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ICT spending by local authorities is forecast to increase by 5% in 2008/9. Overall spending has now overtaken the record levels achieved in 2005. Authorities are planning to spend over 3.2bn on ICT in 2008/9. More organisations are forecasting increases in IT revenue spend this year than those forecasting reductions.

Breaking down the headline costs, staff costs account for 44% of overall spending, a slight increase on the figure reported last year. External services (13%) is now the second highest area of spend overtaking spending on software (12%).  Hardware remains unchanged at (11%). Data and voice communication expenditure (9%) has reduced since 2007. Consultancy fees have increased to 3% of budget in 2008.

These figures are reported in the latest edition of the Society of IT Management’s annual IT Trends survey published in January. The report, published on CD-ROM with or without the data upon which it is based, analyses technology, budgets, manpower, product ratings and market share, together with views and opinions about the future.

IT Trends in Local Government 2008/9: “Uncharted waters” is based on responses to a comprehensive questionnaire sent to heads of ICT in the 600 local public service providers in England, Northern Ireland, Wales and Scotland. Benchmarking data provided by Socitm members was also used and in total data from more than 220 organisations is included in this year’s report.

While the financial resources available to ICT functions in the sector have increased since 2007 they still lag behind commercial comparators. There is a reluctance to borrow to finance ICT schemes, suggesting that the business cases are not compelling. Pooling of budgets and service sharing has not yet taken off as expected. ICT staff remains the biggest cost for all types of organisation in the sector.

The research suggests that there needs to be a greater focus on using ICT to monitor and manage the business. In the current financial environment ICT needs to be able to demonstrate it delivers business benefit wherever it is used. This requires a greater involvement of the ICT function in service planning and development. Organisations that use ICT as a strategic resource rather than as a utility achieve better performance ratings than those that don’t.

There has been a small increase in number of ICT staff working in the sector since 2007. More organisations are reporting difficulties with recruitment and retention. There is evidence that ICT units and their managers are not sufficiently involved at the top table and are not influencing key aspects of service development. The trend of the down grading of the ICT function previously detected appears to be continuing.

Security and privacy of information has leapt to the top of the agenda in all organisations. High profile cases of data loss reported in the past twelve months have served as a wake-up call for all public sector organisations. While it appears that security breaches and losses are rare in the sector the report suggests the time is right for a fundamental review of security and privacy issues. New technology, out-of-date management practices represent a serious threat to organisations.

The survey shows that organisations are working on a wide range of initiatives to deliver both short-term tactical cost savings and schemes that will change fundamentally how services are delivered. The report identifies a number of common themes that if adopted more widely could benefit all public sector organisations. Matching supply and demand for ICT service in a budget constrained environment presents the most significant challenge. Shared service development has proved to be elusive.

Policy, regulatory and social change generates new demands and pressures. The research suggests that organisation awareness and response to these factors is patchy. Some organisations are forging ahead, and the report suggests that there is a case for a wider adoption of key initiatives.

Responses to the IT Trends survey (which were collected before the current financial turmoil unfolded) indicate that IT both capacity and capability were growing in the sector. There was a surge in the amount of new technology that was being procured even though the overall spending on that technology was not increasing at the same rate. The report attributes the increase in purchases to the need to replace technology bought as part of the e-government programme. Lower cost of technology in 2008 is thought to be why more can be bought for less.

Overall, the message from IT Trends 2008/9 is positive says Socitm President Richard Steel ‘The 2008 survey shows that ICT in local public services has come through the past 12 months even stronger and more capable than it was in 2007. ICT managers have bigger budgets, more staff and greater influence over the future development of services. The demand for ICT continues to outstrip supply; this remains the big challenge for heads of ICT.’

John Serle, editor of IT Trends adds: ‘There remain some big opportunities for ICT to transform local public services. The things that were easy to do have been done. Organisations will need to be bold and ambitious with their use of technology in the next few years. Some of the new emerging technologies can be exploited to transform local public services, delivering better more cost effective customer service’

IT Trends provides an in depth review of the current position in the Local Government ICT scene together with a detailed analysis of the challenges authorities face. The 2008 report features:

    * An executive summary for policy makers
    * An analysis of the capacity of authorities to deliver change
    * Ratings of hundreds of IT products
    * Ideas on how to deliver efficiency savings
    * Views of IT managers about the challenges ahead