Digital governance can improve public service delivery, but meaningful transformation requires more than adopting new technologies. This study examines how local government innovation capacity shapes organizational adaptation and public service change in Makassar City, Indonesia. Using an exploratory qualitative case-study design, the study draws on in-depth interviews, field observations, and document analysis across regional apparatus organizations. The findings show a persistent gap between digital policy ambitions and the institutional readiness required for implementation. Dedicated coordination units have strengthened data governance, yet fragmented information systems, uneven frontline digital competencies, hierarchical routines, and weak cross-agency integration continue to constrain reform. Frontline reluctance to use new systems is interpreted not as simple opposition to technology, but as an adaptive response to fragmented procedures, limited training, and increased administrative workload. The analysis shows that durable digital reform depends on adaptive leadership, cross-unit integration, workforce development, and institutional arrangements that can survive political and organizational change. To reduce the risk of widening the digital divide, local governments should shift from fragmented, project-based initiatives to inclusive institutional capabilities that align technology with service needs and public value.