As government spending in Western Europe is set to increase from $56.6bn (€41.7bn) in 2008 to $68.5bn (€50.5bn) in 2013, according to the latest research by global independent advisory firm, IDC Government Insights, VP for Global eGovernment at Capgemini UK, Graham Coclough, warns about the changes, in terms of different commercial models, which are going to shatter the European IT market.

"There are two factors that will affect the government spending," he tells IT Europa. "One is obviously the impact of the perception of technology in terms of how it resolves or not the fiscal conditions. And two is the extent to which governments are actually outsourcing their IT so changing the whole nature of the delivery structure technology."

Take for instance the UK, the highest spender among the top five economies in 2010, according to IDC, and its new strategy in the UK in terms of consolidation and cloud, continues Coclough. "I saw the figures that IDC had come up with and I don't know what that translates in terms of CAGR, but it looked for me a fairly positive picture. The questions that come down are ‘does that mean it's going to be more money or not?' and ‘is it going to be a different form of commercial arrangement between the public sector and the provider?' I think on the money it will continue to be very substantial because it is for the big run..."

Coclough sees the same happening in other countries, such as Denmark and the Nordics in generally, who've seen the need for significant consolidation changes earlier and have created a programme in running new organisations that is about consolidation. "So I think the devise of change is going to spread around consolidation of infrastructure, data centres, and in many ways that mean you're consolidating the landscape, so you should be more efficient and probably spend less; the real answer is you probably spend quite a lot and deliver better quality," he explained.

The consolidation on the market is already leading to several changes. First is the argument that says that the integration market is going to change very substantially. To research director, European Government Technology Decision Support at IDC Government Insights EMEA, Jan A. Duffy, "IT suppliers who want to capture a share of that growth must take pains to ensure that their service offerings address the need for modern infrastructures and application capabilities, streamlined processes, and a demonstration of cost containment or, even better, cost reduction."

Same is true for Coclough, who sees "a strong need to move towards providers that seek to deliver and commit to better business outcomes," and so therefore you're going to need to pull together the ability to deal with technology and business in the same agenda, and commit to different commercial models. To him, the shift will take the form of a need to go for either or both large-scale providers or consortia.

For the pure commodity play technology, he suspects they're "maturing in terms of how to engage with the European market" and that they will continue to "come in and pick-up the mid-tier players" through acquisitions. "So I think consolidation is likely to continue. And I think there's a focus towards what comes in business technology. I think that the ones that focus on pure technology are probably at risk," he concludes.

But whatever the shift in how money is being spent or how slow growth could be, "we are unlikely to see a significant slowdown in IT spending in the next few years," says the report, which sees government IT spending as generally more resilient than some other sectors.

www.idc-gi.com
www.capgemini.com