2023 Projected SLED IT Spend

In case you haven’t been greeted, welcome to the age of digitalization.

As digitalization grows, so does SLED technology spending. Overall, SLED IT spending is expected to grow between three and five percent in 2023 with total spending reaching as high as $137 billion.

Welcome to the “big data” edition of Market Insights. Let’s get to it!

IT Spending and Opportunity Volume are Growing

Technology-related spending is outpacing U.S. GDP. Overall, SLED IT spending is on an uphill projection over the next few years.

Projected annual IT spending based on a variety of indicators.

Takeaway: IT as a whole is a strong sector. Everything is getting looked at through the “experience lens” in the world of digitalization, so the opportunity for IT is strong.

Speaking of opportunity, Industry Navigator tracks IT-specific opportunities in SLED.

What we found in Industry Navigator is that overall IT spending isn’t the only thing growing. Per the chart below, the volume of opportunities is on the path to catching up with the pre-COVID opportunity volume.

(Let me know if you are interested in learning more about tracking these opportunities and much, much more in Industry Navigator.)

Federal Stimulus Dollars are Still in Play

Federal funds add even more padding to overall state budgets.

• COVID Impact — Three COVID-era stimulus packages provided states and localities with roughly 40% of their annual tax revenue.
• ARPA — The bulk of this aid came through the American Rescue Plan Act of 2021. This funding is still creating opportunities in SLED today.
• IIJA — Funding from the Infrastructure and Investment and Jobs Act is just starting to flow. We’re only in the first inning!
• Strong Support — Strong federal support will remain for the near-term, but states need to plan for a return to more normal funding levels post-IIJA.

We are not anticipating more major pandemic stimulus or another transportation bill of this size, but remember, these are multi-year programs.

• The 5-year transportation program alone will create a decade’s worth of projects.

Takeaway: Solving the puzzle around how to leverage these funds will set you up for this year, next year and beyond.

CIO Top Priorities

Last but certainly not least, the results are in (drumroll, please).

Here are the top 10 CIO priorities for 2023:

Takeaway: It’s noteworthy that there is communality across the lists on several key priorities (cybersecurity, customer experience and workforce are all top of mind).

• “Budget and cost control” dropped from the list.
• While CIOs will always be cost conscious, it is indicative of the strength of the market right now.

As always, please reach out with any questions.

The charts and graphs in this newsletter were created with data from the Center for Digital Government and Industry Navigator.