Federal Government IT, Still Strong in a Tough Economy

Despite Obama's latest 2011 budget proposal showing signs of a slow down, there remains a high opportunity within the Federal Government IT market.  This year, spending is expected to reach $89.2 billion, about 5.8% growth from 2009.  Compass Intelligence does expect there to be a slowdown over the next few fiscal budget years for Federal spending or for it to remain fairly flat due to the deficit troubles and push by Obama to tighten spending across the board.

Opportunities will remain high, primarily in the areas around cybersecurity, handheld devices (especially in the military), expanding broadband, consolidation of IT operations (Great for the Large Integrators), Web 2.0/social media to support civilian and communications efforts, transitioning services to the cloud, and basic infrastructure and networking projects.  For the most part it will be back to basics, and newer/advanced technologies will be put on hold in the interim. 

Federal Government IT Spending

·         Defense represents about 68% of total Federal IT spending.

·         Major drivers of IT spending include the Recovery/Stimulus Act, modernization of older infrastructure and systems, and a renewed focus on healthcare, education, and infrastructure.

·         Challenges will include some departmental IT budget freezes, the need to consolidate IT operations, and the push to reduce the number of data centers in the Federal Government.

To contact the analyst, contact Stephanie Atkinson

satkinson@compassintelligence.com