Maximizing Opportunities in SLED FYE

The 2025 fiscal year-end is right around the corner for 46 states, which means that it’s time to take advantage of those end-of-year opportunities before they are gone. SLED decision-makers are already looking ahead to next year’s budget process and are working to identify the most pressing technology policy and priority areas that will shape future downstream requirements.

Key Points To Keep in Mind

• FY26 is rapidly approaching, and agencies are drafting budget plans and request for proposals (RFPs). Customer engagement and relationship-building are critical, as meaningful partnerships will breed long-term contracting opportunities and success.
• Tailor your SFYE go-to-market strategy to align with industry best practices, top technology policy and priorities, fiscal needs and unique agency pain points and challenges – state CIOs have underscored the importance of “getting to know their state,” through resources such as statewide strategic plans.
• Awareness of agency-specific buying trends and timelines is key when it comes to planning requirements-shaping conversations. As Q4 approaches, there will be a push for efficient acquisitions; make sure you plan ahead and take into account agency-specific nuances—for example, the state of Kentucky has advised industry to “make sure you are on contract because if you don’t have the right contract vehicle with us it puts you at risk.”

So where exactly are states placing their biggest bets this SFYE, and what are the biggest IT investment areas we can expect in late 2025 and 2026?

The 2025 National Association of State Chief Information Officers (NASCIO) Midyear Conference took place in Philadelphia, Pennsylvania this April, where state leaders discussed top technology priorities, trends, challenges and current technology use cases. Some of the key focus areas included AI with emphasis on generative AI, data management, governance and quality and cybersecurity and risk management.

Artificial Intelligence

AI, driven largely by GenAI, took the number two spot on NASCIO’s top ten technology priorities list this year, stressing the pivotal role that AI is playing in the SLED technology space. AI has already begun transforming government operations across all verticals, whether that’s public safety, health and human services, transportation or education. In 2025, we are also seeing creative applications of AI to address complex challenges. For example, the DOJ’s final rule now includes a date certain for states to meet accessibility requirements (April 2026). States are looking to emerging technology like AI, to creatively tackle compliance and regulatory challenges, such as current accessibility requirements.

At the federal level, through various new policies and EOs, the Trump administration has signified continuing efforts to dominate AI global competition with promises to help build AI data centers and other AI-related infrastructure. We are also seeing these new policies affect state-level acquisitions as well. For instance, On April 23rd, President Trump introduced an Executive Order directing the integration of AI into K-12 schools in an effort to equip the future U.S. workforce with skills needed to further the technology’s innovation capabilities. The EO establishes a White House Task Force on AI Education along with public-private partnerships to provide resources for K-12 AI education with the goal of providing students with better AI tools.

The Trump administration has also strongly emphasized policies that focus on deregulation, efficiency and innovation. The creation of DOGE coupled with potential funding cuts, and shifting priorities could present increased budgetary pressure for states and localities, which may lead to programmatic changes in areas such as public safety, health and education. Following the federal government’s creation of DOGE, states like Texas, Louisiana and Iowa, are establishing their own DOGE-adjacent, government efficiency task forces. Louisiana, for instance, established the LA DOGE committee to support cost optimization across the board and throughout all customer service delivery.

Although the current fiscal constraints and uncertain regulatory landscape is instilling budgetary challenges, the underlying tone across the state CIO landscape is one of optimism towards the adoption of innovative technology. States have expressed their desire to “use IT to do things better” while simultaneously generating cost savings and efficiencies. As we approach SFYE, new technology investments will reflect states’ desires to support these federal priorities and will demand creativity, innovation and a delicate balance of cost savings with the need to support citizen services through modernization and efficiency.

Data Management and Analytics

Data management has also moved up on NASCIO’s top technologies list to the number four spot. As we’ve seen, data has really become a driver of everything, with emphasis on data management, governance and data quality. With the emergence of technology such as GenAI, data quality has become a top concern for state leaders, with less than 25% of CIOs stating their organization currently has a data quality program. States are currently focusing efforts on establishing sound data management and analytics strategies, with the ultimate goal of enhanced citizen service delivery.

Oklahoma, for example, is currently focused on distributed data and AI enablement with that data; the state also hopes to move from an experimentation phase to a transformation phase whereby data is leveraged to better serve its citizens. As we near SFYE, IT companies that can help SLED agencies track programmatic data will be well positioned. Companies that offer AI and automation-based solutions can craft messaging to encourage adoption of technologies that can enhance statewide citizen services.

Cybersecurity and Risk Management

Finally, cybersecurity is still top of mind for state CIOs and will continue to drive purchasing decisions for state and local government end users. States are taking an all-hands-on-deck, whole-of-state approach to cybersecurity involving interagency collaboration and governed under a secure framework such as Zero Trust. States are also looking to innovative and emerging technologies such as AI to complement their cybersecurity efforts through things like enhanced threat detection. Furthermore, to provide a more holistic approach to security, Utah for example, will be making the push to encourage GovRamp certification for vendors.

As we approach SFYE and head into FY26, industry can take advantage of opportunities that help SLED leaders shore up their cybersecurity posture such as through application modernization, regular updates and patching to ensure critical vulnerabilities are addressed, ubiquitous MFA implementation, centralized identity management supported by a robust and AI-enhanced identity verification solution, the elimination of legacy business processes, and employee security awareness training.

Finishing Strong in FY25

SFYE is rapidly approaching, and now is the time to engage with your SLED customers on the relevance of your IT products and solutions and how they can help generate long-term efficiencies for SLED agencies. SLED end users are now looking to technology to solve their modern-day challenges, and there is no doubt that the demand for efficient technology solutions, such as automation-based solutions, is being reflected within SLED procurement trends. You will want to design messaging around how your tool or solution can supplement your customer’s efforts in addressing unique pain points, priorities and challenges. Be ready to discuss the benefits your solution can provide when it comes to operational efficiencies and streamlined service delivery. End users are looking to boost capabilities around real-time data-driven insights, enhance security and privacy, and help solving compliance and regulatory challenges such as accessibility.

Improving the Customer Experience will always be a focal point for SLED leaders, as today’s modern world underscores the necessity for individualized services that provide agility, accountability, transparency, efficiency and adaptability. Citizens want to establish community trust in administrative decision making, with a lens on transparency and accountability. Robust digital services, for example, can help establish the foundation for trust and transparency and can provide communities with a greater sense of government involvement.

It's important to keep in mind that state and local markets are also affected by downstream effects spawning from federal policy and priority shifts, so keeping those underlying drivers in mind will be key to successful messaging. For example, this year with pandemic-era federal funding come to a head, states are facing a market reset where they are forced to sustain operations on their own without the assistance of these federal funding streams. Additionally, the federal funding shifts within verticals such as education and health and human services could place more pressure on states to fill budget deficits. Technology companies should tailor messaging around how their solutions can generate efficiency, cost-effectiveness and infrastructure modernization.

Decision-makers will also be seeking opportunities to modernize their technology infrastructure and support their efforts to become leaders in modern citizen service delivery. Demonstrating successful adoption and implementation of your product or solution in another SLED organization will help establish confidence in end-user adoption. As SLED agencies collect success stories to share, these established wins will help create a foundation for technological innovation.

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About the Author: Yvonne Maffia is the senior analyst covering state, local and education markets. She applies insights and analysis to purchasing trends to help vendors and partners shorten their sales cycles. Prior to joining TD SYNNEX Public Sector, Yvonne spent 8 years working in state and local government, where she oversaw advisory boards across the State of Florida and served as an analyst to a local politician. Yvonne currently lives in Washington, DC.