Wave Systems Corp. (fka WAVXQ)

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http://www.nextgov.com/nextgov/ng_20100112_7868.php?oref=rss?zone=NGpopular

Government spending on information technology will grow nearly 4 percent, as agencies invest in software applications and services to enable transparency, accountability and modernize old computer systems, according to a federal IT research firm.

Federal IT spending will grow from $73 billion in fiscal 2009 to $75.7 billion in fiscal 2010, Government Insights predicted in a report it released on Tuesday. Civilian agencies will account for 55 percent of total spending, or $41.8 billion, while the Defense Department will spend $33.9 billion on IT goods and services.

"The overall bucket has increased," said Shawn McCarthy, research director for government vendor programs at Government Insights during a Tuesday Web conference to announce results of the report. During the last few years, civilian agencies have had sharper increases in IT spending than Defense, which has stabilized IT spending, and that trend should continue, he noted.

Among its 10 predictions about the 2010 government IT market, the company forecasted the government will spend $1.5 billion on IT services to support distribution and tracking of dollars awarded under the American Recovery and Reinvestment Act, as well as increased investments in accountability and reporting technologies to improve the stimulus spending Web site, Recovery.gov. The Recovery Board overhauled the site in September 2009 after critics complained about poor functionality.

"When you have that type of high-profile situation, government needs to get it right," McCarthy said.

Although agencies will increase efforts to improve transparency, the research firm predicted the government will put less emphasis on Web 2.0 services in favor of social networking applications that allow citizens to define how they interact with government.

"Social media is creating a lot of noise as government agencies get [connected] with Facebook, Twitter" and other software applications that can take the place of online services provided through agency Web sites, said Thom Rubel, vice president of research at Government Insights. "Government 2.0 is dying. Some [investment in social media] will create unintended disappointments, but we don't necessarily think that's a bad thing. Government needs to be prepared to sort and rationalize those interactions" and develop a more concrete strategy for citizen engagement in 2011.

Another technology that will fall short of expectations in 2010 is cloud computing, which Government Insights said is "not ready for prime time" due to legitimate concerns about security, data exchange challenges and performance. But it will begin to see greater adoption in 2011.

Spending on legacy IT equipment and services averages about 69 percent of federal IT budgets, according to Government Insights. Agencies will be forced to rely on existing IT systems in the coming year, investing in strategies to extend the life of aging systems such as service-oriented architecture, which relies on Web applications to link different systems and share information across multiple platforms.