governance to ensure compliance but also as an innovation driver," ? Kalliopi Spyridacki, Chief Privacy Strategist, EMEA & Asia Pacific, SAS.

"Public sector leaders will increasingly recognise AI literacy as essential, not optional. Governance will move beyond technical checklists toward shared understanding and accountability – with literacy at the core of responsible innovation and public trust," ? Josefin Rosén, Principal Trustworthy AI Specialist, Data Ethics Practice, SAS Sweden.

Agentic AI will proliferate in citizen services

"In 2026 and beyond, we will witness a big shift in generative AI and the commoditisation of LLMs. We shall see the rise of agentic AI frameworks that provide trustworthy, reliable, precise context, and orchestrate complex workflows for real value creation. Virtual assistants powered by both traditional AI and generative AI will handle complex citizen queries across languages, reducing wait times and bridging accessibility gaps," ? Afshin Almassi, Senior Sales Manager, Public Sector, SAS Spain.

Synthetic data will emerge as a solution for real-world data shortages

"Agencies relying only on real-world data will be trapped by political shifts and digital sovereignty constraints. Synthetic data will become the only way to innovate AI safely, at scale, and with full compliance," ? Alena Tsishchanka, Director, Global Customer Advisory, SAS Italy.

"With the right analytic guardrails in place, LLMs will be used to create synthetic unstructured text data such as emails, incident reports, or adverse events for use in research, training and testing," ? Tom Sabo, Advisory Solutions Architect, SAS.

A bumpy ride of AI-driven workforce transformation will require a new approach to skill development

"Public agencies will capture institutional knowledge by training retrieval augmented generation (RAG) systems on the documented expertise of senior staff, creating AI mentors that provide junior employees with on-demand access to decades of accumulated wisdom and best practices. Unfortunately, this will also lead to more instances of AI sabotage where workers, concerned with being replaced by AI, purposefully produce poor content to contaminate the training," ? Steven Tiell, Global Head, AI Governance Advisory, SAS.

"AI, robotics and automation will continue to reshape job roles. While some positions will be displaced, many new roles will emerge, especially in tech, green energy and care sectors. Current skillsets will become outdated in some areas in the coming years, necessitating governments to invest in the upskilling and reskilling of their workforces," ? Andrea Covino, Sales Manager, Public Sector, SAS Italy.

AI will be both enemy and ally of public sector investigators and tax officials 

"With more sophisticated generated identities and transactions (given widespread use of GenAI platforms by fraud rings), and ever-more sophisticated tax avoidance schemes, agencies will need to place an even greater emphasis on fraud detection, identity verification and tax-related financial data analysis to lower the risk and safeguard tax revenues," ? John Bace, Industry Consultant, Tax & Revenue Compliance, SAS.

"In 2026, we will see identity management become the backbone of inter-agency agreements to ensure lawful, fair, and secure data exchange. This will promote cross-agency data sharing, enabling more contextual fraud, waste and abuse risk detection and mitigation," ? John Stultz, Principal Solutions Architect, Risk, Fraud & Compliance, SAS.

"Citizens and revenue agencies will benefit from the spread of real-time analysis in tax agencies. This will help reduce account takeover threats and provide in-the-moment feedback to improve filing accuracy and reduce tax gaps," ? Carl Hammersburg, Senior Manager, Government and Healthcare Risk & Fraud, SAS.

AI will unlock public health insights from data trapped on paper, increasing health surveillance capacity

"With much patient and public health data trapped in paper documents or relying on manual data entry, AI-led extraction and entity resolution will step up to streamline public health reporting systems. This will reduce duplicates and time-consuming labour, revitalising the foundation of our public health surveillance systems and hopefully helping us find and end outbreaks sooner," ? Ian Kramer, Senior Manager, Customer Advisory, US Healthcare, SAS.

Learn more about how SAS analytics and AI are helping government agencies face today's challenges at https://www.sas.com/en_za/industry/government.html. 

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