Govt to bolster IT spend

Local government IT expenditure is on par with global IT spend, accounting for about 12% of the country`s total IT outlay. This makes government IT the third largest vertical market in SA, says BMI-TechKnowledge senior analyst Natalie Bryden.

"We expect government - excluding parastatals - IT expenditure to reach R6.5 billion in 2007/08 at a CAGR [compound annual growth rate] of 7.8%, up from R4.8 billion in 2003/04."

Bryden adds that government will invest more of its IT expenditure in grass-roots projects.

Providing an overview of South African IT in the government sector between 2003/04 and 2007/08, Bryden says government is finally starting to view IT as mission-critical as it looks to use it to improve processes, drive down costs, reduce errors and save time and effort.

The use of IT will require a substantial investment in improving the skills of South Africans, says Bryden. "Not only will public servants be required to become more IT-literate, so will all citizens be required to interact with technology."

Government certainly has a business approach to rolling out IT, but there will be areas where it will run into problems, says BMI-T director Mark Walker.

"Unlike a business, they are not motivated solely by profit. They also have a social responsibility role. The fact that most of the large vendors have set up a division that deals only with government, indicates that working with them is a whole different ball game."

Government remains an attractive market simply because of the sheer size of its deals, but vendors are often hesitant to invest heavily on account of the long sales cycles involved, says Bryden.

Those vendors that are actively targeting government usually have long-standing relationships, making entry difficult for new players, she adds. "Smaller black economic empowerment vendors are actively targeting government, but many of them do so in partnership with larger IT companies that have proven service delivery in this sector."

Although Government has a stated intention to consider OSS, we are unlikely to see it being adopted across the board, says Walker.

"Government has a social mandate. It must save money, and open source can save them money."

However, government has started to view open source differently, continues Walker. "In the last two years, open source was viewed very simplistically. Now guys are asking: Is it really going to create more jobs? Do we really want to recreate the wheel?

"Government is in a difficult position regarding open source and proprietary software, as they are trying to figure out who is telling them the truth. It is likely that government will look to adopt open source software whenever possible, and not simply across the board."

Government will begin inhibiting software and hardware expenditure as it adopts open source, adds Bryden. "There are some proprietary contracts in existence that will expire towards the end of the forecast period, so we can expect a shift towards a services-driven model if government starts adopting OSS. Software and hardware expenditure may then decrease as a portion of the total with services driving spend. This means that vendors need to focus on skills development.