IT – Made in Germany

In 2016 the German federal government founded its own IT service provider to bundle its technology, make it cheaper and keep it in its own hands. Ten years later it has twice the staff and spends more than three times as much. The bundling has been called off, and little is in its own hands.

I. An agency nobody knows

The Federal Information Technology Centre, ITZBund for short, was created on 1 January 2016 from three IT service providers of different ministries. It runs computers, networks and specialist applications for a large part of the federal administration, from customs clearance to budget management. Outside the administration hardly anyone knows it. When it appears, it is in subordinate clauses. The new tax on sugary drinks, for instance, needs 23 additional posts at ITZBund according to the coalition’s amendment, as we described in “Saving on Paper”.

II. Twice the people, three times the money

At its founding, ITZBund had around 2,300 employees by its own account; today it has around 4,600. According to the Federal Court of Audit, its spending rose from 440 million euros in 2016 to 1.58 billion in 2024. For 2026 a little over 1.6 billion is budgeted.

Growth alone is no reproach. The administration is supposed to go digital, and that takes people and technology. The question is what the money has produced.

III. The bundling that was called off

The “IT Consolidation of the Federation” has been running since 2015. At the time the federal administration operated more than 1,300 data centres and server rooms, and these were to become far fewer. Costs were initially estimated at around one billion euros. According to the Federal Court of Audit’s 2025 report, they have grown to around 3.5 billion. The government has meanwhile shelved the goal of merging the data centres.

The common foundation has also turned out smaller than planned. For the federal government’s central operating platform, three sites with two zones each were foreseen. What was built is one data centre with two zones. The Court of Audit sees a risk that business-critical IT will fail in an emergency or crisis. That data centres have meanwhile become military targets we described in “All Eggs in Frankfurt”.

A project that was meant to save costs now costs three and a half times as much and has saved away its own goal.

IV. Whom the money goes to

For Microsoft licences the federal administration spent around 274 million euros in 2023, around 348 million in 2024 and around 481 million in 2025. This comes from the government’s answer to a question by the Green MP Rebecca Lenhard. The government cautions that the years are only partly comparable. The federal states and municipalities are not included. Even with these caveats, that is 76 per cent more in two years.

That data held by an American provider falls under American law wherever the server stands, and that the Delos Cloud, offered as sovereign, runs on Microsoft technology, we showed in “The Borrowed Sovereignty”. That a foreign state can switch off the tools of an institution in Europe by sanction is shown by the case of the International Criminal Court, which we described in “The Switch”. The court has since moved to openDesk, office software that the German federal government itself had developed. The federal government thus supplies an international court with the way out that its own administration does not take.

The Federal Court of Audit also found in 2025 that the government has not examined how global technological and geopolitical developments affect its bundled IT. An apparatus that spends billions a year on technology has not checked what happens if its most important supplier is no longer allowed to deliver.

V. The waterworks without a spring

Imagine a municipal waterworks that hires more staff every year but pumps no water of its own. It buys its water from a single supplier abroad who sets the prices and whose government can turn off the tap. The people at the waterworks lay pipes, maintain meters and write bills. They are capable. But what flows through the pipes is decided by others.

That is roughly the situation. ITZBund operates, maintains and administers. A large part of the software on which the administration works it neither makes nor can change. Every year switching becomes more expensive, because more procedures, more data and more habits depend on the product. That explains why the supplier can raise its prices: the customer cannot easily leave.

How it can be done differently, and how laborious it is, is shown by Munich, which spent ten years moving to Linux and then reversed course, and by Schleswig-Holstein, which has been switching since 2024. That is the subject of “The Switch in the Town Hall”.

VI. The next restructuring

ITZBund has so far belonged to the portfolio of the Federal Ministry of Finance. According to a draft bill of October 2026, it is to move to the new Federal Ministry for Digital Affairs and State Modernisation and become the federal government’s central infrastructure and platform provider there, from 2028 as a public-law institution with legal capacity. At the same time the Finance Ministry is to get its own new provider, FinTechBund, which takes over the IT of the tax administration. The bundling that turned three providers into one in 2016 thus becomes two again.

The Digital Ministry has a right of approval over the federal government’s major IT spending. So the lever is there. Whether it is used will show in the next licence contracts.

VII. What is made in Germany here

What is made in Germany in federal IT is above all the administration of the administration: organisation charts, relocations, consolidation programmes, staffing plans. A large part of what people work with comes from Redmond. This is no plan and no conspiracy. It is what results when every single procurement seems reasonable on its own, because the familiar looks cheaper and safer than switching, and nobody examines the sum of these decisions. That is exactly what the Federal Court of Audit found: nobody has examined the sum.

Further reading: The Borrowed Sovereignty · The Switch in the Town Hall · The Switch · The Digital Colony · All Eggs in Frankfurt · Saving on Paper