Governments lag on digitisation spending, says Gartner

Government organisations are lagging behind the leaders in the public sector in spending on digital transformation, according to a survey by Gartner.

The global survey of CIOs found that on average top top-performing organisations in the private and public sectors spend 33% of their IT budgets on digital transformation, compared to 21% of budgets spent by typical government organisations.

By 2018, CIOs of top-performing organisations predict they will spend 43% of budgets on digitalisation, compared to 28% of government budgets.

Gartner's 2017 CIO Agenda survey includes the views of 2,598 CIOs from 93 countries, representing $9.4 trillion in revenue or public sector budgets and $292 billion in IT spending, including 377 government CIOs in 38 countries. Government respondents are segmented into national or federal, state or province (regional) and local jurisdictions, to identify trends specific to each tier. For the purposes of the survey, respondents were also categorised as top, typical and trailing performers in digitalisation.

Rick Howard, research vice president at Gartner, said that 2016 proved to be a watershed year in which frustration with the status quo of government was widely expressed by citizens at the voting booth and in the streets, accompanied by low levels of confidence and trust about the performance of public institutions.

"This has to be addressed head on," said Howard. "Government CIOs in 2017 have an urgent obligation to look beyond their own organisations and benchmark themselves against top-performing peers within the public sector and from other service industries. They must commit to pursuing actions that result in immediate and measurable improvements that citizens recognize and appreciate."

Government CIOs as a group anticipate a 1.4% average increase in their IT budgets, compared with an average 2.2% increase across all industries. Local government CIOs fare better, averaging 3.5% growth, which is still more than 1% less on average than IT budget growth among top-performing organisations overall (4.6%).

The data is directionally consistent with Gartner's benchmark analytics, which indicate that average IT spending for state and local governments in 2016 represented 4% of operating expenses, up from 3.6% in 2015. For national and international government organisations, average IT spending as a percentage of operating expenses in 2016 was 9.4%, up from 8.6% in 2015.

"Whatever the financial outlook may be, government CIOs who aspire to join the group of top performers must justify growth in the IT budget by clearly connecting all investments to lowering the business costs of government and improving the performance of government programs," Howard said.

Among the top spending priorities for government organisations for the next five years, advanced analytics was rated as a high priority the most often (79%). Digital security remains a critical investment for all levels of government (57%), particularly in defence and intelligence (74%).

The Internet of Things will clearly drive transformative change for local governments (68%), whereas interest in business algorithms is highest among national governments (41%). All levels of government presently see less opportunity in machine learning or blockchain than top performers do. Local governments are slightly more bullish than the rest of government and top performers when it comes to autonomous vehicles (9%) and smart robots (6%).

The top three barriers that government CIOs report they must overcome to achieve their objectives are skills or resources (26%), funding or budgets (19%), and culture or structure of the organization (12%).

Drilling down into the areas in which workforce skills are lacking, the government sector is vulnerable in the domain of data analytics (30%), which includes information, analytics, data science and business intelligence. Security and risk is ranked second for government overall (23%).

Howard said that government organisations should bridge the skills gap by accessing external expertise though partnerships with startups and midsize organisations.

Government agencies should also increase their participation in ‘digital ecosystems, Howard said: "The digital ecosystem becomes the means by which government can truly become more effective and efficient in the delivery of public services."