Public sector organisations are accelerating their adoption of AI, but many are doing so without the infrastructure and governance needed to support it securely.
According to industry-specific analysis of Nutanix’s Enterprise Cloud Index (ECI), government organisations face growing challenges around infrastructure readiness, shadow AI and data governance as AI moves from experimentation into operational use.
Among the findings, 91 percent of public sector technology leaders said unvetted AI use creates severe mission and security risks, while 73 percent said their infrastructure is not currently ready to support complex AI workloads on premises. Meanwhile, 87 percent expect their use of application containerisation to increase over the next three years as they modernise environments for AI.
The findings form part of three new regulated industry reports covering the public sector, healthcare and financial services, which build on Nutanix’s global Enterprise Cloud Index research by examining sectors with higher compliance and data sovereignty requirements.
Thomas Cornely, EVP of product management at Nutanix, said: “Organisations across every industry are working to move their AI projects from experimentation to delivering real business value, but the infrastructure requirements vary significantly depending on sector and workload.”
He added: “The one consistent factor is a need for infrastructure and operating models that deliver flexibility, resiliency, and security to run both traditional and AI-powered applications at scale.”
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Shadow AI concerns grow
According to the report, one of the biggest concerns for public sector IT leaders is the rise of shadow AI, where employees or departments use AI tools outside approved governance or security controls.
Nutanix said organisational silos between business units and IT teams are compounding the challenge, creating governance gaps as agencies seek to introduce AI into services ranging from benefits eligibility and fraud detection to wider operational processes
The wider research suggests similar trends across other highly regulated industries.
In financial services, 86 percent of leaders said unmanaged shadow AI introduces severe business risk, while 90 percent reported that AI is accelerating the adoption of application containers. Healthcare organisations, meanwhile, identified data sovereignty, infrastructure readiness and governance as key priorities as AI is deployed more widely in clinical and operational settings.
Nutanix said the findings indicate that regulated sectors face greater pressure than organisations overall, with infrastructure readiness, data sovereignty and governance becoming increasingly important as AI deployments scale.
The research is based on responses from 1,600 cloud, IT and engineering executives at organisations with 500 or more employees. Conducted by Wakefield Research in November 2025, the survey covered organisations across 15 countries, including the UK.
