IT Consolidation Will Drive Worldwide Government IT Investments in 2007 - Report

Government Insights, an IDC company, predicts that global IT consolidation will heavily influence the direction and magnitude of worldwide government information technology (IT) investment for 2007.

After speaking with various levels of government leaders, technology vendors, consultants, and government services contractors regarding business drivers and technology trends, Government Insights released its predictions that will shape the future of government IT investments in the coming year, and cited IT consolidation and standardization as the top global trend.

"The government market, with over $150 billion targeted for technology spending in 2007, is among the top three vertical industries worldwide," says Teresa Bozzelli, chief operating officer and managing director of Government Insights. "With a $9.1 billion dollar increase in technology investments from 2006 to 2007 and a compound annual growth rate projected at 4.1% through 2010, this is both a high-value and high-growth industry that is typically less volatile that many other IT industry markets."

"However," adds Bozzelli, "with over half of the U.S. federal government's expenditures allocated to entitlement programs, 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."

This Government Insights study states that 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 coordination 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 behavior.

"In response to these key market drivers, government organizations are pursuing strategies and changing behaviors to maximize IT investment values and adapt to the constraints and opportunities they present," says Bozzelli.

Top predictions included in this study include:

1. Governments will pursue standardization and consolidation. Though the prioritization of resources being consolidated will differ by region, this trend continues to be driven largely by the global movement to reduce operational costs and increase government value through improved service delivery. Government organizations will pursue this path because they recognize that integrating applications, systems, and processes will improve interoperability, operational effectiveness, and utilization of the technology infrastructure that serves as the foundation for measurable government outcomes.

2. Information sharing and interoperability will drive improved government service delivery, but also call for new business and decision-making models to maximize IT value.

3. Government will create new procurement models and strategic sourcing strategies. New collaborative business processes will drive government organizations to create new procurement models and strategic sourcing strategies that focus on the total value of IT solutions to desired business outcomes.

"Each technology program must be defined, justified, managed, and measured within the context of citizen-centric, value creation," says Bozzelli. "Governments will pursue standardization and consolidation to maximize 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.