Public sector IT spend to grow 8.8% in 2022

Tuesday, 07 September, 2021

Public sector IT spend to grow 8.8% in 2022

The Australian government sector will spend more than $15.5 billion in 2022, according to new forecasting from Gartner — an 8.8% increase on 2021 levels. The new figures include all levels of government — federal, state and local — but do not include the education sector.

According to the forecast, the software segment — including application, infrastructure and vertical-specific software — will experience the strongest growth in 2022 at 19.2%.

While devices experienced the strongest growth in 2021 as government organisations embraced remote work and connected public services, it will suffer the strongest decline of -5% in 2022. Telecoms services are forecast to decline for the second year in a row.

“Government technology spend in Australia is expected to continue upward for the next few years driven by key programs to progress the digital economy, strengthen national cyber response, adopt emerging technologies and address gaps in regulation to cover technology,” said Brian Ferreira, Vice President, Executive Programs at Gartner.

“Consultation papers on AI, ethics, technology and human rights, blockchain and other emerging technologies are now firmly on the government’s radar.”

In 2022, increased investments in digital technologies will see governments in Australia spend 72% of total IT spending on IT services and software to improve responsiveness and resilience of public services (see Table 1). These include investments in enhancing customer and employee experience, strengthening analytical capabilities and scaling operational agility.

Segment 2021
growth (%)
growth (%)
IT services 6,001 7.0 6,435 7.2
Software 3,935 14.7 4,689 19.2
Telecoms 665 -1.0 659 -1.0
Internal services 2,571 0.9 2,669 3.8
Devices 685 15.0 651 -5.0
Data centre 408 0.5 425 4.1
Total 14,266 7.6 15,528 8.8

Table 1. Government IT spending forecast by segment, 2021–2021, Australia (millions of AUD).

IT infrastructure and applications modernisation as well as digital government transformation will remain high government priorities in 2022. In Australia, the $1.2 billion Digital Economy Strategy announced in this year’s federal Budget aims to support investments in emerging technologies and digital skills to advance Australia’s position as a modern digital economy by 2030.

“As the Delta variant continues to create hurdles, government spending will increase on solutions to open up the Australian economy while we continue to live with COVID-19, particularly to drive vaccination validation, open up borders and unblock trade,” said Ferreira.

Increased adoption of cloud strategies and citizen digital identity

The pandemic has amplified the need for governments to rapidly scale IT infrastructure and application systems and respond to unprecedented public demands. Gartner estimates that by 2025, over 50% of government agencies will have modernised critical core legacy applications to improve resilience and agility.

“Key national technology capabilities, whole-of-government cloud and SaaS procurement agreements, and digital skills have progressed at a federal level within Australia,” said Ferreira.

“We have also seen a strengthening digital mandate in ministerial roles with cross federal–state collaboration at a state level.”

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