E-gov leads IT spending forecast

Federal spending on e-government is likely to increase by 10 percent a year

for the next five years — nearly double the rate that spending is expected

to increase for more traditional federal information technology.

The increase is part of an e-government spending growth trend projected

by the Virginia-based market research company Input.

The federal government now spends a total of $40 billion a year on IT,

including salaries for federal IT workers. About $30.2 billion a year goes

for IT goods and services.

Of that, about $7.2 billion, or 24 percent, goes toward developing e-government,

said Kevin Plexico, executive vice president of Input's government group.

By 2005, the portion spent on e-government will increase to 28 percent

of the government's spending on IT goods and services, Plexico said. That's

an annual growth rate of 10.2 percent for e-government spending compared

with a 6 percent growth rate for federal IT spending overall.

Input forecasts that by 2005, spending on IT goods and services will

increase to about $40.3 billion a year and spending on e-government will

jump to about $11 billion.

The bulk of the spending increase, Plexico said, will be on e-government

services such as Web site development, e-commerce functions and Web-based

enterprise resource planning. This means making agency operations — such

as personnel, payroll and travel — available to employees via the Internet.

Another big chunk of the spending will be on telecommunications, Plexico

said.

The government's shift toward e-government is occurring at a slower

rate than the commercial sector's shift to e-commerce, Plexico said. The

lack of guaranteed solutions regarding privacy and security is a major factor

slowing progress on e-government, he said.

Although banks, credit card companies and retailers increasingly operate

online, "the government has to address privacy and security problems that

are unique," he said. The damage that could be done with personal information

gleaned from electronic tax returns, Social Security forms and other government

documents could be far greater to individuals than the damage from stolen

credit card numbers, he said.