IT spending to rise despite budget tightening, analyst predicts

Federal spending on information technology is expected to rise at a compounded annual growth rate of more than 5 percent annually over the next five years, according to a new report.

The market research firm INPUT predicts that the IT sector is poised for growth even in a time of government belt tightening. This is partly because the Obama administration has directed agencies to explore IT solutions as a way to identify budget cuts in other areas, said John Slye, one of the INPUT report’s authors.

“Where we see downward pressure on budgets as a whole we see upward pressure on IT budgets to help them achieve the mission,” Slye said.

Spending on IT will dip slightly in fiscal 2011 to $93.6 billion from $95.4 billion, then rise steadily to $122 billion by 2015, INPUT predicts.

Much of the spending will be on contracts. INPUT sees contracting dollars potentially rising from $85.8 billion in fiscal 2010 to $111.6 billion in 2015, a 30 percent increase.

Deniece Peterson, another author of the report, said INPUT is more optimistic than it was last year, when the company projected a five-year growth rate of less than 4 percent.

Cloud computing and cybersecurity are two areas where spending may be concentrated. The report surveyed federal employees and found that 67 percent expect to see “new or increased focus” in their agencies on cloud computing, and 62 percent on cybersecurity.

IT will also be crucial for agencies to fulfill the Obama administration’s focus on transparency, Slye said.

Slye said IT vendors are worried about federal budget cuts and stricter government oversight of their performance.

“There’s a sense of uncertainty we’re hearing from contractors,” he said. “We’re really telling people, look, don’t panic, your market’s not going away.

Full article By Tom Spoth, Federal Times