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Government software sales hit record high

Analyst warns against expecting similar result by the end of this financial year

Government software sales reached a record high in 2008/2009 financial year, but resellers are being warned not to expect similar figures this year, according to an analyst.

Total government spend on software reached $626 million in the previous financial year, according to Intermedium director, Judy Hurditch.

“There were two key reasons for that," she said. "There was a very large licensing deal at the Department of Defence with IBM for $269m. Then there was our ability to record Microsoft sales in the market. They had previously been hidden.”

Hurditch said the commercial strength of Microsoft software would continue to help resellers land sales in the government market. She cited Data#3 as an example and how it had scored significant deals.

“It’s cyclical and it will take some time before we see agencies procure such large single software deals,” she said. “But we’ll continue to see quite a bit of Microsoft whole-of-government activity because it's a fundamental component of all agency operations.

Hurditch expects to see the market return to normal levels around the $300-400m per annum mark.

The trend of government seeking major deals was set to lessen reseller opportunities and impact on sales, Hurditch warned.

She expected whole-of-government deals to reduce the unit cost of software licences. However, there were still some positive forces at play for smaller businesses, Hurditch said.

“Balancing that out is the fact that increasingly commercial off-the-shelf software is acquired instead of agencies doing their own internal bespoke development," she said. “Nimble resellers who understand what Government is looking for and understand the value proposition will always do well in this space if they’re representing credible software solutions.”

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More about: Data#3, Department of Defence, IBM, IBM Australia, Microsoft

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