From strengthening cybersecurity to adopting generative artificial intelligence (AI), the pressure for government agencies to modernize technology is increasing—along with cost. In fact, federal civilian agencies have increased their technology spending by 8% over the last two years, and projections show it could reach $76.8 billion in fiscal 2025.

When it comes to budgeting for new IT expenses, however, traditional methods often fall short. That’s because the mix of hardware, software, and cloud-based solutions fueling most modern tech stacks requires a far more agile approach than legacy budgeting models can typically accommodate.

Most government agencies have traditionally budgeted for technology as a capital expenditure (CapEx)—essentially, a large, upfront commitment. While this approach can offer long-term value, it locks you into multi-year contracts that don’t easily adapt to new, unforeseen needs. Even worse, by the time the system is fully implemented, the tech can already be outdated.

One alternative strategy is to budget for IT as an operational expenditure (OpEx). While this subscription-based model is more flexible, it introduces a new set of challenges. Relying on an outside vendor means they can adjust pricing or core services at their own discretion—think of Broadcom’s acquisition of VMware, for instance—leaving your agency scrambling if those changes aren’t in your best interests.

So, how can today’s CIOs navigate these pitfalls of both CapEx and OpEx budgeting?

In our new e-book, Budgeting for Tech in the Public Sector, we propose several ways to reimagine IT budgeting for a complex, constantly evolving tech landscape, including:

Prioritizing tomorrow’s needs over today’s challenges.
Adopting a modular approach that differentiates between functional and strategic investments.
Combining the best aspects of CapEx and OpEx into a hybrid model that provides both flexibility and long-term stability.

Because we know CIOs might face resistance when proposing a new budgeting strategy, we also share tips for persuading colleagues who may be firmly rooted in the status quo.

In an era of heightened scrutiny over public spending and potential government “waste,” technology budgets are often in the hot seat. As agencies strive to meet constituents’ expectations for faster service delivery and seamless online experiences, it’s crucial to recognize that success hinges not only on the tech you choose to implement, but also on the flexibility of the budget that supports it.

Want to learn more? Download your ungated copy of  Budgeting for Tech in the Public Sector below.

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