With its first 100 days behind it, Labor has given the IT industry a lot to think about: standing by election promises, centralising Federal government procurement, and instigating funding cuts.
Some IT vendors are enjoying the new government according to Kevin Noonan, head of consulting at government IT research company Intermedium. "The government is absolutely razor focused on delivering what they promised in the election," he said, with firms providing technology for the fibre-to-the-node broadband network, education and the environment to benefit.
Gartner research VP Richard Harris noted that while the government is guaranteed to see through its promises in those areas, suppliers will not have it easy. "For most new governments who come in, many of the feasibility costings are thinly researched. Once you start to scope out costings there is an unpleasant surprise for government," he said.
Along with fulfilling election promises, the Federal government is running a critical eye over its spending. Federal Finance Minister Lindsay Tanner has already indicated that IT spending is up for review by the new government, after announcing last month that control of ICT procurement will be centralised to reduce expenditure and increase interoperability.
"From the government's perspective, there is a real sense of reviewing programs and reviewing the way things are done," Intermedium's Noonan said. "There is very much at stake for companies selling to government." The Federal government spends around AU$3.3 billion a year on IT contracts, he added.
According to Noonan, a move to centralised IT procurement raises a number of concerns, including what part SMEs play in the new procurement regime, whether innovation can flourish under one-size-fits-all systems, and whether there will be a knock-on effect from the Federal government centralisation, as individual states seek to follow suit.
However, Federal IT centralisation won't affect the IT procurement behaviour of larger government agencies according to Gartner's Harris: "What the ATO is doing is unlikely to change now. It will change what's likely to happen to smaller agencies."
Whatever fears vendors have about centralisation, government technology spending is likely to remain strong, according to research firm IDC. Aussie government (Federal, state and local) ICT spending is set to achieve 3.9 percent compound annual growth over the next five years, according to IDC forecasts, with no significant difference between state and Federal growth. The size of all government ICT market spend is forecast at AU$6.1 billion compared with AU$5.7 billion last year, while the Federal government spend will rise to AU$3 billion from AU$2.9 billion.
Government still needs to spend, according to IDC analyst Phillip Allen. "While government is making noises about reducing spending, we're not drastically cutting our forecasts," he said. "If the government is looking for efficiency, they're going to do better investing more in tech."
Forecasts are holding steady despite AU$30 million cuts by the so called Razor Gang, which Intermedium's Noonan said will adversely affect the market. "There are two big drivers in IT -- head count and program delivery. Both of these are taking a hit from the stage one cuts," he said.
IDC's Allen does not believe the cuts are significant. "Overall we need to take a step back and realise the government is a big spender," he said, adding that the cuts are a small proportion of Australian governments' 5 to 6 billion spend.