The software is essentially a complementary commodity to hardware and can not
be used without it. The possibility of using modern software is limited by available
hardware resources, such as processor architecture, RAM, hard disk, etc. In practice, it
means that the software update procedure can be performed after the verification
procedure and, if necessary, update of the appropriate hardware. According to the
report [1] 64% of computer equipment used in central government and 75% in regional
administrations is outdated. Additional hardware purchases results in increased costs
of information technology projects. Such IT projects are axially for government bodies
and it creates additional difficulties for implementation considering funding constrains.
The analysis of public government procurement of IT goods and services
conducted during 2017-2018 (Fig. 1) shows an increase in their volumes and indicates
attempts to solve the systemic problems in usage of IT in government agencies and
state enterprises. However, the process of creation of unified approach to IT
management in public sector has not been completed at the state level and the
procedures need to be improved.
Figure 1. The volume of purchases of software, hardware and IT services in
2017-2018, UAH billion
Source: Prepared by author based on data provided by https://bi.prozorro.org/
Nowadays the IT departments of each state body independently make purchase of
software within existing budgets based on the results of individual utility estimate and
on the needs of each organization. In the long run, this approach is not optimal due to
risk to get into the "investment trap". Under “investment trap” we mean sunk costs for
training, pay license costs to upgrade and purchase applications, the cost of integration
with existing solutions. As a buyer makes additional investment in complementary IT
products, it leads to dependence on one particular manufacturer or technology.
Ultimately it leads to chronic underinvestment in IT, because the choice of a new
product depends rather on compatibility with existing products than on price. Thus,
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