Gartner Blog Network

Government IT Cost Containment at an Inflection Point

by Andrea Di Maio  |  January 25, 2013  |  Comments Off on Government IT Cost Containment at an Inflection Point

Government organizations around the world have been on a continuous path toward greater IT efficiency as a result of overall spending cuts and budget reductions driven by the economic and financial situation in most of the developed world.

An excellent report recently published by the UK National Audit Office shows that recipes for IT cost containment applied by the UK government, especially in the area of better and more consolidated procurement, are delivering the expected results.

There are jurisdictions where there is still a lot of room for improvement when it comes to IT cost containment: insufficient coordination and standardization, complexity and devolution of decision making processes, conflicts of interest or even corruption get in the way.

But in many places, and the UK is one of them, IT cost containment has been relentless pursued, and one might argue that government IT organizations both at national and local level are close to the bones and to not being able to reduce their costs any further. On the other hand spending projections for the next several years in the same jurisdictions indicate that more savings are expected through headcount reduction and other measures to bring down operational spending.

For them, a proportional cost reduction is no longer an option. In order to sustain citizen services and discharge their statutory obligation, they will be force to automate, transform and digitize much further. Although individual technologies become cheaper,  the simple magnitude of the digitization ahead is such that IT spending cannot decline any further.

This seems to be confirmed by some Gartner data (in particular Forecast: Enterprise IT Spending for the Government and Education Markets, Worldwide, 2010-2016, 4Q12 Update – client access required), where especially at state and local level, but also at national level (albeit a bit later), a decline in IT spending reduction and a return to growth around 2014.

After years when government  IT professionals were struggling to prove the value of IT, we may be at a point where their business colleagues finally understand.

However more IT spending does not mean more IT spending by the government IT departments. The use of consumer and commodity technology is likely to shift IT spending from the IT department to IT users.

Therefore, in order for that spending to really help cushion the impact of overall budget cuts rather than be wasted into multiple streams, it is essential for  government CIOs to become good shepherds: they must strike the right balance between what they need to control and what they can leave to their IT users to choose.

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: it-management  

Tags: cost-cutting  

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

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.