XaaS Will Emerge as New Area of Investments as Governments Scale Digital Transformation Initiatives
San Francisco, NFAPost: Worldwide government IT spending is forecast to total $565.7 billion in 2022, an increase of 5% from 2021, according to Gartner, Inc.
Gartner Director Analyst Daniel Snyder said the last few years of enduring pandemic challenges have mobilized a wave of digital transformation activities in government organisations across the world.
“Governments are executing innovative activities by harnessing technology to streamline digital services, advance automation processes and evolve citizen experiences,” said Gartner Director Analyst Daniel Snyder.
In 2022, government IT spending is forecast to increase across all segments except internal services and telecom services. Continuing the trend from 2021, software is forecast to record the strongest growth across all segments in 2022. As legacy modernization continues to be a priority in government organizations, growth in the data center systems segment will continue to slow though the forecast period (see Table 1).
Governments continue to invest in critical application software that directly support end user interfaces driving strong growth in this segment. Spending on telecom services is set to decrease in 2022 as governments reduce spending on expensive legacy systems in favor of digital service delivery models.
Gartner Principal Analyst Apeksha Kaushik said in India, government IT spending is forecast to total $9.5 billion in 2022, growing 12.1% from 2021. “Contrary to the worldwide spending, all segments will experience growth in 2022 in India,” said Gartner Principal Analyst Apeksha Kaushik.
Software will continue to be the highest growing segment in India, in 2022, followed by IT services (see Table 2). Modernisation has been a longstanding objective of government organizations for more than the past decade, but the last few years of enduring pandemic challenges have mobilized a wave of transformation activities.
Now, more than ever, governments are executing innovative activities by harnessing technology to streamline digital services, advance automation processes and evolve citizen experiences and building a data fabric.
These investments will continue as the confluence of stimulus measures and increases in annual IT budgets at most national and state levels empowers governments to continue the existing momentum.
Anything-as-a-Service Model Emerges as Pay-As-You-Use Gains Momentum
Anything-as-a-Service (XaaS) is gaining popularity across government organisations as it provides better return on investment normalizing IT spend over time making budgeting for IT more predictable, while avoiding the accrual of technical debt. Gartner predicts that by 2026, most government agencies’ new IT investments will be made in XaaS solutions.
An XaaS model for modernising infrastructure and accelerating innovation is an increasingly attractive approach to acquiring new digital capabilities and managing IT infrastructure — especially as governments are facing increased pressure to provide digital delivery of services, despite constrained resources
Gartner Principal Analyst Apeksha Kaushik said the pandemic sped up public-sector adoption of cloud solutions and the XaaS model for accelerated legacy modernisation and new service implementations.
“Fifty-four percent of government CIOs responding to the 2022 Gartner CIO Survey indicated that they expect to allocate additional funding to cloud platforms in 2022, while 35% will decrease investments in legacy infrastructure and data center technologies,” said Gartner Principal Analyst Apeksha Kaushik.
Mounting concerns with privacy and data protection have also fostered new regulations about the use and location of citizen data. Few mission-critical solutions delivered in the cloud are increasingly sought across numerous verticals in government, including administration, tax and finance, health and human services, community development and planning, and regulatory agencies.
With the ongoing talent challenges facing organisations, XaaS makes it easier for government organizations to find the right talent via XaaS operating models. XaaS delivery models require different internal IT skill sets and place less demand on the organization to develop or acquire emerging IT skills, which are often hard to find and difficult for governments to afford.
Gartner clients can read more in “Forecast: Enterprise IT Spending for the Government and Education Markets, Worldwide, 2020-2026, 1Q22 Update.”
