Microsoft is set to increase its share of the local government ICT market despite competition from a burgeoning SME market, according to analysts.

A briefing note from research company Tech Market View found that the digital giant has built a strong pipeline in the coming years to support local authority transformation programmes.

During the 2013 fiscal year, the firm made 16% of its £402m public sector revenues from local government contracts, it said.

Michael Larner, principal analyst at Tech Market View, told PublicTechnology.net: “Spend with Microsoft is going to increase next year.

“The firm is taking advantage of councils’ ageing infrastructure and resulting move to the cloud.”

According to the briefing, Tech Market View expects he rate of Office 365 implementations to accelerate in fiscal year 2015, but said the uptake of the Microsoft Dynamics platform will lag by 12 months as this will require ousting SAP, Oracle or Agresso.

Larner added that Microsoft was now moving well beyond its traditional role as a provider of desktop software.

“It is still dominant in the desktop market but is increasingly a challenger against SMEs on niche applications or established companies involved in big data.”

According to the briefing, the Troubled Families programme presents Microsoft with opportunities for business in the analytics field, along with the integration between social and health care and general inter agency working.

The firm will also embed its position through providing infrastructure on which SMEs will need to develop niche apps, Larner said.

More than 700 CityNext solutions are being delivered worldwide, according to the briefing paper.

CityNext is Microsoft’s connected government framework, a high level vision of a Smart City, on which partners can base their solutions. The platform has gained a hold in the UK with wins at Norfolk, Glasgow, Manchester, Kent, Tech Market View said.