Government IT spending to increase by US$9.1bn – IDC


4 Jan 2007

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Spending by governments worldwide on IT systems is projected to rise by US$9.1bn in 2007 to reach US$150bn and will continue to grow at a rate of 4.1pc a year until 2010, the latest report from IDC has claimed.

However, governments will also be scrutinising their IT investment decisions to ensure better return on investment, the report finds.

The latest Government Insights report from IDC cites IT consolidation and standardisation as the top global trend in government.

Teresa Bozzelli, managing director of Government Insight at IDC, said that the government market for IT is among the top three vertical industries worldwide.

“With a US$9.1bn dollar increase in technology investments from 2006 to 2007 and a compound annual growth rate projected at 4.1pc through 2010, this is both a high-value and high-growth industry that is typically less volatile that many other IT industry markets.

“However,” Bozzelli continued, “with over half of the US federal government’s expenditures allocated to entitlement programmes and increased costs of wartime and disaster relief, technology budgets will receive increased scrutiny in the upcoming budget cycle, particularly as priorities begin to shift after the recent elections.”

IDC says that government IT spending will continue to be a priority to the extent that it drives or holds down operational costs and improves service delivery to government constituents including citizens, businesses, and government partners.

The private sector will increasingly rely on government to assure security and continuity through improved communications and co-ordination across governments.

An additional market driver cites intense executive and legislative review for technology investment and management decision accountability in demonstrating value.

Also, new business models including collaborative service delivery and technology disruptions, such as open source software, service-oriented architecture and enterprise resource planning, are impacting government behaviour.

“In response to these key market drivers, government organisations are pursuing strategies and changing behaviours to maximise IT investment values and adapt to the constraints and opportunities they present,” said Bozzelli.

Governments will also create new procurement models and strategic sourcing strategies.

New collaborative businesses processes, IDC said, will drive government organisations to create new sourcing strategies that focus on the total value of IT systems to meet desired business outcomes.

“Each technology programme must be defined, justified, managed and measured within the context of citizen-centric, value creation,” explained Bozzelli.

“Governments will pursue standardisation and consolidation to maximise value from these efforts.

“Vendors must increase their understanding of government interoperability as it evolves, as well as the appropriate technologies, services and partnering strategies that will help governments achieve this universal government priority,” she added.

By John Kennedy