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Public sector spending on the rise

Public sector spending on the rise

Springboard analyst says SaaS providers and application developers can expect more business from Australian governments

Government IT spending will increase to $6.9 billion by the end of 2009 and reach $7.6bn by 2011, according to analysts.

The findings were released during a Springboard Research event titled Towards a Digitised Cloud Nation. According to Springboard Research country manager, Phil Hassey, government spending on IT had risen thanks to public stimulus packages and increasing service demands from Australians.

“It’s due to ongoing stimulus and an overall growth in public sector expenditure,” he said. “Having gone through each of the state budgets separately, we found them dipping into the pockets of the taxpayers [for IT] on a regular ongoing basis and that’s continuing.”

Hassey said recent government measures such as the Education Revolution and the National Broadband Network were “overweight” in IT components when compared to initiatives in previous years.

“Organisations are looking at cutting back on their core ‘keep the lights on’ IT, but I think agencies and the public sector are looking to invest in IT to provide a better citizen or business experience,” he said. The analyst added Australian public sector expectations were being driven by IT usage in the private sector.

“They’re trying to work out how to invest their IT budget in a marketplace with rapidly changing expectations,” Hassey said. “One of the key problems with the public sector is we all have the online experience now with our banking and car insurance. People expect that same level of service with all their online engagements.”

But despite the increase in spending, not all IT-related companies can expect a milk run. Hassey said the services and applications sectors were set to benefit the most.

“We’re going to see governments pushing down the software-as-a-service or cloud route,” he said. “Having attended several events with government agencies on the cloud, I can say they’re interested in it.”

Hassey also warned the strong acceleration in spending would not be permanent.

“I think there’s going to be a spike in the next two to three years. The government stimulus’ are still pouring through and they still have that mentality of expenditure,” he said. “The type of IT expenditure is going to change and evolve over time.”


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