Australian Govt IT spending to shrink 7.6% in 2020

Gartner expects total Australian Government IT spending to contract 7.6% this year to just $7.67 billion, largely as a result of the disruption brought on by the COVID-19 crisis. The projected decline is significantly higher than the expected global average decline of 0.6%.

The devices market will be hardest hit by the contraction, with total spending on track to fall 20.5% to $279 million. But both the data centre and telecommunications services market are also projected to face double-digit declines of 18.1% (to $231 million) and 12.1% (to $429 million) respectively.

Spending on IT services is anticipated to fall 9.1% to $3.25 billion, with spending on internal services set to fall 9.2% to $1.58 billion.

The sole bright spot will be the software market, with spending on track to grow 1.9% to $1.92 billion.

Meanwhile, Gartner expects total spending to recover somewhat next year, growing 5.8% to $8.12 billion. But this would still represent a decline from 2019 spending of $8.31 billion.

Spending is expected to increase across every category, led by the software market, which will grow 9.7% to $2.1 billion, and the data centre market, which will grow 8.6% to $250 million, the research firm said. The software segment is also the only category set to return to above 2019 levels.

Meanwhile, total spending on IT spending is tracking to increase 5.3% to $3.4 billion, spending on software is expected to rise 9.7% to $2.1 billion and spending on internal services is projected to grow 2% to $1.6 billion.

Finally, device sales are set to grow 4.5% to $291 million and sales of telecom services are projected to grow 5.4% to $452 million.

Gartner Senior Research Director Irma Fabular said the trend of IT spending recovering in 2021 from a decline in 2020 — a trend expected to be mirrored in the global figures — reflects increased government spending on COVID-19 recovery efforts.

“Government organisations are accelerating IT spending on digital public services, public health, social services, education and workforce reskilling in support of individuals, families and businesses that are heavily impacted by the COVID-19 pandemic,” she said.

“To sustain economic viability, government organisations also deployed government recovery assistance programs which assist small businesses and allow workforce reskilling.”

Gartner expects that even as government organisations globally begin to ease stay-at-home policies, some practices relevant to public health and wellness will persist, including options for telecommuting. This will require increased spending on the IT infrastructure required to support this.

“Many government organisations will also introduce measures to build community and national resilience, including improving disease and other threat surveillance systems.”

But at the same time, Fabular said governments are expected to put less urgent IT projects such as enterprise resource planning and robotics process automation deployments on hold to make room for immediate and critical spending in digital workplace support, public health response and economic growth.

The extraordinary circumstances on the COVID-19 pandemic will meanwhile accelerate the shift to the cloud, while government spending on servers and storage will continue to decline, she added.

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