Billion-dollar boom forecast for govt IT spend

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Joseph Brookes

Australian governments are forecast to spend more than $6.4 billion dollars next year on IT services like consultants, managed services and cloud infrastructure, as part of a near double-digit rise in the growth of overall IT expenditure.

Advisory firm Gartner on Wednesday released its 2022 government IT spend forecast, predicting Commonwealth, state, territory, and local governments in Australia will spend $15.5 billion on IT in 2022, an 8.8 per cent or $1.2 billion leap on this year.

Canberra Parliament House
Gartner has forecasted a $1.2 billion increase in government IT expenditure next year.

This includes $6.4 billion on IT services and a further $4.7 billion on software, the two largest and fastest growing areas of IT expenditure by Australian governments, which together will account for 72 per cent of IT spending in 2022.

The jump is being driven by a slew of digital projects, including the federal government’s $1.2 billion Digital Economy package, as Australian governments try to catch up to global counterparts by modernising systems and forming a clearer view of citizens across different services, according to Gartner vice president, executive programs, Brian Ferreira.

“Government has to modernise their landscape. That’s the biggest issue,” Mr Ferreira told InnovationAus.

“They’ve been underspending in technology, and suddenly now that COVID has created chaos in our lives they want all of these technology capabilities. Now they are finding themselves behind the curve.”

The modernisation acceleration is driving the forecasted jump in software and IT services spend, Mr Ferreira said, but governments are also looking at ways to get a more holistic view of citizens to deliver linked up services through a “case management” approach rather than as individual agencies or services.

“If you look at how things are handled at border control and trying to see if people are vaccinated, how do they cross the borders – case management has become one of the biggest gaps in government end to end,” Mr Ferreira said.

The federal government has spent years and $460 million on a controversial digital identity scheme designed to address the service fragmentation issue, including handing a single consultancy firm more than $54 million dollars to work on the program which will be widened to the states and private sector next year.

Mr Ferreira, who advises large public sector clients including federal agencies, said a digital identity system is fundamental to the case management approach to service delivery.

“If you don’t have some of the end-to-end case management use cases out and digital identity, you can modernise until you’re blue in the face [but] you’re not going to get it right.”

Cyber security is also driving the growing IT spend, Mr Ferreira said, particularly with new powers allowing governments agencies and law enforcement to monitor and alter citizens’ communications, and the threat of foreign interference.

“With that legislation now being available, I think we’re going to see probably a lot of spend going into the cyber space. I think the government is worried about that,” Mr Ferreira said.

The trend by Australian governments to outsource technology work will continue because of talent gaps and staffing caps, which Mr Ferreira said often leave agencies with little choice but to outsource.

“Government still has old models of how many [full-time employees] an agency can have… the headcount model in government hasn’t adjusted yet for digital,” Mr Ferreira said.

“And for some of the more advanced things they just don’t have the skills, and they can’t attract the skills locally.”

The growing importance of technology to deliver digital services means governments’ IT expenditure will continue to grow, he said.

“You can’t cut IT spend if you want to go digital, it’s going to cost you more [eventually]. You’ve got to find the business case in the citizen value, or efficiencies or operating expenses. You just can’t cut IT further if you want to go into digital.”

In 2019, a review of the Australian Public Service recommended an “urgent” audit of IT spending after discovering a lack of oversight. The audit was accepted by the government but only began this year.

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1 Comment
  1. Digital Koolaid 3 years ago

    It’s common knowledge, and well researched, that public sector projects fail to deliver in huge numbers. You know this because you read the proceedings of Senate Estimate, don’t you? The APS goes to massive effort to answer nothing. It is brilliant at avoidance, obfuscation, misrepresentation and “thank you for your question Senator, which I will take on notice.” If that fails then pure arrogance will be OK. Just suck it up Senator. So, why don’t the inept, unskilled, naive and uneducated APS get a few $Billion more to waste? It was fun wasting the last $Billions for no outcomes. Let’s waste some more for a few more nothings. “You can’t cut IT spend if you want to go digital” ????? The more you spend – the more you save ???? Consultants must think they died and went to heaven. There really is a money tree. You ….

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