My Take on Civic Tech Growth – 6.4 Billion in Spend This Year Alone

Over this past weekend I realized that six months ago, nearly to the day, I joined the Technology and Civic Engagement team after 14 plus years working on the enterprise side of Microsoft, mainly building the Microsoft Technology Center organization. Between Super Bowl commercials I took the opportunity to reflect back and compare what I’ve learned over the past few months against the expectations I had when first accepting the job.

What has stood out to me most is not only the size of the civic tech market—although it is larger than I realized—but how fast it is growing. This growth manifests itself in three ways:

 

  • Increasing government spending on civic tech projects
  • Civic tech’s growing contribution to the overall economy
  • The rate at which Entrepreneurs are creating new businesses to capitalize on this growth

 

Screen Shot 2015-02-05 at 12.25.59 PMIDC predicts that state and local governments will spend $6.4 billion on civic tech projects in 2015 alone. To put that in perspective, that is over a quarter of the $25.5 billion they will spend on all external IT services. What’s more, they expect civic tech spending to grow 14 times faster than other IT projects over the next five years.

And that’s just government spending. When one looks at the overall economy, the numbers are mind boggling. McKinsey Global Institute estimates that open data will generate more than $3 trillion in value annually—$1.1 trillion in the U.S. alone. Part of that will come from increased efficiency; better informed businesses and citizens can make smarter decision. This ranges from simple cases such as NextBus providing real time transit predictions so I don’t have to worry about standing around waiting for a late bus to using big data and predicative analysis to improve the energy efficiency of buildings like we are doing with our 88 acres project.

Finally, the number of new startups entering this space continues to grow. The Knight Foundation reports the number of civic tech companies grew at 23% CGAR since 2000. These companies are following a common pattern of entrepreneurs finding novel ways to use the treasure trove of government data  to build very successful and long lived companies. For example, companies generate $90 billion in annual value from the once closed GPS system providing everything from pinpoint crop fertilization to location targeted ads to turn-by-turn directions to ensure you don’t get lost returning the rental car.

Just as the combination of the smartphone and the migration back into our urban centers ushered in a new wave of innovation that brought us Uber, Airbnb, and Task Rabbit—companies that solve problems we didn’t even know we had—I can’t wait to see what the civic tech ecosystem brings us over the next six months and six years.