The National Audit Office prepared an overview of the information technology expenditure and investments of public authorities in 2019–2024, as the Ministry of Justice and Digital Affairs does not have a central view of such expenditure. This information is not provided in the state budget either. As we know, the Estonian state budget has been activity-based since 2020 – all expenditure, including IT, is allocated to authorities by service. An overview is necessary to see where public money is going and what exactly is received for these funds, and it is also necessary to make informed management decisions in the area of IT.
However, the state does have the data of IT expenditure and investments (see Figure 1) and they can be accessed from the public accountancy and payroll accounting system SAP BO (Business Objects). The National Audit Office has also prepared an overview of the years 2016–2019 based on accounting data.
Figure 1. Expenditure included (in green) in and excluded (in red) from the overview
Source: public accountancy Chart of Accounts, National Audit Office
The overview includes ministries, their IT centres and the authorities, inspectorates and authorities in their areas of government (hereinafter on the figures: area of government) that spend the most on IT (see Annex A). The overview is based on the structure of the authorities as at 31.12.2024.
A number of organisational changes took place in the areas of government of ministries from 2019–2024, such as the establishment of new authorities, the merger of authorities, the transfer to an authority’s functions to another authority, the consolidation of IT services, which in turn had an impact on the IT expenditure of authorities. The establishment of the Estonian Information and Communication Technology Centre (RIT) on 01.12.2021 can be considered the biggest change that had an impact on IT expenditure.
The Government’s decision of autumn 2021 to allocate €30 million to increasing the level of cybersecurity had a significant impact on the increase in IT expenditure. The increase in IT investments and IT administrative costs has also been influenced by the general increase in hardware and software prices.
The authorities covered by the overview invested a total of €418 million in IT from 2019–2024
The IT expenditure of the authorities under review as a whole (i.e. both IT investments and expenditure) has increased from 2019–2024. Although IT investments decreased in 2024, they have also increased compared to 2019. Whilst total IT investments across all authorities amounted to €45 million in 2019, they have almost doubled to €83 million by 2024 (see Table 1). The largest investments have been made in the areas of government of the Ministry of Economic Affairs and Communications, the Ministry of Finance and the Ministry of Social Affairs, and the most expensive IT projects during this period were the Government Cloud (€11.09 million in total), the Register of Structural Support (€7.07 million) and the Election Information System (€5.69 million). The share of foreign financing in IT investments ranged from 30–40% during the period.
Table 1. IT investments, IT administrative costs and IT staff costs of the authorities under review at the beginning (2019) and end (2024) of the period (€ million)
| Type of expenditure | 2019 | 2024 |
|---|---|---|
| IT investments | 45 | 83 |
| IT administrative costs | 38 | 77 |
| IT staff costs | 40 | 97 |
Source: SAP BO (Business Objects) reporting system and balance sheet records system
The total IT administrative costs in the last six years for the authorities under review were €322 million
The IT administrative costs of the authorities covered by the overview doubled over the period. In 2019, they totalled €38 million, but in 2024 amounted to €77 million.
A more detailed analysis of the costs of IT centres shows that the administrative costs (including IT administrative costs) needed to maintain the IT centres in general increased from 2020 onwards. Compared to the first years of the period (€37 million in 2019), the administrative costs have also doubled by 2024 (€84 million).
The total IT staff costs of the authorities under review in the last six years were €385 million
IT staff costs increased over the period in both the IT centres and the rest of the public authorities under review. In 2019, they totalled €40 million in all the authorities under review (including €32 million in IT centres), but by 2024 they already reached €97 million (including €75 million in IT centres). The increase in IT staff costs was driven by growth in the number of employees and salaries.
The number of employees in IT centres has been growing, from 1,064 in 2019 to as many as 1,743 in 2024. Average gross salaries increased in all IT centres and the trend has been similar to the increase in average gross salaries in the ICT sector. The average gross salary in the IT centres was €2,621 in 2019 (the average in the ICT sector was €2,342) and €3,481 in 2024 (the average in the ICT sector was €3,484).
Although the IT expenditure and investments almost doubled over the period, the increase in expenditure has remained below the needs estimated by the areas of government.