In the US, the federal government's spending on technology is a 'hot spot' compared to the private sector, particularly in terms of customer relationship management (CRM), supply chain management (SCM), and enterprise resource planning (ERP) systems, according to a report from The Yankee Group.
However, while federal budgets are expanding to support cross-agency information technology (IT) initiatives, the expansion of technology at the federal level appears to be greatly over-estimated. "Federal government IT spending is growing but it remains to be seen if it will sustain the IT recovery," explained Yankee Group senior analyst, Carrie Lewis.
According to the report, 'The Yankee Group Evaluates Federal IT Spending Opportunities', the various opportunities for capturing federal IT spending are not all equal, and vendors seeking to compete need to carefully evaluate the opportunities. Lewis advises companies to "be sceptical, ask questions, and test all assumptions." In other words, vendors will need to find out if an apparent opportunity represents long-term sustainable IT growth or short-lived growth.
Market future
The Yankee Group's analysis of federal government technology spending indicates that although opportunities such as security and e-government have captured the attention of vendors seeking high investment returns, these opportunities will cycle through as priorities shift.
However, the report suggests that not all federal IT opportunities are fleeting either. The core business opportunities, particularly including ITO (network and seat management), BPO (accounting, financial, and HR), and AO (ERP, SCM, and CRM), will continue for years to come.
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