Forrester Predicts Slow Year For Government IT SpendingForrester Predicts Slow Year For Government IT Spending

Governments face big IT challenges this year as funding for spending on technology grows at a slower pace.

Forrester Research on Friday released a report that predicts the top technology issues for 2008 will include infrastructure consolidation, server hardware and legacy software systems replacement, and improving storage.

The report is based on surveys of 151 government and 1,082 nongovernment IT decision-makers in North America, Europe, and Asia Pacific in the fourth quarter of 2007. It states that government IT decision-makers are pessimistic about this year, and most government IT spending will focus on increasing efficiency.

While most government IT decision-makers expect their budgets to rise, increasing expenses for operations, maintenance, and personnel will offset expansion, according to the report.

State revenue will increase at the slowest rate in four years, but that may not translate into increased funds for IT spending, the report warns.

Federal revenue is likely to increase through 2013, and the White House continues to request IT spending increases for 2009. The agencies requesting the largest increases fall under the U.S. Department of Defense. Two DoD agencies -- the U.S. Army Corps of Engineers and the Navy -- requested smaller IT budgets for 2009, compared with the current fiscal year.

The report found that 43% of governments are working with flat budgets this year, while 40% have bigger budgets than last year. Seventeen percent said they are working with smaller budgets.

Thirty-three percent of government respondents forecast a somewhat challenging year, and 21% predict an extremely challenging year. In the private sector, only 16% expect an extremely challenging year.

Forrester Research recommended that vendors brace for a year or two with little changes or new projects by building relationships and shaping ideas for cost savings. Finally, vendors should look ahead to 2010 when new blood in the White House will outline new spending priorities.