Public sector IT budgets could fall by £3.6bn over three years - survey

Public sector managers expect the government's Comprehensive Spending Review (CSR), which will be announced in two weeks' time, to wipe a total of £3.6bn from ongoing public sector IT budgets over the next three years.

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Public sector managers expect the government's Comprehensive Spending Review (CSR), which will be announced in two weeks' time, to wipe a total of £3.6bn from ongoing public sector IT budgets over the next three years.

And only a fifth feel ready to achieve the savings, according to new research.

Such cuts are expected to lead to IT job losses and a curtailment in large IT projects undertaken by councils and other organisations. The estimated £3.6bn cut comes from research undertaken by server virtualisation software firm VMware among 101 senior public sector finance officers.

Those finance officers believe the UK public sector will have to find £3.6 billion in savings from its annual IT budget by 2013 to meet government targets, a reduction of 22.5 percent on current levels. The research was carried out by ComRes on behalf of VMware. It found that half of the respondents had already explored reducing their headcounts, despite government promises that front-line services will be protected from austerity measures.

And with the CSR due in only two weeks time, only 20 percent say they are ready to tackle the impending spending reductions.

Mark Newton, UK managing director at VMware, said: “The time has come for smarter technology investments across the public sector – there’s a golden opportunity here for major cost-savings by looking towards IT. Virtualisation and cloud-based technology should be seen as a savings and services enabler that can contribute to maintaining front-line services."

Senior finance officers (SFOs) were asked to predict how much of their current IT budget they expected to have to cut in 2010/2011, 2011/2012 and 2012/2013. From this, an average percentage of how much SFOs think will be cut from their IT budget, for each of the three years, was calculated.

These three figures were then extrapolated to model IT budget cuts across the entire public sector. The estimated figure for the total IT spend across the public sector is estimated at £16 billion a year. The final predicted IT budget cut in 2013 (after the three years of expected cuts) was calculated at £3.6bn, which is a reduction of 22.5 percent over the three years from the current budget.

Central government IT is not expected to escape severe cuts. Its IT suppliers are already set to lose substantial revenue this year, as ministers can projects and renegotiate contracts, according to analyst house TechMarketView, which predicted a cut of up to seven percent - around £700 million - in central government technology spending this year alone.

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