Hungary’s Digital State Transformation: From Centralised Procurement to AI-Enabled Public Governance

​

The Legacy of State IT Procurement in Hungary​

​

Over the past fifteen years, public-sector IT development in Hungary has become far more than a matter of technology. It has become one of the most significant areas of public spending. The Hungarian state operates a wide range of central systems covering citizen administration, healthcare, education, taxation, transport, public benefit payments and administrative document management. In principle, these systems should have made the state faster, cheaper, more transparent and easier to use. In practice, however, publicly available reporting suggests that this was often not the case.

Many public-sector IT developments were implemented through centralised procurement structures, where a limited number of major suppliers and framework agreements determined what public institutions could purchase, from whom and at what price. In theory, such a model could have delivered economies of scale and lower costs. In practice, several investigative reports suggest that public institutions often did not obtain IT products and services more cheaply through these centralised mechanisms. In some cases, centrally procured prices appeared to be higher than, or at best comparable to, open-market prices. This indicates that centralisation did not necessarily produce innovation or efficiency; instead, it often created a costly, rigid and supplier-driven procurement structure.

The problem was not limited to pricing. It was also visible in the quality and usability of the systems delivered. After several large-scale public IT projects, users encountered slower administration, system errors or temporary service disruptions instead of faster and more efficient services. For example, after the introduction of a major new IT system at the Hungarian State Treasury, media reports suggested that several administrative processes became slower and case backlogs emerged. The data protection and cybersecurity scandal surrounding the KRÉTA platform, used across the Hungarian education system, also demonstrated that even nationally critical systems did not always rest on sufficient technological and cybersecurity maturity.

A particularly illustrative example is the case of the state document management system, where the mandatory introduction of an ostensibly free software solution may have generated costs of tens of billions of forints for the public sector. This shows that, in public-sector digitalisation, the main cost is often not the software licence itself, but the total cost of mandatory rollout, integration, support and supplier dependency. The user experience of Hungarian public IT systems has often fallen short of what citizens should expect from a modern digital state. Citizens have frequently faced difficult interfaces, complicated identification procedures, over-administered processes and periodic system outages.

For this reason, Hungary’s public-sector IT problem should not be described simply as the use of “old technology”. A more accurate diagnosis is that the system often failed to operate in an innovation-driven, user-centred and performance-based way. A new political and administrative era may create an opportunity to rebuild public IT development around open competition, auditable costs, modular architecture, stronger cybersecurity and genuine user value. This is particularly important for the introduction of AI-based government solutions, because artificial intelligence should only be built on public infrastructure that is transparent, secure, interoperable and genuinely service-oriented.

​

The Political Turning Point and Its European Significance

​

The victory of the TISZA Party and the formation of a new Hungarian government may represent a turning point not only for Hungary, but also for Europe. For more than a decade and a half, Hungary operated under a highly centralised, politically dominated system frequently associated with allegations of corruption. If the new government is able to dismantle the closed networks built around public spending, this would not simply amount to a change of government. It could become a process of systemic institutional renewal.

The international significance of this change lies in the fact that Hungary had long been regarded as one of the most prominent examples of an “illiberal state” within the European Union. If, after such a period, the new government rebuilds rule-of-law institutions, strengthens anti-corruption mechanisms and creates a more transparent public procurement system, it could set an important precedent for the entire European Union. It would demonstrate that democratic institutions, even after serious deterioration, can still be repaired through electoral, institutional and legal means.

A more Western-oriented and EU-compatible Hungarian government could also make European decision-making more effective. In recent years, Hungary often played a blocking or delaying role in strategic EU matters, especially in relation to Russia, Ukraine and the unity of the European Union. A shift in Hungary’s foreign policy orientation could therefore have significance beyond Hungary’s borders, because even a relatively small EU member state can exercise disproportionate influence when it holds veto power in strategic European decisions.

The real transformation, however, would not lie in the political change alone, but in the reorganisation of how the state functions. Hungary now has an opportunity to move from a public-sector model burdened by corruption, high costs and often outdated administrative practices toward a new type of digital state. This would not merely mean IT modernisation. It would require a deep rethink of public procurement, state data assets, public services and the use of artificial intelligence in government. The true international relevance of the Hungarian case is not that Hungary will become a great power, but that it may demonstrate how a poorly functioning, corruption-affected state system can be placed on a new trajectory through democratic, technological and institutional reform.

​

Zoltán Tanács and the Strategic Reform Agenda

​

Zoltán Tanács, Hungary’s Minister for Science and Technology, may play a key role in this transformation. He is a management and IT consultant, as well as a digitalisation expert, with more than 25 years of professional experience in public administration, information security, technology development and organisational transformation projects. His career has included work in Hungary and in international environments, including Europe, the Middle East and Africa.​​

​

​

​

 

 

 

 

 

 

 

 

 

 

 

 

​

His professional background is not that of a traditional politician. It is rooted in management consulting and digital transformation. For many years, he worked at IFUA Horváth & Partners, where he gained significant experience in organisational development, digitalisation, IT and public-sector transformation projects for large institutions. He has worked with ministries, municipalities, universities and corporate leaders, giving him practical insight into the operational challenges of public administration, large institutional systems and digital transformation.

Within the TISZA Party, Tanács first emerged as a leader responsible for programme development and preparation for government. In that role, he contributed to the professional preparation of the “Functioning Hungary” programme. As minister, his portfolio brings together several strategically important areas: digitalisation, state data assets, innovation, science policy, research and development, the startup ecosystem and cybersecurity. This combination is highly relevant because the modern state can no longer be separated from data governance, IT infrastructure, cybersecurity and innovation capacity.

At the centre of Tanács’s professional vision is the creation of a more service-oriented, simpler and more user-friendly digital state. One of the key elements of this agenda is the restructuring of state registries and data systems. Hungary has more than one thousand public registries, but these systems are often poorly coordinated, insufficiently interoperable and difficult for citizens to use in practice. A genuinely modern digital state is not defined by the number of systems it operates, but by whether those systems can be securely connected, transparently governed and presented to citizens as simple, reliable services.

Another priority is the review of public-sector IT procurement, especially framework agreements where concerns have been raised about corruption, overpricing or poor efficiency. Tanács’s approach suggests that reforming public IT is not merely a technological task, but also an institutional and operational one. It requires more transparent procurement, auditable costs, safer systems and developments that create real value for users.

A further important area is cybersecurity: strengthening the protection of state systems, investigating data leaks and security incidents, and rethinking the relevant regulatory and market-supervision frameworks. In parallel, Tanács also places emphasis on science, research and development, innovation and the startup ecosystem. His strength is that he does not enter government as an empty political figure, but with substantial consulting, public-sector transformation, digitalisation and IT project experience.

​

Why This Matters for AI-Based Government Transformation

​

The Hungarian case is particularly relevant for AI-based public-sector transformation because artificial intelligence cannot be successfully introduced into a dysfunctional administrative environment merely by adding a new technological layer. If legacy systems are fragmented, procurement is opaque, data assets are poorly governed and public interfaces are difficult to use, AI will not solve the underlying problem. It may even amplify existing inefficiencies.

For AI to create real value in government, the state must first establish the institutional and technological foundations of modern digital administration. This means transparent procurement, reliable data governance, interoperable systems, strong cybersecurity, modular architecture and services designed around real user needs. Without these foundations, AI risks becoming another expensive layer added to an already inefficient system.

Hungary’s potential opportunity lies precisely in the fact that political change, public-sector reform and technological transformation may now converge. If the new government is able to combine anti-corruption reform with digital state-building, Hungary could become a valuable test case for the wider European public sector. The goal would not be to replace public administration with AI, but to use AI responsibly to make the state more accessible, faster, more transparent and more accountable.

The central challenge will be execution. Strategic vision alone is not enough. Institutional resistance, entrenched supplier networks, legal constraints, fragmented data systems and cybersecurity risks can all block reform. The success of Hungary’s digital transformation will therefore depend on whether the new government can translate its reform agenda into disciplined implementation: clear audits, transparent tenders, enforceable standards, measurable service improvements and a public administration that genuinely serves citizens rather than its own internal bureaucracy.

​

Zsigmond Varga

​

​