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Agencies Spend Big to Transform Internal Processes, Report Finds

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On the cusp of the election, federal agencies are poised to spend more on digital transformation, a report shows.

Federal agencies are investing in cloud, software and endpoint security as they consider how to update internal operations, but they're less focused on using technology to change customer experience, according to analysis from market research firm Govini.

In fiscal 2016, annual cloud contract obligations reached $2.8 million, compared to $1.8 billion in fiscal 2011. Infrastructure-as-a-service offerings accounted for 36 percent of that. Software spending grew about 44 percent between fiscal 2011 and 2016, with end-user productivity programs accounting for almost half.

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Those programs "are designed to make tasks such as creating graphics, documents and data sets easier," the report said.

Spending on endpoint security reached $2.1 billion in fiscal 2016, about 22.4 percent more than the average over the last five years. Endpoint security software spending grew 61.4 percent in fiscal 2016 compared to the average of the last five years, topping $451 million.

Mobility spending, however, has slowed. The report found the mobility sector "experienced two years of decline after rebounding from sequestration in FY14, seemingly the opposite of what has taken place in the private sector."

"Citizen engagement agencies like [Health and Human Services Department] and Veterans Affairs Department] and [Homeland Security Department] have done a pretty good job of thinking about how they want to digitally transform their engagement" with citizens, author Matt Hummer told Nextgov. But across the board, tech spending was "limited to internal efforts for transforming internal processes within the agencies," he said.

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