Deniece Peterson Manager, Industry Analysis April 21, 2010 INPUT State of the Public Sector...

Deniece PetersonManager, Industry Analysis

April 21, 2010

INPUT State of the Public Sector

Copyright © INPUT 2010. All rights reserved.

Copyright © by INPUT. All rights reserved.

Industry Analysis

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Upcoming Reports:

Federal Technology Strategies for Energy Efficiency (April)Federal IT Market Forecast (June)State of the States 2010 (April)State and Local IT Market Forecast (June)

This presentation contains content produced by INPUT as part of the Industry Analysis program.

INPUT‘s Industry Analysis Program includes:INPUT Annual IT Market Forecast Industry ReportsOn-Site BriefingResearch SupportFederal IT Forecast FinderFederal IT Budget Finder

Copyright © by INPUT. All rights reserved. 3

Budget Environment

Trends and Issues• Convergence of Obama Policy and Technology

• Economic Stimulus

• Health Care Reform

• IT Policy and Priorities

• Acquisition

Technology Forecast

Conclusions and Recommendations

Agenda


Budget Environment

Copyright © by INPUT. All rights reserved.Copyright © INPUT 2010

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Outlook of the Federal Deficit

Source: Congressional Budget Office, OMB


Total FY2011 Discretionary Budget Request

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FY2011 President’s Budget RequestFY2011 President’s Budget Request

Agriculture 4%Commerce 36%Defense 3%Education 6%

Environmental Protection Agency 3%

Housing and Urban Development 5%Interior 2%

Labor 2%NASA 2%National Science Foundation 7%

Social Security Administration 9%State and Other Int’l Programs 16%Transportation 2%Treasury 2%Veterans Affairs 7%

Energy 7%

General Service Administration 17%Health and Human Services 1%Homeland Security 11%

Justice 12%

Small Business Administration

% Change, FY10 - FY11

Source: FY2011 President’s Budget Request

25%


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FY2011 IT Budget Request

Source: FY2011 OMB’s Report on Information Technology (Exhibit 53)

Total IT Budget Request: $79.4BOverall Percent Change: -1.6%Total IT Budget Request: $79.4BOverall Percent Change: -1.6%+7%

+7%-63%

+33% +25.4%-5%

-2%


S&L Fiscal Outlook

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S&L Government

Stability


Trends and Issues


Obama Policy Priorities and Impact on Technology

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Energy/ Conservation

Cybersecurity

Healthcare

Broadband

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Cloud Computing

• Cloud pilots conducted in 2010• Agencies to “consider” cloud for all

future IT needs• Agency inventories due by April 30th

Data Center Consolidation

• Consolidate 1100+ data centers• Reduce energy consumption• Reduce the costs of hardware, software,

and operations

•HHS standards development•Continued promotion of EHRs•Long-term implications for reform

Health IT

Federal Technology Priorities


Top 5 S&L Technology Investments

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Public Safety Force Multipliers

Predictive policing, consolidated dispatch, unified 911 call centers, voice/data/video communications

Waste, Fraud, & Abuse Prevention

IT Infrastructure Consolidation

Decision-Support ToolsCommunity Supervision

for Non-Violent Offenders

Virtualization, hardware standardization, SOA, information Security

Focus moving from recovery to prevention of WFA

Performance management driving need for data and BI

GPS monitoring, mobile case management, registries


Health Care Reform Act – Cost and IT Implications

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Source: CBO & INPUT

IT Implications from:•New or Expanded Organizations and Programs•New Reporting/Tracking/Business Processes•New CMS/MMIS Ramifications•Tax Ramifications


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ARRA Spending and Costs


Availability of Appropriated Funds Varies But Pay Outs are Minimal

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Stimulus Funds Obligated and Paid Out -Technology, Facilities Modernization/Construction, R&D, and Training

16% 62% 57% 46% 57% 37% 28% 19% 64% 70% 56%87% 20%24% 1% 20%

Percent of Appropriated Funds Obligated Source: Recovery.gov


S&L Impact of Federal Stimulus To-Date

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2009 funding distribution per INPUT forecast• Grants, contracts, and entitlements

• Paid out slightly slower than forecast

• Build America Bonds

• Helped sustain historic borrowing levels

• Vital to capital/infrastructure projects

2010 remains pivotal year• $2.25 billion in stimulus driven S&L IT consumption

• National health IT and broadband plans due in Q1/2010

• Will prop up a flat year for S&L revenues


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Federal Acquisition Reform Major Goals

Reduce the combined use of no-bid contracts and cost-based contracts on new contract actions by 10% (over FY08 baseline)

• Strengthen contract management and review• Closer oversight of all contract types, particularly sole-

source and other non-competitive contracts

Goal 1: Save $40B

Goal 2: Increase Contracting Effectiveness

Goal 3: Insourcing

Goal 4: Increase Acquisition Workforce

Reduce contractor spending by or 7% (3.5% in 2010 and in 2011) by identifying wasteful, inefficient, or ineffective programs

Grow acquisition workforce by 5% and build skills

Clarify “inherently governmental” and consider in-sourcing. Examples in 3/31 guidance: security (including cyber), lead systems integration, strategic planning, acquisition management


Rise in Task Order Vehicles at the Expense of GSA GWACS and Schedules

Source: INPUT, FPDS

There has been a sustained shift in reliance on agency-specific Task Orders…….

…at the expense of GSA schedules and GWACs.


Technology Forecast


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Source: OMB, INPUT

FY10 figures are OMB estimates.*Enacted**Assumes 103% of FY11 request.

Only once since 1994 has actual IT spending been less than a president’s IT

budget request.

IT Budget Requests vs. Actual


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Addressable IT Forecast

Source: OMB, INPUT


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Market Segment Forecast

Source: INPUT


Source: INPUT

Addressable S&L IT Market, 2009-2014


Conclusions and Recommendations


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Federal role in U.S. economy expanding

• Particularly in social, regulatory and security related programs

• Budget requests are generally conservative and should be looked at with skepticism

“Near-term” federal technology priorities revolve around: • Consolidation

• Advancing information security

• Transparency and accountability

“Long-term” federal technology priorities revolve around:

• Health IT adoption

• Energy/environment (renewable energy, advanced battery manufacturing, smart grid)

INPUT’s Take


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Insourcing is a red herring in most areas of federal contracting

Increase in federal task order contracting drives• Need for companies to align with agency preferred vehicles

• Increase in ‘sell through’ for product companies and subcontracting for small businesses

Make big money where S&L governments are making big cuts• Automation and mobility for over-burdened civil servants

• Citizen online self-service

• SaaS, open source, and COTS for quick implementation

• Business intelligence (BI) for desperate decision-makers

Fewer super-sized S&L opportunities in 2009-2011• Less predictable pipelines; cast your net widely to catch many fish

Overfill to compensate for opps. that are withdrawn

Extend timelines to account for funding delays

INPUT’s Take (cont.)

Copyright © by INPUT. All rights reserved.27

Track agencies’ tech refresh cycles; this is likely target for investments to support cloud computing, virtualization, green electronics, etc.

Align with solutions with embedded security features• New centralized security/cloud computing certification process in progress

Streamline Bid & Proposal (B&P) processes; the increase in task order vehicles and competition require agility

Align short-term business development (BD) to governors’ priorities backed by stimulus funds• Transportation

• Education (Primary/Secondary & Higher)

• Social Services/Employment

Stick to Tangible (not “Soft” or Speculative) ROI • IT investments must produce savings that can be 1) identified, 2) captured,

and 3) re-allocated

Recommendations


Q&A

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Deniece Peterson Manager, Industry Analysis April 21, 2010 INPUT State of the Public Sector...

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