The role of state CIOs is evolving beyond just operating government IT. At the annual conference of the National Association of State CIOs last week, discussions about AI data centers and citizen identity showed how state CIOs increasingly influence decisions that shape economic development, public trust, cybersecurity, and investment priorities. Sessions on AI data center development and identity & access management illustrated how this expanding influence is playing out:

AI Data Centers: CIOs Are Being Challenged To Communicate Fact vs Fiction

The most interesting discussion of the conference was a panel on data center strategy featuring CIOs from Tennessee, Nevada and New Hampshire. With the broad attention data centers are receiving in the press, the panel provided thoughtful perspectives on how states are balancing the economic opportunities of data centers with managing public perception and holding developers accountable:

  • State CIOs are influencing private sector investments. State CIOs’ remit is to manage IT organizations that support the state’s agencies and citizens. So, it was fascinating to see that state CIOs are being brought in to lend their expertise to discussions of private sector investments in AI infrastructure. This makes sense – who better to provide guidance on the feasibility and logistics of AI data centers than the highest-ranking public sector IT leader in the state?
  • Data centers can create positive economic opportunities: All agreed on the positive impact of data centers in their states, generating employment and tax dollars as well as improving digital service quality. Denis Goulet of New Hampshire pointed out that data centers can even revitalize communities. For example, he described how a decommissioned coal plant eliminated 50% of the tax base of one NH town (NH relies heavily on property taxes). A data center project offered the opportunity to repurpose abandoned real estate and reinvigorate the town’s employment and tax base. The panel acknowledged the strain data centers place on public infrastructure, but hearing their take on the benefits painted a fuller overall picture of the tradeoffs.
  • Local governments need to use the leverage they have: Tennessee and New Hampshire both brought up the impact data centers can have in regions where legacy industries have disappeared. While these areas are motivated to revitalize their economies, the CIOs are teaching local governments how to be smart in negotiating deals and not give up more than necessary. For example, local governments control zoning and many sites being considered for data centers require zoning changes. So, local governments have leverage in this case to set requirements as to what it will take for data centers to function in the local community successfully.

Citizen Identity Management: CIOs Are Making The Case For Investment Prioritization

A panel of CIOs from Arizona, New York, Ohio and Washington discussed modernization of identity and access management (IAM) platforms. IAM modernization has been on NASCIO’s annual list of top ten CIO priorities each year since 2015, and over half of US states are actively working on identity management modernization projects. There is both a security imperative and a financial opportunity. On the security side, Ohio CIO Katrina Flory talked about the need to centralize safeguards against AI-driven threats like AI-augmented citizen IDs. On the financial side, all agreed that consolidation offered opportunities for cost savings. In fact, one state that centralized its citizen identity platform achieved an annual savings of $5M+ per year.

The top impediment to progress is funding. 70% of states ranked funding as the largest challenge in delivering citizen identity transformation, just ahead of fragmentation and cultural resistance (both 68%). IAM transformation in states is complex and costly, with some states having 20+ systems across their agencies. And as the survey indicates, cultural resistance from agencies can be high. But with the favorable overall cost benefit, all agreed that states need to push ahead. In fact, Washington CIO Bill Kehoe stated, “it’s important to not stop if funding comes up short – states need to be guided by the residents.” The broader value case helps position identity modernization as a priority for the state even when funding is scarce.

Two Final Thoughts

Both discussions indicate that state CIOs have more influence than their formal remit might suggest. With AI data centers, CIOs are a key voice in garnering public support and helping local governments strike a successful partnership with investors and vendors. In fact, there’s also a lesson here for the investors and vendors themselves – states need support from private sector partners not just communicating why AI data centers are necessary, but in educating their citizens on the basics of what data centers do and how they impact the local community. And if you don’t think this is important, Denis Goulet gave an example of a developer that tried to strong-arm the local community and was spurned immediately.

Second, CIOs armed with the right information about the costs, risks and public benefits of an initiative are in a stronger position than they think. For example, Bill Kehoe’s aforementioned advice on funding may sound easier said than done. However, the point is that having all the relevant information enables a discussion about value rather than just cost. And when the discussion is about value, you can more effectively agree on what the high/low priority investments are and channel funding to the items that matter most.

Want to talk further about the 2026 NASCIO Annual Conference or public sector IT spend management in general? Drop me an email or set up a guidance session.

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