Stimulus Priming the Information Technology Pump

Energy management will receive lion's share of spending.

by / April 6, 2009

If there's one clear winner in the government's stimulus plan, it's the information technology sector. The $789 billion plan, known officially as the American Recovery and Reinvestment Act (ARRA), will stimulate more than $100 billion in technology spending for energy, health care and government, according to research firm IDC.

The largest portion of spending will flow to the energy sector ($77.6 billion), while health care will reap approximately $21.1 billion in stimulus money, according to the research report released in March 2009. IDC forecasts $2.5 billion for IT projects within the federal sector, but provides no estimates on the amount of stimulus funds that will end up in the state and local IT sector. The estimates represent incremental spending that will take place between 2009 and 2014.

Green New Deal

While health care remains the 800 pound gorilla that will impact the economy and government budgets for years to come, the impact of the stimulus plan on technology spending for the energy sector is remarkable. Some have dubbed the investment as President Barack Obama's Green New Deal. IDC breaks down the spending into the following categories:
o Smart grid ($8.6 billion)
o Renewable energy ($66 billion)
o Energy efficiency ($3 billion)

The smart grid investment focuses on deployment of smart appliances and other smart user equipment, smart electrical transmission and distribution systems, smart meters, integration of hybrid and electric cars into a smart grid and all the supporting software and communications networks.

Health-care IT presents a huge opportunity for automation via electronic health records. IDC projects a $20 billion investment for infrastructure and interfaces that will improve patient care, reduce medical errors and improve provider interoperability. An additional $1.1 billion will be invested in comparative health IT research.

Of the $2.1 billion spending on federal IT, the majority of the funds ($990 million) will update the Social Security Administration's data centers and IT systems and will increase automation in the claims processing area. Other big winners include the departments of State, Education, Homeland Security and Veterans Affairs.