Unlocking public sector potential: 4 trends defining modern government and education

Across every level of government and education, technology is opening new possibilities to serve, protect, and empower communities. From digital-first city halls to AI-enabled classrooms, innovation is driving smarter decisions, stronger connections, and faster outcomes for the people who rely on them most.

Building on this momentum, Hether Danforth, Vice President for State & Local Government and Education (SLED) at Microsoft, shared her perspective in a recent episode of Mission by Design. She explored how modern technology and AI are reshaping the future of public service and learning and outlined four key forces that forward-thinking leaders can harness to deliver greater impact.

Curious to see these insights in action? Watch the featured video right here Mission by Design | Microsoft on Innovation in Public Services and Education.

The future of SLED: Four technology shifts every leader should know

1. Mission-critical modernization: The foundation for resilience

Modernization is no longer optional, it’s the cornerstone of progress. Legacy, monolithic systems can no longer keep pace with the dynamic needs of citizens, students, and staff. Migrating core operations to the cloud enables scalability, flexibility, and efficiency while delivering better digital experiences for everyone.

The City of Redmond offers a powerful example. By migrating to Microsoft Dynamics 365 Finance, the city transformed how it manages its finances and serves a growing community, gaining real-time visibility, automation, and actionable insights that unlocked $3.6 million in new savings, reinvested in public safety and community programs.

Discover more: City of Redmond marks municipal milestones with Dynamics 365 | Microsoft Customer Stories

2. AI as a force multiplier: Turning possibility into progress

Across SLED, AI is already redefining what’s possible: reducing manual work, unleashing creativity, and improving outcomes in weeks instead of years.

• Serving citizens smarter. AI is enabling governments to provide quicker, more personalized public services while easing pressure on frontline staff. At the City of Montréal, Microsoft Copilot Studio powers an AI assistant that helps citizens find accurate information across 40,000 web pages in seconds. In its first four months, the assistant earned high satisfaction scores and helped call center teams manage seasonal surges, allowing staff to focus on critical needs like emergency response.

Discover more: City of Montréal supports citizens with a virtual agent built using Microsoft Copilot Studio

• Reimagining learning with AI. In education, AI is making classrooms more engaging, adaptive, and future-ready. At Indiana University’s Kelley School of Business, Microsoft 365 Copilot is transforming how students learn and collaborate. The school reports a 10% improvement in grades and a 40% reduction in time spent on assignments.

Discover more: IU’s Kelley uses Microsoft 365 Copilot to prepare business students for the AI era

• Driving student success at scale. AI is helping academic institutions improve retention, empower faculty, and equip students with real-world skills. At Miami Dade College, Microsoft 365 Copilot supports the university’s mission to make learning more accessible and effective. Since adopting the solution, the college has seen a 15% increase in pass rates, a 12% drop in course dropouts, and notable time savings for faculty and staff, allowing more time for mentoring and one-on-one support.

Discover more: Miami Dade College boosts student pass rates by 15% with Microsoft 365 Copilot

• Empowering the next generation of innovators. As AI reshapes every industry, universities are preparing their communities to lead in an AI-driven world. At Auburn University, Microsoft Copilot is helping students, faculty, and researchers explore new ways to integrate AI into teaching. By promoting AI literacy and accessibility, the university is building a foundation for innovation that extends beyond campus, expanding both educational and economic opportunities for its community.

Discover more: Auburn University empowers thousands of students, faculty, and staff to explore new ways of using AI with Microsoft Copilot

3. Zero Trust: The new non-negotiable

Cybersecurity threats are constant. That’s why Zero Trust and secure cloud architectures must be the first design principle.

Microsoft helps public sector organizations stay ahead of threats through:

• End-to-end protection of data and identities.
• Compliance with the most stringent public sector and education regulations.
• Layered defences and continuous monitoring to minimize breach impact.

Examples of resilience in action:

• Sandia National Laboratories built a secure AI chat tool on Azure OpenAI, saving employees hours while keeping sensitive data protected. Read more: Sandia saves employees countless hours a month with a secure AI chat tool built on Azure OpenAI in Foundry Models
• Kern County unified its governance approach with Microsoft Purview. Read more: Kern County unifies its approach to secure and govern data with Microsoft Purview
• Oregon State University safeguards vital research through Microsoft Sentinel and Defender. Read more: Oregon State University protects vital research and sensitive data with Microsoft Sentinel and Microsoft Defender

4. Resources optimization: Doing more with every dollar

In a time of tightening budgets and expanding missions, technology helps leaders extract more value from every dollar. By consolidating services, modernizing infrastructure, and collaborating across ecosystems, organizations can reduce costs while accelerating results.

How it works:

• Standardize and rationalize to eliminate duplication.
• Maximize value from existing technology investments.
• Scale impact through partnerships with ISVs, integrators, and academic partners.

For example, Alameda County ITD migrated 62 TB to Azure VMware Solution, cutting patch cycles by 100 hours and saving $50K annually — while supporting 1.7M residents. Read more: Alameda County ITD saves 100 hours per patching cycle with Azure VMware Solution

The next frontier: Leading from the edge

All these trends are being shaped, and accelerated, by Frontier Firms: leaders who are embracing innovation with purpose.

What does it mean to be Frontier?

“In state, local, and education, it means leading from the edge of innovation,” says Hether Danforth. “Thinking boldly, acting collaboratively, and showing up when challenges are toughest — bringing transformative technology to solve them.”

By combining mission-driven leadership with trusted technology and strong partnerships, Frontier Firms are setting new standards for what’s possible in public service and education.

Explore more: 2025: The year the Frontier Firm is born

5 ways to start your frontier journey

1. Adopt the frontier mindset: Focus on mission-driven, sustainable impact built through collaboration and trust.
2. Modernize your core: Identify systems ready for the cloud and build a modernization roadmap.
3. Design security in from day one: Make Zero Trust and compliance foundational.
4. Scale through partnerships: Leverage Microsoft’s ecosystem of ISVs, integrators, and policy innovators.
5. Invest in people: Build AI fluency across your organization with training and adoption programs.

“Lean into being frontier,” encourages Hether Danforth. “It can be uncomfortable, but that’s where real innovation happens. When we combine the right technology, the right partners, and the right security posture, we can build safer communities, stronger services, and more equitable education for all.”

Ready to lead from the edge?

If you want to modernize operations, scale AI adoption, or strengthen your security foundation, we are here to help you take the next step.

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