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US defence spending set to rise

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Annual information technology spending at the US Department of Defence (DoD) has decreased a total of -14,4% in the past three years.
But fiscal year 2016 is on track to see a slight increase (up 1,6%) in DoD IT spending. A new IDC Government Insights report, US Defence Department IT Forecast – 2015 to 2018: A Slight Recovery and New Opportunities, presents Government Insights’ five-year forecast for information technology spending at the US Defence Department. The document also examines the major IT developments and challenges faced by DoD services today, with a close examination of how these trends are shaping defence IT spending, procurement operations, and technology preferences.

The DoD IT budget was a little over $35-billion in Fiscal Year 2012. But by the time Fiscal Year 2015 ends on September 30th, the DoD is expected to have spent a bit over $29,9-billion on information technology solutions. That’s a decrease of $5-billion if you compare the 2012 Defence IT budget to the 2015 spending plan. However, after the multi-year decline, FY 2016 looks slightly better, with a proposed $30,5-billion in Defence IT spending. Further, the forecast for Defence Department IT spending is relatively healthy through 2019. The compound annual growth rate (CAGR) between FY 2014 and FY 2019 is roughly 0,5%.

The following key views are presented in the new forecast:

* A five-year total forecast of external IT spending in the DoD by major services (Army, Air Force, Navy/Marines), plus other projects that reach across multiple services (so-called “DoD-wide” IT programs and projects).

* A roll-up of expected spending by hardware, software, and IT services for Fiscal year 2015;

* Additional DoD budget details, including parts of the defence IT budget that fall outside of traditional spending, such as staff salaries and other costs;

* Details on some of the major projects driving spending within the DoD; and

* A list of key forecast assumptions, with details on how these factors will influence government IT spending in the months ahead.

According to the new forecast, the DoD area with the highest anticipated growth during this time is the so-called defence-wide services, which includes multiple resources that can be tapped into by other service groups. Its growth is well underway, related to new systems for common enterprise IT solutions and multi-year investments related to cloud solutions. Slightly negative CAGRs are expected for the Army and the Air Force between 2014 and 2019. Very slight growth is expected for the Navy.

“The increases show slightly more spending targeted to cloud solutions and more spending targeted to security improvements,” says Shawn McCarthy, research director for IDC Government Insights. “This trend is expected to increase for the next few years. Beyond 2017, we don’t expect to see growth to be quite as robust as what we have seen between 2014 and the proposed 2016 budget year for DoD agencies.”