XChange Public Sector: No Slowdown Of Federal Spending

That was the word from Rishi Sood, research vice president at Gartner, who kicked off Everything Channel’s XChange Public Sector event in Jacksonville, Fla. Monday by laying out Gartner’s view of the federal spending climate.

The past 10 years of federal government IT growth needs have brought yearly spending up from $30 billion to $70 billion, Sood explained. According to Gartner, the federal government spend is expected to continue to increase every year, headed for $81.1 billion in 2012.

Among market dynamics to keep an eye on, Sood said, are budget constraints, limited stimulus funding, a government-wide push toward insourcing, the firm-fixed price model accounting for some 30 percent of government contracts by 2012, the current consolidation of integrators, the impact of the so-called tech troika (federal CIO Vivek Kundra, CTO Aneesh Chopra and chief performance officer Jeffrey Zients) to shape the national discussion, and a possible shift in momentum if the Obama Administration doesn’t win a second term.

“There’s an emerging reality in some of the agencies that maybe the president’s priorities don’t have legs, and maybe we can wait them out,” Sood said of agencies’ acceptance of Obama technology priorities. “They can comply with the open government directive, but not really change things. They can do piecemeal investments in cloud and other things, but not really embrace it further.”

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According to Gartner, the highest spending priority among federal agencies in 2010 is to reduce operational costs, which according to Sood, was “negligible” as a priority 10 years earlier. Program accountability, an increase in collaboration and the ability to oursource non-core business processes were also moving up the list.

Among technology priorities, security is still highest, but business intelligence, biometrics and open source are among those areas making gains from previous Gartner surveys.

Sood urged VARs and integrators to focus on areas where the government is sure to spend, especially in government-funded health care -- which will outpace private sector health care spending by 2012 -- and operational efficiency. The cloud will come to government, he said, but it may come more in the form of application outsourcing and remote hosting in the short term.

New doors for VARs are opening, Sood added, saying there was a small, but growing group of CIOs in the federal government looking for better value beyond the province of the traditional, tier-one federal integrators.

“They recognize the value of partnering with smaller and midsized players,” Sood said. “There is an idea of kicking out some of the incumbents.”