Gartner Blog Network

Should Governments Spend More or Less on IT?

by Andrea Di Maio  |  August 3, 2011  |  4 Comments

Just yesterday a last-minute agreement has been found to prevent the US from defaulting on their debt, while Europe is still swept by increasing financial worries triggered by the situation in Greece and Ireland, which may spread to other countries too. Sluggish economic growth and the need for formidable reductions in public spending will pose major challenges to both policy makers and government executives for the foreseeable future.

In recent posts I have covered the importance of becoming smarter at using dollars spent on IT, but the debate on the critical value of IT during difficult times continues. I’d like to quote excerpts from a conversation involving a number of analysts, where different viewpoints have emerged. As usual for Gartner blogs, the statements in this post do not constitute established Gartner positions, but just offer an insight on different viewpoints: it is the very process of comparing and contrasting these positions that leads us to the positions that we share and base our client advice upo

Point: IT spending should be increased

“The portion of government spend on IT over the next three years along with the total spend on IT services should increase, and perhaps dramatically, rather than be cut.
This because it will continue being an elastic good (where total demand increases as unit costs fall) and that will remain true mostly because it is the prime catalyst for the productivity improvements desperately needed to close budget gaps.”

Reinforcing the point: IT spending should be increased and business savings reinvested in IT

“Indeed total IT budgets should be preserved (or even increased) despite ongoing budget constraints, if government is to become either “smart” or able to “do better with less”. Line items and cost centers should be reallocated within IT budgets to reflect different sourcing options and/or accelerate consolidation initiatives or shared services capabilities. But to seek overall reductions in IT and expect that somehow government will magically become more efficient and effective in the short term is naive or worse.
Reinvesting back into IT budgets a portion of any savings that result of increase IT-driven business efficiencies is essential to ensure the ongoing acquisition of modern IT products and services while inoculating against the obsolescence of IT in the future”

Counterpoint: Challenges ahead require radically new approaches to IT to spend less and create business savings

“The position that suggest a relation between increased IT spending and overall productivity increase is well established. CIOs, vendors and analysts – although with a very different spin – have been claiming this for quite some time and there is anecdotal evidence that IT creates public value. On the other hand, for how naive it might look like, a position advocating both increased impact and reduced IT cost is both controversial and interesting to explore.
There are many ways IT can become more transformative and cost less. Clever use of public cloud, crowdsourcing, citizen developers, engagement of smaller suppliers, PPPs are all steps in that direction.
This is one of the discontinuities that we should explore to help clients deal with the “new normal’ of furloughs, debt defaults and financial crises.”

Our debate will continue for a while, and we may even bring it on stage at one or several of our future events, as well as report its outcomes in future research notes.

It would be interesting to hear from a broader community, including this blog’s readers, what is the sentiment about this point-counterpoint.

Which side are you on and why?

Additional Resources

View Free, Relevant Gartner Research

Gartner's research helps you cut through the complexity and deliver the knowledge you need to make the right decisions quickly, and with confidence.

Read Free Gartner Research

Category: smart-government  

Tags: cost-cutting  government-20  

Andrea Di Maio
Managing VP
19 years at Gartner
33 years IT industry

Andrea Di Maio is a managing vice president for public sector in Gartner Research, covering government and education. His personal research focus is on digital government strategies, open government, the business value of IT, smart cities, and the impact of technology on the future of government Read Full Bio

Thoughts on Should Governments Spend More or Less on IT?

  1. Such a general question IMHO is meaningless (because circumstances differ); but since you are asking, my reply is: During imminent government spending cuts IT budgets will suffer, so spending more (or the same amount) is not really an option at the moment 🙁

  2. […] Should Governments Spend More or Less on IT? Source: […]

  3. […] is crucial to face all this, and we would all wish this to be reflected in budget decisions (see earlier blog post). However, this does not seem to be […]

  4. […] is crucial to face all this, and we would all wish this to be reflected in budget decisions (see earlier blog post). However, this does not seem to be […]

Comments are closed

Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes, with attribution to Gartner. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.