Spending still strong in local government
UK leads Europe for council IT revenue
The UK is the most lucrative local-government IT market in Europe, and will continue to be a good source of revenue for resellers even after this year's e-government deadlines have passed.
Analyst Datamonitor has predicted that over the next three years, local councils in the UK will pump an extra $1.22bn into external IT. Spending, which stood at $3.31bn last year will leap to $4.53bn by 2007.
Front-office packages are the second-largest area of technology spend, accounting for $529m of council spending in 2004.
However, once 2005 e-government targets have been met, front-office spend rate will slow down, and the spending will shift from internet-based investment to ERP, financial solutions and replacement of back-office systems, the analyst said.
Datamonitor associate analyst Helen Toft said vendors are worried that when the 2005 e-government deadlines have passed the money will run out.
"We don't see that. Some councils won't hit the deadlines. Also after the 2005 deadline, there will be other guidelines coming," she said.
Steve Hedegaard, sales director at Civica Services, agreed. "We don't see a slowdown at the end of 2005. There are plenty of other drivers in the market, such as the Freedom of Information Act," he said.
Hedegaard added that the Act is driving demand for document management and email compliance technologies. "Organisations have to have policies and systems around that," he said.
Simon Darlington, managing director of VAR LSI Business Solutions, said some parts of local government have embraced IT.
But he added: "There are still many local government organisations, including some large ones, that are struggling with the basics such as server operating system platforms, WANs and LANs.
"There is still a major opportunity in local government, an area most resellers believe is saturated by the competition."