City and County Governments Lag Behind IT Spending Recovery

July, 2012

Irvine, Calif. – While a modest recovery is lifting IT spending across many sectors, local governments are continuing to restrain spending on information technology.

According to the annual IT spending and staffing survey by Computer Economics, an Irvine, Calif.-based research firm, local governments plan to increase IT operational spending this year by 1.5% at the median. That contrasts with a median 2.2% rise in IT operational budgets across all sectors and is the lowest growth rate of any of the 11 sectors in the study.

The planned increase may be optimistic. About one-third of the local government respondents in the benchmarking study did not expect to spend all of the money in their IT operational budgets.
“At the start of the recession, the public sector was slower to reduce IT spending,” said Frank Scavo, president of Computer Economics. “Now  the reverse is true. IT spending by local government is slower to recover.”

Much of the restraint is in IT staffing levels. At the median, local governments plan to maintain IT staff headcount at about the same level as the prior year. The benchmarking study also found that about 85% of local government’s IT spending is going toward maintaining existing systems. That leaves 15% for initiatives that add new capabilities to IT systems. “That is barely adequate for staying current on technology,” Scavo said. “In the private sector, a more typical spending level today on new initiatives is 30%.”

The top IT priorities for local governments this year in order are becoming more cost-efficient, improving IT service levels, and upgrading infrastructure, the study also found.

The Computer Economics IT Spending and Staffing Benchmarks 2012/2013 study is based on a survey in which more than 200 IT organizations, including 18 city and county IT organizations, detailed their IT budget and staffing plans for the current budget cycle. It provides composite statistics of IT spending and staffing data, a segmentation of the same statistics by organization size, and individual chapters for 20 sectors and subsectors. A description of the study’s content, design, demographics, and methodology can be found in the free executive summary.

About the Study
The Computer Economics IT Spending and Staffing Benchmarks study, now in its 23rd year of publication, provides key metrics to assist organizations in the financial and strategic management of information technology. Each year, we conduct an in-depth survey of IT executives in the U.S. and Canada to gather detailed metrics concerning their IT spending and staffing levels, use of outsourcing, and adoption of IT management best practices. The respondents include executives in the public and private sectors. By repeating this survey each year, Computer Economics is in a unique position to identify long-term trends and understand the challenges of managing IT organizations.