Public sector IT set for slowdown

Despite massive projects in the media eye, and an over all worth growing faster than the rest of the market, the UK's public sector software and IT services market is set for a slowdown, according to forecasts by analyst firm Ovum.

The sector grew by nine per cent in 2006 to be worth £8.1 billion, and is set to jump by 11 per cent this year. But Ovum forecasted a compound annual growth for the next five years at 6.9 per cent. While that's still higher than the 5.8 per cent growth in the overall software and IT services (S/ITS) market for the same period, Ovum said suppliers should expect ICT projects to slowdown, held back by budget constraints and spending reviews.

"From 2008, the dynamics of the UK public sector S/ITS market are likely to change significantly," said Georgina O'Toole, lead analyst for the research, in a statement. "Suppliers fortunate enough to have landed themselves a 'mega-deal' in recent years have benefited most. However, with fewer mega-deals on the horizon, the underlying S/ITS market is set to become relatively more attractive, particularly for second-tier suppliers, as UK government puts greater emphasis on exploiting the infrastructure investment of the early part of the decade."

Rather than massive projects, the sector will see more mid-sized deals for areas such as application development and maintenance, systems integration, and consulting.

"In this comparatively lower-growth environment, suppliers will need to shift their modus operandi in the UK public sector. Account teams will need to be far more adept at understanding the specific needs of customers and potential customers rather than on winning the next mega-deal," O'Toole said. "The winners will be those companies that change their approach to suit the new shape of the market."

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