Pent Up Demand and New Funding Fuel Steady Growth in State and Local Government IT Space, IDC Research Shows

FRAMINGHAM, MA – February 2, 2005 – After three lean spending years, pent-up demand and new funding is finally triggering slow but steady growth in the state and local (S&L) government IT market space. According to a recently published report from IDC, overall state IT spending should jump 7.6% by the end of 2005, and another 4.5% by the end of 2006. The compound annual growth rate (CAGR) from 2003 to 2008 will be 7%.

"After several lean years and flat spending patterns, state and local government IT spending is again enjoying moderate growth," said Shawn McCarthy, program manager for U.S. IT Opportunity Government and Education at IDC. "We believe that this is an opportune time for IT vendors to target the state and local market space."

Among the key findings presented in IDC's study are the following:

— Overall local spending should increase 4.7% between by the end of 2005, and 3.8% by the end of 2006. The CAGR from 2003 to 2008 is 6.3%.

— Hardware spending is a mixed bag. IDC forecasts substantial increases for laptops, handhelds, and networking equipment, but desktop PCs will show a decline and high-end servers are slowly being displaced by popular and less expensive "volume" servers.

— The top five states for IT spending will see slow steady growth now through 2008. Many other states will see slightly higher growth, with compound annual growth rates (CAGRs) of over 5%.

— Overall, system consolidation goals and federal mandates for sharing state and local data are driving the current S&L spending patterns.

This study, U.S. State and Local Government IT Spending Forecast, 2003-2008 (IDC #32591) includes IDC's newest 2003-2008 forecast for state and local government IT spending. In addition to the total S&L predictions, IDC also breaks the forecast down by IT segment and lists the states with the top ten IT budgets. In addition, this document outlines the current major information technology issues faced by state & local governments and also analyzes the major challenges shaping government IT procurement at the S&L level.

IDC's primary focus is on the following specific IT segments: hardware, software, and IT services. This breakdown allows vendors to make accurate comparisons of IT spending across different vertical industries and government agencies.

To purchase this document, call IDC's Sales hotline at 508-988-7988 or email

For additional information about IDC's Vertical Research Group, please contact Virginia Lehr at 508-935-4188 or

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