CIOs Project Continued Local Government IT Budget Cuts

Almost half the CIOs reported that they plan to outsource IT operations, including cloud computing.

by / October 21, 2010

Local government IT departments will continue to endure the impact of the sluggish economy for the next two years, according to a national survey conducted by the Public Technology Institute and Input.

The survey, sent to CIOs and IT executives nationwide, showed that 50 percent of local government IT budgets will be cut over the next couple of years, a number that’s on par with last year’s results.

“At one point technology was looked at as a way to save money,” said Alan Shark, executive director and CEO of the Public Technology Institute, a Washington, D.C.-based national, nonprofit technology research and development organization. “Now, local governments are being asked to cut an awful lot to save the sinking ship.”

Although the cuts may save money now, Shark warned that cutting technology budgets and overlooking costs for equipment updates and new software could have disastrous effects down the road. Because IT infrastructure doesn’t show signs of wear and tear like a bridge, “it’s very easy to put things off,” Shark said.   “Time and time again, deferred maintenance will backfire.”

To keep pace with demands for increased productivity, almost half the CIOs reported that they plan to outsource IT operations, including cloud computing, shared services and software as a service.

Shark said that the severity of the IT cuts is directly correlated with the number of foreclosures in a particular city. On the federal level, however, IT departments aren’t experiencing the same level of cutbacks because they have begun to bring down costs through consolidation and virtualization, and they’re also removed from local politics, Shark said.
A separate survey conducted by the nonprofit TechAmerica Foundation showed that federal IT budgets will actually increase by an annual rate of 2.8 percent over the next five years because of drivers like health care, energy efficiency and business intelligence. But the report also warned that growth may be prohibited by uncertainty related to program freezes and consolidation of data centers.

 “Overall, federal agencies are on track to realize the promise of government technology, but will pursue it at a relatively modest pace in the face of uncertain policies and overall budget realities,” said TechAmerica Foundation’s Chairman Phil Bond.

Shark said that he expects the decrease in local government spending to continue for years, or at least until the economy can consistently show growth for 18 months to two years.

“It’s discouraging,” he said, but added that there are many avenues local governments can take to be more cost efficient.


Lauren Katims Nadeau

Lauren Katims previously served as a staff writer and contributing writer for Government Technology magazine.