Government IT spend on the rise

Public sector IT expenditure is growing at a rate of almost 8% annually and is set to reach R6.5 billion by the 2007-2008 financial year, according to research company BMI-TechKnowledge.

"Government IT expenditure in SA is growing at a rate of 7.8% off a large base, making it a very attractive market [for private sector companies]," explains BMI-T senior analyst Natalie Bryden.

Over the 2003-2004 financial year (the most recently recorded period), the South African government spent about R4.8 billion in the ICT sector, she notes.

Of the R4.8 billion spent in 2003-2004, R2.6 billion was spent on national government, R1.3 billion on provincial and R0.9 billion on local government.

Bryden notes that about half of all South African government IT contracts are for services, with 32% of the budget spent on hardware and 19% spent on software.

Justice and protection services account for more than half of all public IT contracts, notes Bryden, with 27% going to central government administration, 10% to economic services and infrastructure, 7% to social services and 5% to financial and administrative services.

BMI-T also states that government contracts "make up a substantial portion of the large players` service revenues". Siemens Business Services derives 33% of its revenue from government business, Accenture 30%, arivia.kom 19%, Unisys 16% and Business Connexion 13%.

Although it is difficult to compare SA with larger countries, the US government business research company INPUT states that for the 2004 fiscal year the US government awarded more than $155 billion in IT-related prime contracts.

The US has recently seen a decline in the total annual value of public IT contracts, with the federal government awarding $123 billion in 2005 - a 20% decrease from 2004.

In Europe, research published last year by e-government analyst Kable indicates European public sector ICT spending is set to rise steadily over the next two years.

Total government ICT spending will increase from EUR 87 billion this year to EUR 94 billion by 2007, with the UK representing almost a quarter of this figure, notes the report.