A/NZ Govt IT spend slump deeper than global

Published on the 13/08/2020 | Written by Jonathan Cotton

Govt IT spending slump

In the wake of Covid-19, state spending on IT is set to shrink across Australasia…

Gartner’s latest research offers a grave forecast for the tech sector Downunder, with declines in state-level spending significantly greater than the global average.

According to the research and advisory company’s latest forecast, government IT spending in Australia is set to decline by 7.6 percent in 2020. In 2019, across federal and state levels, government IT spending topped AU$8.4 billion, but this year it’s likely to reach just $7.7 billion. Gartner also says that the drop will be affected by reduced numbers of hardware device purchases, followed by reductions in data centre spending and telco payments.

The Kiwi sector is facing a similar situation. This year, New Zealand government IT spending is set to hit just NZ$1.2 billion – a five percent decline compared to last year.

By any standard, that’s a big drop, but especially so when compared with global trends.

Governments are spending large to build community resilience to the Covid-19 threat.

According to Gartner, global government IT spending is down 0.6 percent and will account for 16 percent of total $US2.7 trillion in enterprise IT spend. Overall global enterprise spend is down eight percent.

So where is government spending likely to be? Digital government services, data and analytics, cybersecurity as well as citizen engagement and experience will continue to be spending targets for the public sector says the research company.

“Government organisations are accelerating IT spending on digital public services, public health, social services, education, and workforce reskilling in support of individuals, families and businesses that are heavily impacted by the COVID-19 pandemic,” says Irma Fabular, senior research director at Gartner.

“To sustain economic viability, government organisations also deployed government recovery assistance programs which assist small businesses and allow workforce reskilling.”

Spending on IT services and software will continue to grow, with IT services the largest spending segment among governments. Software spending specifically is expected to increase by 4.5 percent, the strongest growth of any category.

According to Gartner it is all part of a worldwide reallocation of resources as the Covid-19 pandemic continues to wreak havoc.

Fabular says while governments are spending large to build community resilience to the Covid-19 threat, important but less urgent IT projects, such as enterprise resource planning and robotics process automation will be delayed ‘to make room for immediate and critical spending in digital workplace support, public health response and economic growth’.

“Adoption of cloud services will continue to accelerate while spending on in-house servers and storage will continue to decline.”

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