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Professional services, systems integrators, security professionals, health IT software companies and large-scale technology service providers all stand to benefit from information technology spending in fiscal year 2011 and beyond, according to upcoming annual research on government spending.
The latest figures on IT budget requests for the federal government are $79.4 billion for fiscal year 2011, an increase of 7 percent over 2010 enacted levels, wrote Kevin Plexico, a senior vice president with Reston, Va.-based Input Research, in a recent analysis-view presentation on the federal market.
What is driving government spending on IT?
“Technology has been a way for the government to fill gaps in capabilities created by a limited work force,” said Plexico in an interview with eWEEK. “Budgets have increased, but the government does not have the work force to handle the increased workload that those increases have entailed, so they turn to technology. Technology has become a critical part of the way government functions, whether it’s basic government operations (e.g., payroll, financial management, etc.) to meeting increasing and more complex mission goals (e.g., cybersecurity, health care, etc.)”
Hardware, according to Input’s research, is the area of IT seeing the least amount of growth at only 3 percent over five-year compounded rates. Compared with IT services at 7 percent over five years, the money appears to be headed toward specialization that takes advantage of reducing long-term costs while increasing flexibility and usability.
The federal government’s short-term goals include data center and hardware consolidation, increasing the quality of information security, and showing as much transparency and accountability as possible with the use of social and Web-based technologies. Longer term, the U.S. government is focusing efforts on adopting stronger health care technology practices, boosting a green economy in renewable energy, establishing smart grids and enhancing the manufacturing of advanced battery technologies, according to Input Research’s Plexico.
“IT Services (Prof Services, SI, and Outsourcing) segments continue to be the strongest market segments, followed by Software,” wrote Plexico. “Drivers for IT services include Data Center consolidation and optimization, cloud computing, SOA, and healthcare reform, in addition to the ongoing human capital challenges the fed faces to meet the ever-increasing scope of government and the redefinition of areas that are considered ‘inherently governmental.'”
The budget, however, does not represent increases for every department in government. Some, like the Department of Homeland Security, the Commerce Department and NASA, will be experiencing IT budget decreases. NASA is seeing the “[l]argest decrease from Space Operations ($75M) and $50m decrease in IT development related to Space Station,” wrote Plexico. The Commerce Department will see the largest decline in IT spending, at 63 percent less than fiscal year 2010. The largest technology spend increases will be in the Department of Education (33 percent), Housing and Urban Development (25.4 percent) and the Department of Defense (7 percent).
Job losses at NASA are expected for some 6,000 contractors in the Houston area after changes to some NASA programs, including the Constellation Program and the end of the space shuttle program, according to an article by The Houston Chronicle.
Earlier this month, an injection of $144 million went to colleges, universities, medical centers and major research centers for adopting meaningful use technology practices from the Health and Human Services, reported eWEEK.