Govt IT spend in dispute

Government IT specialists have roundly rubbished a claim that the state sector accounts for only 11% of New Zealand's IT market.

Government IT specialists have roundly rubbished a claim that the state sector accounts for only 11% of New Zealand’s IT market.

The 11% figure, which appears in a IDC survey due out this week, claims to count central and local government work but does not include the broader health sector, outside of the Ministry of Health. That appears in a separate vertical market segment.

The survey also suggests that government is the fastest growing of the seven major verticals measured, though the growth is concentrated in services. Government hardware and software purchases have decreased in comparison with last year, says IDC’s Graham Muller.

Even without health, delegates to the government IT managers (GOVIS) conference in Wellington last week suggested the figure is too low.

“From my experience [government’s share of the market] is more than 30%,” says consultant Andrew Mason.

“I’d say 30% to 40%, especially as the banks [one of the other leading verticals] have moved a lot of processing overseas,” says fellow consultant Colin Boswell.

Ted Christiansen of the State Services Commission, which runs the e-government unit, says a rough estimate could be reached by simply considering the proportion of staff engaged in government and non-government sectors, plus a little extra to account for the fact that “government is particularly information-rich”. That proportion would definitely be higher than 11%, he says.

Muller sticks by his figure, which values government IT purchases in the past year at $440 million (the consultants estimate it “in the high hundreds of millions”). The IDC figure represents a 5.2% growth over the previous year, he says, with all the growth being in services. “There has actually been a decrease in hardware and software spending.”

Hewlett-Packard’s government relationship manager, Mike Russell (pictured), another GOVIS attendee, agrees with the consultants. He would “pack up and go home” if government represented just that much of his business. He says the public sector accounts for about 30% of HP’s enterprise business.

The survey asked a number of government organisations about their IT budgets and found 66% of them had increased theirs. By contrast, in most verticals the proportion of budget-boosters was only 40% to 50%.

Much of the increase in services expenditure was in the areas of “enterprise-level outsourcing and systems integration”, Muller says.

He could give no further authoritative breakdown, but his personal interpretation of the growth is that government agencies are reorganising their processes for greater efficiency and possibly integrating their IT in some measure with other agencies.

EDS government specialist Michel Brazeau identified the latter in particular as a positive step in e-government evolution.

The conjectured process reorganisation Muller puts down to a search for better services to a “more vocal” public. People faced with unsatisfactory service don’t just shrug and say “that’s government for you” any more, he says, but are instead more inclined to make their discontent known.

IBM spokesman Jeremy Seed says the view among his sales staff was that the IDC market-share figure “is a bit light”. They did not, however, see as large a gap as HP or the consultants. “They thought maybe it was more like 15% to 20%.”

Acting State Services Commission e-government head Bethia Gibson would not comment either on IDC’s market share or growth figures. She referred Computerworld to Statistics NZ, whose most recent IT survey is for the 2002 financial year. Its publicly available tables do not break down expenditure by vertical market sector and the agency could not advise by press time if it had those figures.

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