Report: Consolidation trend to drive government IT purchasing

Government Insights predicts that global IT consolidation will heavily influence the direction and magnitude of worldwide government information technology investment for 2007.

The research and consulting firm came to its conclusions after speaking with various levels of government leaders, technology vendors, consultants and government services contractors regarding business drivers and technology trends.

"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 percent through 2010, this is both a high-value and high-growth industry that is typically less volatile that many other IT industry markets," Bozzeli said.

More than half of the federal government's expenditures are allocated to entitlement programs and increased costs of wartime and disaster relief, so technology budgets will receive increased scrutiny in the upcoming budget cycle, the study said.

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 study said. The private sector will increasingly rely on government to assure security and continuity through improved communications and coordination across governments.

The study's top predictions are:

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