E-gov to top $5B by 2007

The federal government could spend more than $5 billion on e-government initiatives by fiscal 2007, according to a report released last month by Input.

The market research firm expects the Office of the Secretary of Defense to lead the way, spending $778 million on e-government in 2007, compared to $453 million in 2002 — a compounded annual growth rate of 11.4 percent — followed by the individual spending power of the Army, Navy and Air Force.

The Treasury Department tops the list of civilian agencies, according to the report, and is expected to spend $400 million in 2007, compared to $212 million in 2002, a compounded annual growth rate of 13.5 percent. Other top e-government spenders are NASA and the departments of Health and Human Services, Transportation, Justice and Commerce.

Agencies spent an estimated $2.9 billion on e-government in fiscal 2002, with resources focused primarily on improving or replacing the servers and applications supporting their core operations, said Payton Smith, manager of public-sector market analysis services at Input, Chantilly, Va.

By improving those internal business systems, and consolidating such systems across agencies, the federal government can generate savings that can be reinvested in applications that serve the public — a strategy the Office of Management and Budget is pushing aggressively through the budgeting process.

"That business line is ripe for consolidation because every agency does it," Smith said. "It's the most obvious area for cost savings."

Agencies will also need to improve business systems to support e-government strategies, which Input took into account when making its projections.

So rather than limit its study to the 24 e-government initiatives highlighted by OMB, Input counted any projected spending that would support online government operations, whether it's collaboration between agencies, between government and businesses, or between government and citizens.

Given those parameters, Input predicts that overall e-government spending will increase at a compound annual growth rate of 12 percent between 2002 and 2007. That is the same increase Input predicts for overall government spending on information technology.