Estonia's digital state was supposed to be like a well‑fitting suit, but in reality it increasingly resembles a latex costume that squeezes in the wrong places, makes you sweat and constantly needs patching. It is presented as modern and desirable around the world, but the closer you look, the more the seams of the patched‑up areas stand out.

We were sold a dream of a lean state — less paper, fewer officials, less pointless bureaucracy. The digital state was supposed to be like a AAA+++ household appliance: gets the job done faster, uses less power and rarely needs repairs.

In reality, it has become a bulky machine that constantly needs a repairman, devours more and more money and does not give the sense that the state is simpler, slimmer or cheaper. Instead, the e‑state has added a new digital layer of fat on top of the physical state.

The state's digital fat layer

It is actually very difficult to get a reliable overview of Estonia's IT spending. I first took the state's payment records, which show detailed transfers from state institutions to various companies. Then I identified the names of IT firms that have participated in state IT procurements — around 80 of them. Next, using AI, I calculated how much money has been paid to these companies year by year. What follows still reflects only part of the state's IT spending; much remains hidden.

In 2023, the public sector paid privately owned IT firms more than €161 million and in 2024 already more than €171 million. But even this is only part of the picture, because the state has not reduced its own IT apparatus. On the contrary. In 2024, the seven largest state IT centers employed a total of 1,743 people.

The Ministry of the Interior's IT and Development Center alone had 412 employees; the Information System Authority 286; the Center of Registers and Information Systems 271; the Health and Welfare Information Systems Center 221; the State Information and Communication Technology Center 209; the Ministry of Finance's IT Center 188; and the Ministry of the Environment's IT Center 101.

If you add the tens of millions of euros in budgets for these institutions, a question arises that can no longer be politely swept under the rug: if the state is simultaneously expanding both its own IT centers and the volume of outsourced development, where is the savings for the taxpayer? According to the data I found, these seven major institutions accounted for roughly €187 million in the 2025 state budget.

If a family hires a cleaner, buys a robot vacuum, orders a cleaning service once a week and still ends up wiping the kitchen floor themselves, you cannot call that efficiency. You can only say that an expensive and self‑expanding system has formed around cleaning. Something similar has happened with Estonia's digital state.

A little bit trickles to the political parties too

What's especially telling is who receives the money paid to private firms. In 2024, the largest sum went to Nortal: €26.87 million. This means that a company associated with Priit Alamäe alone absorbed more money in one year than the entire operational budget of some smaller state institutions.

Helmes received €17.75 million that same year and Trinidad Wiseman €8.59 million. These two — both linked to Jaan Pillesaar — together collected more than €26 million. If you put Priit Alamäe's Nortal and Jaan Pillesaar's Helmes and Trinidad Wiseman on one line, the total exceeds €53 million.

Both Alamäe and Pillesaar have also stood out for donating money to political parties — though the sums are tiny compared to what they earn from state contracts. Alamäe has given a total of €278,000 to Eesti 200. In 2022, Pillesaar also gave €40,000 to Eesti 200, but later his favorite became Parempoolsed, which received €30,000 euros in 2023, €70,000 in 2024 and €40,000 last year.

Entrepreneurs often like to say that the state should interfere less in business and let them operate in peace, but in reality many companies depend directly on state orders for their existence. The intertwining between the state and such firms is no longer ordinary service procurement based on need, but a dependency relationship.

For example, more than 80 percent of Nortal's revenue in Estonia in 2023 came from the public sector. The state cannot simply replace major suppliers because the systems necessary for continuity are in their hands. But the companies themselves also get used to the idea that the state's money tap must keep flowing. This creates a situation where the external development partner is no longer just a service provider but almost like a neighbor in the same apartment building.

And the old bureaucracy does not disappear. It simply continues in a new form. A paper folder becomes a digital folder. A stamp becomes a digital stamp. A queue at the counter becomes a portal. A clerk's desk drawer becomes a database. Instead of an old procedure, there is a new user interface meant to give the impression that everything is different. In reality, nothing substantive has changed.

Expensive and failed information systems

Worst of all, despite the enormous spending, there has been no qualitative improvement — quite the opposite. The list of blunders keeps growing and these are not just technical mistakes but symptoms of a sluggish and inefficient system.

The most grotesque example of the misuse of taxpayers' money is the endless development of the Social Insurance Board's information system SKAIS2, which began sometime in the early 2010s. By 2022, SKAIS2 had swallowed €14 million according to Delfi and another eight million were spent on launching it — yet what was missing was a functioning system. At some point, the media grew tired of following this never‑ending "development"; the journalists who covered it probably changed professions, and some may have retired.

The latest trace of SKAIS2's existence in some incomprehensible form can be found in a press release published by the Social Insurance Board last November, which states that the plan is to carry out a generational change of the social sector's information system (sic!).

Now the discussion apparently concerns SKAIS3, although it is unlikely that anyone would dare present the project under that name anymore. The press release revealed that SKAIS1, introduced in 2000, is still in use and the creation of a new‑generation information system is beginning. Modern components originating from SKAIS2 are planned to be reused to save both time and resources. New millions will be spent.

During the development of SKAIS2, the ministers of social affairs — Margus Tsahkna (Eesti 200), Hanno Pevkur (Reform Party), Taavi Rõivas (Reform Party), and Jevgeni Ossinovski (Social Democrats) — tossed it around like a dead dog over a fence, blaming each other for the failure.

Bad and good digitalization

True digitalization means that the process itself becomes simpler. Fortunately, we do have such examples, like the e‑Tax Board. Bad digitalization means copying paper‑era thinking onto a screen. Too often, this is exactly what has been done in Estonia. No one has asked whether a particular application, approval, register, certificate or procedure is needed at all. Instead, a new form, a new information system, a new interface and a new procurement are created. This does not produce a leaner state — it produces a digital twin of the old one.

What makes this even more striking is that the major state IT centers have themselves become mini‑ministries inside ministries. They have their own management chains, their own internal processes and their own need to justify ever more new projects. When tens of millions are simultaneously spent on outsourced development, it becomes impossible to seriously claim that technology has helped reduce administrative costs. Instead, technology has become one of the forms through which bureaucracy proliferates.

What do we gain from all this?

The taxpayer usually does not experience any of this as convenience. They see a new login, a new portal, a new error, a new message saying the system is under maintenance. They live with a state that was supposed to become invisible but has instead moved onto the screen of the phone in their pocket — and is even more irritating than before.

In this sense, the digital state increasingly resembles a relationship that was supposed to be passionate and liberating at first but has become controlling and expensive. In the end, a person finds themselves in a situation where they pay for everything and are still told they must endure a little longer because the next development will definitely make things better.

Digital signing may have seemed impressive 20 years ago, as did many other old stories that are still sold to us as success.

In 2026, instead of endlessly adding new IT layers, we should ask which state IT investments in the past five years have actually reduced officials' workload. Which have measurably shortened processing times? Which have allowed the closure of an old system, the elimination of a duplicate requirement or prevented the need to create a new job?

If there are no clear answers to these questions, then we are not building a more efficient state — we are feeding a money‑devouring digital parasite.

Too much money in Estonia is spent giving old bureaucracy a new latex costume, new makeup and a new marketing story. If the digital state does not make the state cheaper, simpler and easier to understand, then it is no longer a success story. It is an expensive affair whose bill always lands on the taxpayer. It is not innovation — it is simply an expensive dependency that makes us poorer.

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