Public sector AI use outpaces readiness, Nutanix finds

Nutanix has released public sector findings from its annual Enterprise Cloud Index survey, showing widespread AI use across government and education organisations.

The survey found that 91% of government and education IT leaders believe unvetted AI use creates mission and security risks. It also found that 73% of public sector infrastructure is not ready to run complex AI workloads on premises, while 87% of technology leaders expect their use of application containerisation to increase over the next three years.

The data covers respondents from the federal, state and local government sectors, as well as primary and secondary schools and higher education institutions. The findings reflect a sector trying to manage AI deployment while dealing with older on-premises systems, private cloud environments and the shift of legacy applications to newer cloud infrastructure.

According to the survey, AI is already being used in public sector operations, from benefits eligibility to fraud detection. That is increasing pressure on IT teams to address infrastructure gaps, workforce skills and governance at the same time.

Infrastructure gaps

The figures point to a mismatch between adoption and preparedness. Organisations are introducing AI into operational settings, but many still lack the underlying systems needed to support more demanding workloads in their own data environments.

Containerisation appears to be central to how public sector technology leaders plan to respond. The 87% of respondents who expect their reliance on containerisation to grow suggests agencies and education bodies are seeking a more consistent way to run applications across mixed environments.

The findings also highlight concern about so-called shadow AI, where staff use AI tools without formal approval or oversight. In highly regulated settings such as government and education, that raises questions about security controls, data handling and accountability.

A regional executive at Nutanix said governance had become the main issue as AI use spreads.

"The proliferation of unvetted AI, or 'Shadow AI', has emerged as the defining governance challenge for the public sector. Across Asia Pacific and Japan, the conversation has shifted from AI ambition to operational readiness. The organisations moving ahead are those that stop chasing every new capability in isolation and instead consolidate their foundations. By prioritising secure, containerised architecture, these leaders are establishing the guardrails required to harness AI confidently, ensuring they earn and sustain public trust as AI becomes further embedded in citizen services," said Daryush Ashjari, Chief Technology Officer and Vice President of Solution Engineering, APJ, Nutanix.

Survey scope

The public sector findings form part of Nutanix's eighth annual Enterprise Cloud Index study. Wakefield Research conducted the research, surveying 1,600 cloud, IT and engineering executives at manager level or above from organisations with 500 or more employees across multiple countries, including Australia, the United Kingdom and the United States.

This edition draws on the subset of respondents working in public sector organisations. They span government bodies and educational institutions, giving the report a broad view across administrative and academic environments.

The picture that emerges is one of uneven modernisation. Public sector organisations are introducing AI into service delivery and administrative functions, but many are still operating across fragmented technology estates without a single management layer.

That creates practical challenges for agencies balancing service outcomes with the protection of public data. In areas such as citizen services, public safety and education, infrastructure decisions can have direct consequences for compliance, data sovereignty and operational control.

The survey shows the public sector is moving ahead with AI, but progress is being shaped by oversight concerns and the limits of existing systems. The strongest signal in the data may be that adoption is no longer the main question; readiness is.