FEDERAL
SECTOR REPORT
January 2002
(c) P2C2 Group,
Inc.
IN THIS ISSUE
Market Growth for Federal IT
New Year's Resolutions
Project Experience Online
Link of the Month
Sponsor's Message
Home Page
MARKET GROWTH & COMPETITION IN
FEDERAL IT
Federal spending for
information technology (IT) will grow by 15 percent during Fiscal Year
2002, climbing from nearly $42 billion in FY 2001 to
$49 billion in FY 2002. This forecast is from the Government
Electronics
and Information Technology Association, which also has visions of
further
growth to $65 billion by FY 2007. This is both good news and cautionary
news.
The need for upgraded IT in the
federal government is urgent. The technology
infrastructure of many agencies still resembles a patchwork quilt, and
substantial new investments are required to achieve a manageable,
effective enterprise-wide architectures. The move to e-Government
requires a total rethinking of business processes and realignment of IT
systems and applications.
And protection of federal IT from vulnerabilities, as required by the
Government
Information Security Reform Act, calls for sharply increased
investments
in infosec.
The good news is that many
federal agencies will have more money to spend
on IT, and they may be able to solve some technology problems that have
awaited
new money. However, boatloads of new money is not a sure thing: The
Office
of Management and Budget (OMB) is asking for more rigorous IT capital
investment
planning, better business cases, and a clearer promise of financial
payoff
for the spending. New spending must also address a laundry list of
information
security, privacy, and risk management issues that have been identified
by OMB with the help of the National Institute of Standards and
Technology
(NIST). So, getting approval of proposed agency spending is contingent
on increased "homework," business planning and analyses, and budget
proposals
that are marketable to OMB.
Federal contractors can aspire
to revenue growth. In addition to new business,
add-ons to existing contracts will be an important strategy for
success.
Competitions for new contracts will not be spread evenly across
agencies
or IT budget categories: Defense spending will increase, as will
agencies
that are somehow involved in anti-terrorism initiatives--such as
Department
of Transportation and those parts of HHS addressing bio-terrorism.
Contractors
should also note that state and local governments will also be a
growing
market, and these government units are also asking for massive federal
aid
to boost protection against terrorism.
Increased spending also brings
cautionary notes: Faced with increased accountability,
agencies will also need to tackle some of the tougher issues like
workflow
and business process improvement, data integration, application
consolidation,
and more cost efficient management of common assets like mail, servers,
networks, and desktops. In addition, many agencies will need to pursue
the
consolidation of IT management, which has traditionally been balkanized
into
petty fiefdoms. With dollars will come increased scrutiny by OMB,
General Accounting Office, and an army of Inspectors General.
Even in agencies with increased
IT spending, the money will be concentrated
in high-priority areas. Lower-priority computer applications and
networks
may even experience budget crunches. So don't assume you will quench
your
financial thirst in FY 2002 or beyond, for your oasis may turn into a
dry well.
Contractors should also expect
increased competition. As Wall Street currently
recognizes, the federal marketplace is attractive. Well-financed
competitors
will be investing in most of the largest procurements of FY 2002.
Moreover,
hungry technology companies suffering from the dot-com bust are licking
their chops, hoping to eat and grow fat at Uncle Sam's table. As an
alternative
to going Chapter 11, some could occasionally bid very aggressive
pricing.
Federal grantees, such as
university research centers, should also pay attention to the growth of
the federal IT budget. Certainly there will
be some projects related to terrorism, but the bigger picture is that
agencies
will be moving to e-Government. Grantees will be expected to operate
projects
that integrate effectively in the electronic infrastructure--regardless
of whether the subject matter is education, child welfare, job
training,
aviation, community development, or international trade.
So there the money is. Go for
it, but proceed strategically.
NEW YEAR'S RESOLUTIONS
Life is good, but it can get
better. Right? We're offering a short list for a great Year 2002:
- Adopt a work style and
strategy that matches the new reality. Washington's priorities,
mindset, movers and shakers, and rules for success have changed
dramatically in only one year. Old habits and assumptions
are downright dangerous.
- Identify new ways to add
value to you work, your projects, and your organization. In many cases,
this simply means using better strategies,
working smarter, and shedding the "we always did it that way" syndrome.
- Take time to smell the
roses. Success seldom comes to grumpy people who are too tired to be
creative or fully productive.
- Take time to laugh. It's the
best and cheapest therapy for the twists and turns of the Federal
Sector.
LINK OF THE MONTH
Richard White at Fedmarket.com
is publishing a series of articles about "Doing Business with
Government." It's a great primer about the federal
market place and is required reading for anyone new to the Federal
Sector's marketplace. Richard is distributing chapters by e-mail, and
you can sign
up for his mailing list.
Currently the first six
installments may be viewed online at
http://www.fedmarket.com/vtools/articles/index.html:
- Getting Started
- Basics of Selling
- Market Segments
- Finding Target Agencies and
End-Users
- Finding Official Buyers
- Finding Bidding Opportunities
HOME PAGE
I spent the holiday season
working out of this home office. While I did make trips to a few
project meetings at GSA Public Building Service and
Anami Communications, most of my project work was completed at home in
the comfortable presence of two canine associates. The work-at-home
setup
has been amazingly productive, and I hope to do more of it in the
coming
year. I eliminated the commuting time, was more productive, and had
time
to think creatively. Hopefully, the payoff for my clients will be even
better results and productivity.
