Although state and local governments have felt a financial squeeze in the aftermath of the recession, the outlook for information technology investment in the public sector is improving. The CDW IT Monitor, which has been tracking IT sentiment since the beginning of the recession in 2007, reveals local government organizations anticipate greater IT investment in hardware and software heading into 2011.

- Eighty-six percent of government IT decision makers overall expect to replace or install software in the next six months, an increase of nine percentage points since the August IT Monitor. This figure is also the highest since the launch of the IT Monitor in December 2007.

- Hardware outlook: Eighty-four percent of local government IT decision makers plan to replace or install hardware in the next six months, an increase of 14 percentage points since the August IT Monitor.

- Software outlook: One in five IT decision makers at small businesses expect to replace or install software for a significant part of the organization in the next six months—a record high since the inception of the IT Monitor in December 2007.

According to the CDW IT Monitor, a bimonthly indicator that tracks the direction and momentum of the U.S. IT marketplace, 86 percent of government IT decision makers anticipate replacing or installing software in the next six months—an increase of nine percentage points since August 2010 and a record high since the launch of the IT Monitor in December 2007.

Despite a challenging fiscal environment, confidence is strongest among IT decision makers in the local government segment. Eighty-four percent of local government IT decision makers plan to replace or install hardware in the next six months, an increase of 14 percentage points since the August IT Monitor. In addition, 85 percent of IT decision makers at local government agencies are planning to replace or install software in the next six months, up 10 percentage points since August 2010.

“Many state and local government IT decision makers appear to be prepared to spend money in order to save money in the long run. Newer technologies can help government agencies accomplish more even with reduced staff and reduce costs in key areas such as energy consumption,” said Thomas E. Richards, president and chief operating officer, CDW.

The IT Growth Monitor, which measures IT investment expectations, increased six points in the government sector to 69, the highest level since August 2008. The overall CDW IT Monitor index score held steady at 72 for the sixth consecutive reading.

In the private sector, the recent uptick in confidence among IT decision makers at small businesses first seen in the August IT Monitor held steady. Almost one in five (19 percent) expect to replace or install software for a significant part of the organization in the next six months—a record high since the inception of the IT Monitor in December 2007. In addition, 39 percent of IT decision makers at small businesses expect to replace or install new hardware over the next six months, up 3 percentage points since August and the second consecutive gain for this measure since this year's low point in June 2010 (34 percent).

“The uptick in confidence among small businesses that we first saw in August has remained steady in this wave of the IT Monitor,” added Richards. “Developments such as the recent passage of the Small Business Jobs Act of 2010—with its tax benefits and lending provisions—could also be contributing to this stabilizing effect.”