The sequester will hurt tech nationally
Federal IT spending will fall, but cutbacks may accelerate shift to cloud
Computerworld - WASHINGTON - The federal government's automatic budget cuts, due to begin Friday, may accelerate cost savings measures already in place via sharing of services across agencies, IT consolidation, and an increasing reliance of off-the-shelf products and cloud-based services, as opposed to customized development.
However, there will also be damage to IT spending, and a period of uncertainty as the government reacts to the cuts. Known as the sequester, the automatic cuts are expected to hit "full force," and that will impact IT spending, said Andrew Bartels, an analyst at Forrester Research.
In January, Forrester forecasted a 7.5% increase in U.S. tech spending for this year, but that was on the assumption that the sequester would be resolved by Congress. Bartels now expects the federal cuts to reduce the tech spending forecast by about 1%.
In terms of dollars, in January Forrester put U.S. tech spending in 2013 at $820 billion. Its current estimate for business and government purchases of technology goods and services this year is now at about $808 billion, without telecommunications services, which are just over $1 billion. U.S. government purchases represent between about 8% and 10% of that spending.
The overall economic impact of the federal cuts is broader than just what the federal agencies buy. The reduction in grants to local, state government and institutions and employee furloughs contribute to the impact, said Bartels.
The public sector accounts for about 27% of Dell's revenue, according to its financial disclosures. But the company expects IT spending to remain a priority with the government even as budgets are cut, said Paul Christman, vice president of public sector sales and marketing for Dell.
What will change is how that money is spent, said Christman. Federal IT spending will see an increasing shift from hardware to services, he said.
Christman believes Dell is suited for this shift in spending. It has been expanding its services capability, as federal agencies move to cloud and SaaS-based systems. "The sequester is really accelerating things," he said.
This shift to services and new approaches is in place at agencies and institutions. The 31 schools in the University of System of Georgia, for instance, has been consolidating its IT services.
One top project for Curtis Carver, the CIO and vice chancellor of the Board of Regents of the University, is deploying BYOD policies and tools. The use of employee-owned tablets has increased productivity and job satisfaction, and that's something the school system wants to facilitate.
"[The Bring Your Own Device (BYOD) trend] is lowering costs by allowing us to do things in different ways," said Carver. "What we want to do is have appropriate controls so the data is protected, but at the same time empower those employees."
The BYOD policy also reduces the pressure on university system to buy tablets for employees.
But the university makes its bigger gains in its centralization and shared services, such as its learning management system, an online repository and student engagement vehicle, said Carver.
What the sequester is doing is "creating greater pressures for centralization," he said.
The White House hasn't detailed how federal agencies are to respond to the automatic cuts, except to offer general guidelines. The sequester will deliver 9% cuts across non-defense agencies, and 13% to defense agencies, according to a White House memo.
The vendors aren't certain how sequester will impact them, and say the feds have disclosed few details.
"There have been no consistent answers," said Ed McNamara, director of communications and marketing at SHI International, a $4.4 billion reseller with about 2,000 employees.
In the short term, McNamara expects sequester to create a "period of inactivity" among buyers. March, which is usually a busy month because it's at the end of a quarter, may be slow.
Dale Luddeke, who chairs the Industry Advisory Council (IAC), an IT industry group, said he expects to see a shift in government to things with "cost savings attributes," such as open source, and agile development and cloud technology.
Luddeke said he expects to see an emphasis on value, but some things won't be affected, particularly cybersecurity, data analytics and the IT requirements set in health care reform.
"We can adapt, we can figure this out," said Luddeke.
Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is firstname.lastname@example.org.
Read more about Government IT in Computerworld's Government IT Topic Center.
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
If you use ‘password,’ one the worst passwords, as your password, fail to keep antivirus protection updated and don’t bother to deploy security patches to close critical vulnerabilities, then maybe you should consider working for the cybersecurity-clueless federal government; you’d fit right in, according to Senator Tom Coburn's cybersecurity and critical infrastructure report.
- IT Certification Study Tips
- Register for this Computerworld Insider Study Tip guide and gain access to hundreds of premium content articles, cheat sheets, product reviews and more.
- Changing the Way Government Works: Four Technology Trends that Drive Down Costs and Increase Productivity
- This paper discusses four technology-based approaches to improving processes and increasing
productivity while driving down department and agency costs.
- HP HAVEn: See the big picture in Big Data
- HP HAVEn is the industry's first comprehensive, scalable, open, and secure platform for Big Data. Enterprises are drowning in a sea of data...
- What Datapipe customers need to know about the new PCI DSS 3.0 compliance standard
- This handy quick reference outlines what PCI DSS 3.0 is, who needs to be compliant and how Alert Logic solutions address the new...
- The 12 PCI DSS 3.0 requirements addressed by Peer 1 Hosting
- This handy quick reference outlines the 12 PCI DSS 3.0 requirements, who needs to be compliant and how Alert Logic solutions address the...
- Defense Throughout the Vulnerability Life Cycle
- This whitepaper provides insight into how to leverage threat and log management technologies to protect your IT assets throughout their vulnerability life cycle. All Government IT White Papers
- Meg Whitman presents Unlocking IT with Big Data During this Web Event you will hear Meg Whitman, President and CEO, HP discuss HAVEn - the #1 Big Data platform, as well...
- The New Way to Work Knowledge Vault This Knowledge Vault focuses on how, in today's increasingly virtual world, it's more important than ever to engage deeply with employees, suppliers, partners,...
- Getting Ready for BlackBerry Enterprise Service 10.2 Find out how BlackBerry® Enterprise Service 10 helps organizations address the full spectrum of EMM challenges, while balancing the needs of both the...
- Containerization Options: How to Choose the Best DLP Solution for Your Organization This webcast outlines a framework for making the right choice when it comes to containerization approaches, along with the pros and cons of...
- Mobile Apps and Devices Slash Customer Cycle Time Consolidated Engineering Laboratories' field employees used to collect data on triplicate forms that were sometimes hard to read and difficult to manage. After...
- All Government IT Webcasts