FEDERAL SECTOR REPORT

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:

1. 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.
2. 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.
3. Take time to smell the roses. Success seldom comes to grumpy people who are too tired to be creative or fully productive.
4. 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:

1. Getting Started
2. Basics of Selling
3. Market Segments
4. Finding Target Agencies and End-Users
5. Finding Official Buyers
6. 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.

CONSULTING SERVICES

We provide enterprise-level management consulting services for federal agencies and the contractors who support them. Our areas of specialization are Capital Planning and Investment Control, Enterprise Architecture, strategic planning, performance evaluation, and acquisition support including work statements. Our consulting specialty includes experience in many related areas such as CIO program support, earned value management, risk management, the C&A process for security, and customer satisfaction surveys.

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