eGovernment implementation in all European countries is about to create a substantial market for ICT sector companies. Reasons for using ICTs in public sector are numerous. First, governments, at all levels, are urged to cut expenditures in order to reduce fiscal burden while they have to optimise access to information and “customer” care. Thus, governments have faced pressure to improve the professionalism with which government agencies are managed, notably through the use of ICTs.
Although governments seem committed to fulfil the implementation of eGovernment, they still lack accurate strategies to achieve the set-out targets. The first challenge for governments is to solve issues of horizontal fragmentation (policy areas) and vertical regionalization when setting-up eGovernment. Secondly, as governments are under constant pressure to reduce their expenditure, they often shift in favour of implementing open source software.
In terms of business opportunities, consultancy services will be, considering the complexity of the administrative apparatus, important when drawing-up ICT strategies. For most governments, an important task is to integrate back-office with middle- and front-office systems. IP telephony vendors are also gaining considerable traction given the efficiencies that their solutions can generate through cost reductions, unified multimedia and new applications. In terms of new ICT tools market opportunities, the public sector is viewed as one of the most aggressive vertical markets for voice solution adoption through the coming five years.
Opportunities in three main Western Europe countries
The UK is the largest market for local government ICT expenditure and will remain the most attractive market over the coming years. According to the Business Insights’ forecasts, UK local government external ICT spend should grow at a Compound Annual Growth Rate (CAGR) of 12% in the UK between 2003 and 2007, from 2.38bn euros in 2003 to 3.75bn euros in 2007. Breaking into the UK market requires: developing strong partnerships, targeting central government, sub-contracting, using S-Cat/G-Cat (catalogue based procurement schemes) as a positioning tool, talking the language of local government and managing risk on projects.
Despite its larger population and greater number of local government institutions, the German market lags behind the UK in terms of market size. According to Business Insights’ forecasts, local government external ICT spend will grow at a CAGR of 6% in Germany between 2003 and 2007, from 1.96bn euros in 2003 to 2.5bn euros in 2007. This growth rate is however slower than in the UK and France. The reason is that German local governments tend to be risk-averse and to prefer German solutions. Market strategies include: making the L?nder their primary focus, adopting a local government approach, promoting flexible and adaptable solutions, educating local authorities and developing appealing financing packages.
The French market currently lags behind the UK and German markets and this is about to continue since a slow and long-lasting political process limits the market’s true growth potential. However, the French local government market still represents a fair opportunity for IT suppliers and, according to Business Insights’ forecasts, the total market for external IT spend will amount to more than 1.66bn euros by 2007. Potential strategies that companies can adopt to improve traction in the French local government include: focusing on central government, deploying lowrisk solutions, pricing competitively, educating local authorities, recognizing the French preference for local suppliers, and offering consultation services as part of channel support.
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