BUSINESS

OMB urges federal agencies to cut IT budgets

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Last week the White House gave federal agencies guidance as they prepare their IT budget requests for 2014. OMB called for agencies to cut 10% from the average of what they spent on IT from 2010 through 2012. But they should also include plans for possible reinvestments of 5% and 10%.

Federal News Radio said these cuts would bring total spending on technology to the lowest level in eight years.

What are some of the more obvious consequences of these cuts?

Profit margins should shrink as agencies become more interested in lowest price vs best value.

Big companies will compete more with small businesses as they all chase smaller opportunities.

Technologies that purportedly save agencies money – such as cloud computing - should have strong growth.

And of course, companies will investigate opportunities in adjacent markets such as utilities and healthcare.

Making spending plans so public is unique to the government business. No one can say they didn’t see these budget cuts coming.

I’m Steve Vito of UpsonVito.

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