Cloud computing and Business Process Outsourcing (BPO) will be two of the key trends aimed at driving efficiencies in government IT in 2011, according to Ovum.

In a new report the technology analyst states that government agencies will become more open to a cloud-based approach to service delivery and outsourcing in the coming year, as the need to cut costs comes to the fore.

"Asian governments will continue to invest in local cloud computing capabilities to boost the competitiveness of their ICT industries in the region," said Dr. Steve Hodgkinson, Research Director.

"We expect to see consumption-based and shared delivery models gaining momentum in 2011, as agencies become more open to the efficiencies that a cloud-based approach can offer. However issues of privacy and security will mean some governments will remain cautious," said Jessica Hawkins, Analyst, Ovum and author of the report. "Many will look to their IT vendor to guide them through the new technologies that can help them achieve this and vendors should be ready to do this."

These changes are not expected to be uniform across the technology stack. Momentum for application-based shared services (such as HR, payroll and finance apps) will be slow, while momentum for more commodity-like ICT infrastructure-based shared services (networks, application hosting and office computing) will grow strongly– drawing on the broader momentum of utility-like services demonstrated by cloud computing.

According to Hawkins, the door to BPO, shared services and on-demand access will be more open in 2011 than ever before. "However, governments should push beyond knee-jerk cost-cutting measures and adopt a long-term vision of how fundamental changes to the way they deliver services will bring efficiency," she said.

With new service delivery models emerging in 2011, Hawkins believes there will also be a new approach to procurement by government agencies. She said, "With governments keen to ensure there's more visibility and accountability of how taxpayers' money is spent, agencies will look at new ways of procuring services in 2011. In addition there will be changes in how contracts look– in some cases we will see consolidation."