State and Local

Government
State and local governments spend $3
trillion.
2X federal, excluding defense
19 million workers
7X federal & > manufacturing, retail,
construction & finance
An industry of industries
90,000 governments and 600,000
business entities
19 states would qualify as Fortune 100

State and Local

Government
The state and local government market
continues to recover and show signs of
strength.
State and local government salaries grew by
1.6% last year.
The GovTech market is THE Market to be in.
There is money to be made in solving
government problems.

State Government Outlook

State spending
is up 5.7%.
The majority of
states
(43) enacted
budgets
with general fund
increases in 2015.
General fund
spending is up

Local Government Outlook

80% of city finance officers report that cities
are better able to meet fiscal needs.
For the first time since 2008, cities are
increasing their workforce size.
Counties are trending in the right direction
but recovery remains slowed.

State and Local Government Competing

Priorities
Education K-12 and Higher Ed
Medicaid
Corrections
Transportation
Workforce Healthcare and Pensions
Tax Reform

What does this mean for Tech

spending?
State IT budgets have increased by an
estimated 3.9%.
The top 100 cities and top 100 counties IT
budgets have increased by an estimated 3%.
In 2015, the Center for Digital Government
projects that IT spending will be nearly $97
billion.

2014-2016 Digital States Survey CIO

Priorities
Open

Cyber Security

Shared Services
3

Cloud Computing
4
5

Mobile Applications
Hire and Retain
Competent IT
Personnel

Government/Transparency/Open
Data; and Budget & Cost Control

Governance; and Disaster

Recovery/Business
Continuity
Portal/E-Government

7
8
9

10

Health Care; and

Virtualization
Data Center
Consolidation

Top 10 Priorities for Counties with an Increased

Focus
in 2015 Disaster

Cyber Security

Hire & Retain Competent IT

Personnel

2
3

Shared Services
Budget and Cost
Control

4
5

Mobility/Mobile
Applications

Recovery/Business
Continuity

Open Government/
Transparency/Open Data

Virtualization/Portal
E-Government

8
9
10

Broadband and
Connectivity
Governance/Data
Center
Consolidation &
Cloud Computing

Top 10 Priorities for Cities with an Increased Focus in

2015
Broadband and
Open Government/
Transparency/Open Data

1
2

Mobility/Mobile Applications
3

Cyber Security
Portal/E-Government &
4
IT Staffing
Disaster Recovery/
Continuity of
5
Operations

Connectivity;
Virtualization
Cloud Computing

7
8

Social Media

9
10

Budget and Cost

Control
Shared Services

2011-2014 State IT Spending

(in

billions)

$44

$42

$42

$40

2011

2012

2013

2014

2011-2014 Top 100 City and County IT

Spending (in billions)
City

County

$4.20

$4.30

$4.40

$4.50

$3.50

$3.50

$3.60

$3.70

2011

2012

2013

2014

2013 vs 2014 State

and Local12000
IT RFP/Bid Volume
6.6% increase
over 2013

10000

8000

6000

4000

2000

State

County

City

Health and Human Services

DRIVERS
Medicaid Expansion
Evolution of Affordable Care Act
Social Services Modernization

2015 Est. IT Spend:

$25 billion

IT OPPORTUNITIES
Continued development of Health Information
Exchanges
Completion of MMIS modernizations
Modernization: Child Welfare, Adult Protective
Services, WIC
Analytics: Claims, fraud, demographics, reporting
Expansion of online and mobile

Transportation
DRIVERS

2015 Est. IT Spend:

$9.8 billion
Aging infrastructure
Outdated enterprise IT systems
Lack of data quality
Growth in citizen demand for service

IT OPPORTUNITIES
Expansion of eGovernment, mobility and online
services
Master Data Management and improve data-sharing
Expansion of Intelligent Transportation
and internet of things
Permitting expansion

Finance and
Administration
DRIVERS

2015 Est. IT Spend:

Push for greater accuracy in financials$8.3 billion

Growth in citizen demand for service

IT OPPORTUNITIES
ERP replacement and upgrades
Shared services: HR and IT
Tax system modernization
Procurement (expansion of cooperative
procurements,
e-procurement and vendor management)
Mobile apps and development

Justice and Public

Safety
DRIVERS

2015 Est. IT Spend:

Community safety and accountability $7.3 billion

Plagued by data silos

IT OPPORTUNITIES

Wearables/Cameras
Video surveillance
Data: Security, integrity, sharing and analytics
Disaster recovery and business continuity
Network/Connectivity/Bandwidth
Offender Management System modernization and replaceme

Education: K-12
DRIVERS
Common Core roll out
Transition to digital content
Expansion of E-Rate program

2015 Est. IT Spend:

$10.2 billion

IT OPPORTUNITIES
Mobile devices
Digital curriculum
Network/Connectivity/Bandwidth

Education: Higher
Education
DRIVERS
Enrollment growth
Budget constraints

2015 Est. IT Spend:

$10.5 billion

IT OPPORTUNITIES

Instructional use of video

Online and blended learning solutions
Cloud computing
Wireless networking

Lessons Learned
the Hard Way

Failed or Problematic Project due to Inadequate IT Infrastructure

States and localities are

still very much
challenged by outdated
IT infrastructure.
Nearly 60% of
respondents report
having failed or
problematic projects
due to their inadequate
IT infrastructure.

59%
Yes

No
41%

IT Infrastructure Modernization
When does your organization plan on needing to update your IT infrastructure?

Nearly half of state and

local respondents plan
to modernize their IT
infrastructure in the
next
12 months.
Bulk of modernization
is planned within the
next
5 years.
Will governments stay
in the infrastructure

15%
18%
1%

45%

21%
In the next 12
months
2 to 5 years

A Big Push to the Cloud in 2015?

Only 38% report that their primary
data center fully meets their needs

38%

51%

6%6%

Don't know

Doesnt meet our needs

Outlook
State and local revenue continues to climb
slowly above pre-recession levels.
Governors, mayors and legislators will focus
on political hot buttons.
The federal government and the political
process remains very polarized.

Outlook
There is initial recognition that delayed and
deferred investment in critical infrastructure
must be addressed.
State and local governments are open to
alternatives to traditional acquisition and
support models for HHS and enterprise
administrative systems.
Interest in data-sharing and analytics is
increasing.

Outlook
Innovation will be incremental in the near
term and tied to modernization of existing
systems.
Public sector workforce challenges and
changes will create new opportunities for
industry partners.

Market Forecast
2015
Todd Sander
Executive Director
Center for Digital Government
tsander@erepublic.com

Joseph Morris
Director of Market Intelligence
Center for Digital Government
jmorris@erepublic.com