Nebraska officials have spent 2025 focused on laying the groundwork to advance IT talent pipelines, AI implementation and more in 2026 — and on reducing IT costs while doing so.

State CIO Matthew McCarville was tapped to lead Nebraska IT in 2024, in part with the goal of delivering cost savings to taxpayers. He views diversity, in a broad sense, as a mindset through which to find new technology solutions and talent.

Nebraska IT is in a position to modernize now, McCarville said, and that is in part a result of IT work in recent years. When he came to the state, systems were almost entirely on-premise mainframe. Since his arrival, work has begun to get the state off mainframe and into a cloud environment in the next calendar year; a vendor selection is expected in January. That will be key to state adoption of emerging technologies like AI.

“[The cloud environment] enables us to leverage all of that data in a new way we’ve never been able to before,” he said, explaining that using AI on an on-premise mainframe is “cost-prohibitive.” Now, state data can be used more effectively, enabling predictive analytics and AI in a cost-effective way.

The other piece of the AI puzzle is the skillset needed to implement it effectively. In Nebraska, roughly one-third of full-time employees qualified for retirement about a decade ago, according to McCarville, so the talent question is a high priority.

The state has a Data and AI Center of Excellence in Omaha, which enables officials to launch an internship initiative as an early talent pipeline for people who may not have worked with state government. The internship is expected to launch “full-bore” in January, and the first-ever statewide IT apprenticeship program is expected to arrive in 2026.

The apprenticeship program is GI Bill-qualified, so its funding will support the state’s collaboration with educational entities to train exiting military members — and the broader public — on AI, data and cybersecurity. The program is also intended to encourage people to stay in Nebraska.

These initiatives, McCarville said, aim to help the state address modernization needs while dealing with a soon-to-retire workforce, cost-effectively.

Part of modernization is implementing a mindset shift to one that is more forward-looking, he said. For example, rather than remaining entrenched in vendor agreements created 20 years ago, state IT is diversifying its ecosystem and moving away from such long-term relationships.

Diversifying vendors does require knowledge about more products, but it better positions the state to tackle new projects by being able to work with the lowest-cost provider. This shift is not a critique of previous vendors, McCarville said, but reflects meeting modern needs.

The state launched its first Joint Security Operations Center in 2024, powering a whole-of-state model through which state IT officials serve all 93 counties and their cities, plus more than 250 K-12 supporting organizations, governor’s cabinet agencies, and non-cabinet boards, agencies and commissions.

“So, we are building a kind of ‘Field of Dreams’ for cyber,” said McCarville of the state’s approach — creating the infrastructure in an effort to attract organizations to participate.

There has been much discussion of potential changes at the federal level that could affect state cybersecurity funding, but McCarville said state cybersecurity must rely on sustainable funding sources — and federal funding is not always that. He said he views federal funding as an “added bonus” for state cybersecurity.

Although the state is investing in IT, doing so in a cost-efficient way is a priority to address budget constraints. The state Legislature is facing a $471 million deficit in the annual budget, and the governor has established a goal for cabinet agencies to cut $500 million a year over the next two years.

The Nebraska Office of the CIO (OCIO) is in a unique position because rather than receiving a general fund appropriation, agencies pay for its services from general funds they receive. Still, OCIO is reducing its rates and expenses to offer them discounts — cutting $2.5 million in annual recurring overhead so far, with the goal of reaching $13 million. This was not mandated, but is OCIO’s way of helping the state address the deficit.

“Cutting dollars in IT doesn’t always end up having an added benefit,” McCarville said. “But we are trying very hard in modernization, which typically costs more money, to lower our expenses — but yet modernize and do all of these initiatives at the same time.”