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Government Tech Spending to Reach $565.7 Billion

Government leaders must grasp new opportunities resulting from the global COVID-19 pandemic and economic recovery, changing political demands, and digital transformation expectations. Thinking ahead, CIOs should design new flexible business, operating, and talent retention models.

Meanwhile, worldwide government IT spending is now forecast to total $565.7 billion in 2022 — that’s an increase of 5 percent from 2021, according to the latest survey and global market study by Gartner.

“The last few years of enduring pandemic challenges have mobilized a wave of digital transformation activities in government organizations across the world,” said Daniel Snyder, director analyst at Gartner.

Government IT Services Market Development

Gartner analysts believe that governments are executing innovative activities by harnessing business technology to streamline digital services, advance automation processes, and evolve citizen services.

In 2022, government IT spending is forecast to increase across all business technology segments, except internal services and telecommunication services.

Continuing the trend from 2021, Gartner says that application software is forecast to record the strongest growth across all government segments during 2022.

As legacy modernization continues to be a priority in government organizations, growth in the traditional data center systems segment will continue to slow throughout the forecast period.

Governments invest in critical application software that directly supports end-user solutions, driving strong growth in this segment. However, spending on telecom services is set to decrease in 2022 as governments reduce spending on expensive legacy systems in favor of new delivery models.

According to the Gartner assessment, anything-as-a-Service (XaaS) is gaining popularity across government organizations as it provides a better return on investment, normalizing IT spending over time and making budgeting for IT more predictable while avoiding the accrual of technical debt.

Gartner predicts that by 2026, most government agencies’ new IT investments will be made in XaaS solutions. Moreover, cloud-based Digital Services innovation is a top priority for many governments.

“The pandemic sped up public-sector adoption of cloud computing solutions and the XaaS model for accelerated legacy modernization and new service implementations,” said Snyder.

Fifty-four percent of government CIOs responding to the 2022 Gartner CIO Survey indicated that they expect to allocate additional funding to cloud computing platforms in 2022, while 35 percent will decrease investments in legacy infrastructure and on-premises data center technologies.

Outlook for Government IT Applications Growth

Gartner notes that with ongoing IT talent challenges facing many organizations, XaaS potentially makes it easier for government organizations to find the right talent via XaaS operating models.

XaaS delivery models require different internal IT skill sets and place less demand on the organization to develop or acquire emerging IT skills, which are often hard to find and difficult for governments to afford.

That said, I anticipate that more government CIOs and CTOs will need to adapt their capabilities to better support the forward-thinking agencies that will continue to offer flexible working models for their employees.

The expansion of distributed workforce models creates demand for Digital Workspace solutions that empower employees to securely work from anywhere on any device, and with all the apps they need to access in the data center or in the cloud.

Originally published at https://blog.geoactivegroup.com on July 11, 2022.

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David H. Deans

David H. Deans

Technology, Media, Telecom analyst, consultant, columnist