Analyst: No quick wins from NBN and budget

The 2009 budget is tough but fair on ICT with ample business opportunities, according to Intermedium’s head of consulting, Kevin Noonan.

“I think it’s an extremely tight budget and it’s a budget appropriate for the times that we’re in. For ICT, I think there are opportunities there but companies just need to focus…the budget is certainly not opening up major new areas of investments that were previously unknown,” he said.

Noonan claimed the biggest ICT cuts this year would be from the slashing of business as usual (BAU) funds as a result of changes implemented under the Gershon review.

“There will be significant cuts in the order of 15 per cent to government agency’s BAU and that has come through in the budget papers…government agencies aren’t buying till their purchasing regime is clarified… we expect it to take another year,” Noonan said.

According to a media release from the Minister for Finance and Deregulation, Lindsay Tanner, the cuts to BAU funds equate to “annual savings totalling more than $100 million to reduce their business-as-usual Information and Communication Technology (ICT) expenditure”.

“The good news is that half of that money is going into a reinvestment fund for new whole of government strategic projects…an important thing for IT companies is to start thinking about and positioning themselves for that fund,” Noonan said.

Despite plans for a $43 billion NBN, most ICT companies would not see any financial benefits for at least six to nine months, he said.

“Companies that are looking for business out of the NBN will be disappointed and must see this as a strategic initiative and need to develop their marketing strategies,” Noonan said.

Fortunately, it’s not all bad news, with existing fibre suppliers and NBN policy framework consultants likely to be in hot demand.

“We are seeing some opportunities, and those opportunities will need to be looked at from an agency to agency basis. The sales method for ICT companies must change…they will need to be quite clear of the effects of the budget at an agency level,” Noonan said.

The massive funding boost given to the Department of Defence in response to its Defence White Paper is also set to boost ICT thanks to funded plans for datacentre consolidation.

“This is more work that’s required to do the consolidation, there is potential for savings for Defence by upgrading its hardware to look more at virtualisation of processes and storage, so these are all sales opportunities now,” he said.

While the analyst acknowledged many ICT companies that dealt with government agencies would feel the pinch, he contended the budget was as good to the industry as possible.

“They [the Federal Government] understand the strategic benefit of ICT perhaps more than previous governments. However, they are seeing their investments as tightly focused and strategic – they are not looking at opening the purse strings,” he said.

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