Governments still see value in investing in IT, according to IT sales executives interviewed for the Keating Report mid-year 2010 forecast on government budgets, spending and technology.

"State and federal reporting and oversight requirements will continue to drive investments in software upgrades and add-ons like budgeting and business intelligence tools," said Doug Ingram, industry strategy director for public sector, for St. Paul, Minn.-based Lawson Software.

"With budget shortfalls in 48 of 50 states currently and weak fiscal predictions into 2011 (even in a recovering economy), state and local governments will continue to face challenges to support the many programs and services the public expects," Ingram told

He said government back-office departments, including IT, finance and human resources, will continue to be pressured to improve their operations' efficiency and effectiveness.

"In an environment where budget cuts are being mandated, sometimes on a daily basis, it is critical that managers can quickly and accurately understand the financial and operational facts about their department to make the best possible decisions," Ingram said.

The problem is outdated hardware and software, he explained. "Many legacy systems and processes simply cannot provide the level of insight necessary to support the kinds of tough decisions these individuals are being asked to make. Investment in new and improved systems is probably overdue and certainly necessary to provide this kind of data."

Ingram's government customers are upgrading in a couple of areas, including modernizing enterprise resource planning software, cloud computing and virtualization, he said.

"We're seeing our customers changing business processes and workforce practices to address these key challenges governments are facing today. Shifting IT investments to a virtual environment is one example of how our customers are able to comply with mandates to cut budgets, but continue to invest in new software and productivity tools," he explained.

Software vendor Autodesk is closely watching the federal marketplace, said Ken Tometsko, director of government industry solutions for the San Rafael, Calif.-based developer and seller of 2D and 3D design, engineering and entertainment software.

"Federal spending has clearly aided the recovery," Tometsko told "There are at least two key dynamics that will help to maintain federal spending during the second half of 2010. First, many federal agencies still have stimulus funds that have not been utilized. We expect to see these funds being put to use in the second half of 2010. Second, many federal agencies put off software and hardware upgrades while riding out the recession," he explained.

Those federal software and hardware upgrades could be just around the corner, if INPUT's recent forecast is accurate. Spending in the federal information technology market will grow from $86 billion in 2010 to $112 billion in 2015, at a compound annual growth rate of 5.4 percent, according to "Federal Information Technology Market, 2010-2015," a new report from INPUT.

Reston, Va.-based INPUT is a membership organization that provides comprehensive procurement and market information.

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