State and local IT spending on the rise

After a dry spell, governments look to technology

When California consolidated several agencies into a central information technology department this summer, Gov. Arnold Schwarzenegger said it was an important step toward bringing the state's technology structure into the 21st century.

"Californians deserve to have a government that serves them effectively and efficiently, and this reorganization is an important part of accomplishing that goal," he said. "I look forward to working with the legislature to improve and modernize state government so that it better serves Californians."

Market analysis firm Datamonitor recently issued a report that reinforces the governor's view. After several years of IT budget cutbacks, state and local IT spending is on the rise again, said Kate McCurdy, Datamonitor's public-sector technology analyst. Spending will increase from $55 billion in fiscal 2004 to $62.4 billion by fiscal 2009.

Specifically, the report predicts that technology spending at the state level will increase from $27.8 billion to $33.5 billion, while local government spending will rise from $27.2 billion to $28.9 billion.

"One thing that I think is definitely a positive trend [is that] state and local governments are really looking to transform themselves — to become more efficient — and technology is a way to do this," McCurdy said. "It's a matter of both becoming more efficient and serving the constituents better."

She said IT spending will shift away from hardware and networking equipment to software and services because of falling hardware prices, efficient IT services, savings from enterprisewide systems and growing interest in e-government. She said state and local officials are trying to meet constituent demands for round-the-clock access to government services.

Half the IT spending will go toward health and human services — specifically for Medicaid management information systems — and public safety and justice programs, she said.

"There's a lot of technology spending going toward first responders," McCurdy said. "They want them to be able to communicate with each other and communicate with other levels of government."

Governments will also focus spending on transportation, education and general government, such as tax and revenue services.

Additionally, she said many local and state governments, including California's, are consolidating technology purchasing and operations into centralized offices to improve efficiency and reduce costs. The strategy could also shield IT offices from political agendas.

"State and local governments are looking to make central IT offices part of institutional change so they're not connected to one person," McCurdy said. She didn't know how many state and local governments are taking that approach, but she said it's definitely a trend.

In another trend, state and local governments are outsourcing major projects or even entire IT functions. They see outsourcing as one way to meet the challenge of an aging public-sector workforce whose members will soon retire in large numbers, she said.

Rather than outsource all IT functions, McCurdy said the trend would likely be toward outsourcing short-term projects because they're easier to accomplish.

Alan Shark, executive director of the Public Technology Institute, a nonprofit group that works on technology issues with cities and counties, said he found out during conversations with chief information officers that local governments were planning to spend more on IT before Hurricane Katrina hit. The storm's devastation might spur governments to spend more on IT, especially on communications.

"I think that what just happened and the magnitude of what just happened is a wake-up call for all governments of all sizes, and I think we're going to see a greater increase in spending," Shark said.

He said the increased spending will not only benefit first responders but also all local governments because "they're the ones who have to worry about transportation, relocation, communication [and] housing."

Follow the money

Datamonitor, an independent market analysis company, released a new report that predicts:

  • State and local information technology spending will grow from a combined $55 billion in fiscal 2004 to $62.4 billion by fiscal 2009.
  • State IT spending will rise from $27.8 billion to $33.5 billion.
  • Local IT spending will increase from $27.2 billion to $28.9 billion.
  • Investments will shift from hardware and networking equipment to software and services.
  • Investments will focus on public safety and justice, health and human services, general government, transportation, and education.
  • Governments will consolidate their purchasing and operations into central technology offices to reduce costs and improve efficiency and customer service.

— Dibya Sarkar

NEXT STORY: 9/11 remembered...

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.