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Flat IT funding threatens cloud, mobile computing initiatives

Oct. 18, 2011 - 10:53AM   |  
By NICOLE BLAKE JOHNSON   |   Comments
TechAmerica is forecasting that budget cuts and greater scrutiny of poor-performing projects and programs will be big factors in keeping IT spending from growing.
TechAmerica is forecasting that budget cuts and greater scrutiny of poor-performing projects and programs will be big factors in keeping IT spending from growing. (Staff file photo)

Federal information technology spending is expected to remain mostly flat over the next five years, with agencies receiving little or no additional funding for administration priorities like cloud computing and data center consolidation, according to a new IT spending forecast by TechAmerica Foundation.

Discretionary budget cuts and greater scrutiny of poor-performing projects and programs will be big factors in keeping IT spending from growing, TechAmerica predicted in a forecast presented Monday.

As a result, the fate of federal efforts to embrace cloud computing and mobile computing technologies are relatively uncertain, according to the forecast.

"The overall plan is more or less indefinite at this time because they [agencies] can't make commitments based on particular funding levels," said Robert Haas, a TechAmerica Foundation spokesman.

Much of the government's future IT spending will be focused on health IT, wireless and mobile technology and investments in consolidation initiatives.

"Combined, all of these challenges are bigger than at any other time in recent U.S. history," Haas said.

Annual IT spending will rise slightly from $81.2 billion this fiscal year to $85.7 billion in 2017, according to the forecast. That equates to a 1.1 percent compound annual growth rate or a 5.5 percent increase over the five year period, compared with a 19 percent increase over the last five years from 2007 to 2012.

The forecast is based on data analyses and interviews with federal executives, congressional oversight committees, think tanks and industry.

IT spending at civilian agencies is expected to see the most growth 9.6 percent over the next five years from $42.7 billion to $46.8 billion. But the Health and Human Services, Treasury, Justice and Agriculture departments are the only civilian agencies expected to see budget increases. These increases are driven by mission requirements under health care and financial reforms that require modernization or development of new IT systems.

Defense Department IT spending is projected to grow 1.3 percent to $38.9 billion during the same period. DoD IT consolidation efforts are constrained by legislation that dictates who can spend what money when, Haas said. Initiatives will be under more scrutiny to show a return on investment, he said.

The Army, for example, does not expect to have a budget for IT transformation, and funding will likely come from existing projects or other initiatives the service will have to scale back, Haas said.

Agencies are also using more indefinite-delivery, indefinite-quantity contracts to reduce administrative costs and toward shorter contracting periods to reduce risks, Haas said.

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