While it may seem paradoxical, the mantra among federal, state and local government agencies on IT investment strategies seems to be: You have to spend if you want to save.

Spend, that is, on emerging technologies that are proven to slash operational costs because they’re more efficient and less pricy than many legacy systems. And they use less power too, further reducing the day-to-day costs of public service.

These are the broader conclusions presented in a recently released forecast of emerging IT technologies among federal, state and local governments produced by INPUT, a Reston, Va.-based government IT market research firm. The forecasts were compiled after INPUT surveyed more than 140 federal, state and local government agencies—with the fed side including many Department of Defense agencies, as well as the Department of Homeland Security, General Services Administration, Nuclear Regulatory Commission, and Securities and Exchange Commission—and conducted interviews with an estimated 90 government and industry experts. Government procurement data and vendor IRS filings were also analyzed for additional trend reporting.

Here are some key findings:

• In the federal sector, the total IT budget is expected to reach $89 billion in the 2010 fiscal year, generally staying level with 2009 spending. Cloud computing, virtualization, service-oriented architecture, open-source software and geospatial technologies are emerging as top technology solutions/architectures to watch. Cloud computing and virtualization command a significant degree of high interest, due to the anticipated cost savings and energy efficiency of these technologies. "Green" computing is now a driving factor in deciding federal IT purchases now, as President Obama is mandating that agencies begin to measure greenhouse gas emissions and set target strategies to reduce them.

As a result, more than 54 percent of agencies taking part in INPUT’s research indicated that they already have virtualization projects in place, and nearly one out of five have cloud computing projects up and running. NASA’s Ames Research Center, for example, recently launched a private cloud environment called Nebula for self-service computing, network resources and storage needs. The Department of Energy is prototyping Google Docs for word processing, spreadsheet and e-mail, while the Department of Transportation is tapping into the cloud for computing-as-a-service (CaaS) tools. Overall, the total federal cloud computing market is expected to grow from $370 million in 2009 to $1.2 billion in 2014, INPUT reports.

• Many of the same technologies are driving demand among state and local government agencies, which are expected to make $61.2 billion worth of IT purchases in the 2010 fiscal year, also essentially remaining level with last year’s spending. These agencies are lagging behind their federal counterparts with respect to cloud computing, but are embracing virtualization technologies: While 63 percent of state/local agencies report that they have virtualization solutions already in place, only 7 percent report the same about cloud computing projects.

The challenges in greater acceptance of cloud computing technologies among these agencies include perceived threats to data ownership, records management and storage needs, according to INPUT. There are also concerns that agencies with longtime legacy systems may not be able to effectively make a transition to a cloud computing platform. Virtualization, however, was found to be favorable among these agencies for the increased savings on operational costs and the reduced energy consumption benefits, as well as the increased agility of computing resources and tech applications.

Overall, however, expect cloud computing to gain greater acceptance eventually within all levels of government, along with other emerging technologies, according to INPUT. When it does, the impact will be significant.

 “The impact of cloud computing, service-oriented architecture and virtualization could have significant implications for agencies, especially when they’re combined,” says Deniece Peterson, manager of industry analysis for INPUT. “They require managers to closely examine their current technology environment and the processes within it. Part of the battle of gaining efficiencies and reducing costs is to simply understand where you are failing to effectively use what you have. Implementing these solutions will force agencies to do that.”