Report: Government IT spending will remain strong in 2008

“We predict that there will be accelerated investment in 2008, but the five-year overall U.S. IT government spending picture will remain relatively flat,” said Teresa Bozzelli, chief operating officer and managing director of Government Insights.

Government Insights’ IT forecasts are from its recently issued “Worldwide Government 2008 Top 10 Predictions” report.

In a webcast announcing Government Insights’ forecasts, Bozzelli estimated that worldwide government IT spending would reach $161 billion in 2008. Governments in the United States, she noted, would account for about $73 billion, or 46 percent of that global IT spending.

Bozzelli estimated that government IT spending in the United States and Europe was growing at roughly a 6 percent annual rate between 2008 and 2009.

Local IT spending projected to exceed state spending

In 2008 and 2009, Bozzelli sees local government IT spending in the United States exceeding IT spending by state governments. As recently as 2006, “local government spending on information technology was only half of spending by the states,” she said.

Bozzelli has observed a great deal of concentration in state government IT spending, “with just five of the states making up 25 percent of the spend.” The top IT spending states include California, Texas, New York, Florida, Michigan and Illinois.

Conversely, IT spending by local governments is both “very diverse and very diversified,” Bozzelli said.

“We do see local spend for this year really being driven by network and application updates,” Bozzelli noted.

Governments are tapping into the social networking phenomenon on the Internet, Government Insights Practice Director Thom Rubel explained in the webcast.

“You’ve got blogging and the YouTube factor on the Internet, and all of that information that in the private sector they are capitalizing on,” Rubel said. “YouTube was bought by Google for tremendous value, and really the customers are running the business. They are supplying all of the information. Governments are taking notice of that, and beginning to capitalize on the fact that, ‘Gee, we’ve got all this good information moving around among citizens; it’s time for us to take advantage of that, and to use it intelligently.”

In its report, Government Insights also predicts that:

• Infrastructure optimization and IT resource repurposing will replace solutions as the top government IT trend.
  
• “Gov 2.0” will replace “e-Gov” as governments seek to gain additional value from citizen interaction and business transactions.
  
• Continuing government security breaches will drive governments to invest in secure content management for mobility.
  
• The first substantial wave of the government work force retirement bubble will force governments to measurably broaden the use of telework and re-examine sourcing strategies.
  
• “[G]overnments will look to squeeze more value from enterprise resource planning, by making substantial investments to extend foundational capabilities to further integrate back-to-front office operations,” as Bozzelli put it.

For more information on the report, click here.