Transcript INPUT Federal Technology Forecast, 2010-2015

INPUT State of the Public Sector
Deniece Peterson
Manager, Industry Analysis
April 21, 2010
Copyright © INPUT 2010. All rights reserved.
Industry Analysis
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 Reports
On-Site Briefing
Research Support
Federal IT Forecast Finder
Federal IT Budget Finder
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)
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Agenda
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
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Budget Environment
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Outlook of the Federal Deficit
2010
2011
$200
2012
2013
2014
2015
10
56
51
20
2016
2017
2018
2019
Deficit Estimates ($B)
$0
-$200
-$400
-1349
-650
-539
-475
-208
-249
-480
-521
-313
-649
-415
-454
-503
-373
-264
-$800
-3
-$1,000
-$1,400
-542
-980
-$600
-362
-$1,200
-525
-4
-5
-15
-151 -1
-6
-$1,600
Federal Deficit Baseline
Including FY11 Budget Request
Including Healthcare Reform
Source: Congressional Budget Office, OMB
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2010 reserved.
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Total FY2011 Discretionary Budget Request
FY2011 President’s Budget Request
Billions
$0
$500
$1,000
$1,500
FY2011
(Request)
$1,106
FY2010
(Enacted)
$1,076
FY2009
(Actual)
ARRA
$1,004
$265
Source: FY2011 President’s Budget Request
Agriculture
Commerce
Defense
Education
Energy
Environmental Protection Agency
General Service Administration
Health and Human Services
Homeland Security
Housing and Urban Development
Interior
Justice
Labor
NASA
National Science Foundation
Small Business Administration
Social Security Administration
State and Other Int’l Programs
Transportation
Treasury
Veterans Affairs
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% Change,
FY10 - FY11
4%
36%
3%
6%
7%
3%
17%
1%
11%
5%
2%
12%
2%
2%
7%
25%
9%
16%
2%
2%
7%
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FY2011 IT Budget Request
FY2011 President's Budget Request ($B)
$40
Total IT Budget Request: $79.4B
Overall Percent Change: -1.6%
+7%
$35
$30
$25
$20
$15
$10
-2%
-63%
+7%
-5%
$5
+33%
+25.4%
$0
FY2010 Enacted
FY2011 Request
Source: FY2011 OMB’s Report on Information Technology (Exhibit 53)
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S&L Fiscal Outlook
Unemployment
Workforce
Spending
Revenue
S&L
Government
Stability
Gov’t
Borrowing
Housing
Market
Budget Deficits
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Trends and Issues
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Obama Policy Priorities and Impact on
Technology
• Modernize the
nation’s electric grid
• Reduce energy
consumption
• Utilize electronic
health records to
reduce costs
• Expand health care to
uninsured
Energy/
Conservation
Broadband
Healthcare
Cybersecurity
• Expansion of cyber
operations
• Consolidation of networks
to improve cybersecurity
• Expand broadband to
underserved and rural
areas
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Federal Technology Priorities
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
Health IT
•HHS standards development
•Continued promotion of EHRs
•Long-term implications for reform
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Top 5 S&L Technology Investments
Waste, Fraud, & Abuse
Prevention
Public Safety Force
Multipliers
Predictive policing, consolidated
dispatch, unified 911 call
centers, voice/data/video
communications
IT Infrastructure
Consolidation
Focus moving from recovery
to prevention of WFA
Virtualization, hardware
standardization, SOA,
information Security
Community Supervision
for Non-Violent Offenders
Decision-Support Tools
GPS monitoring, mobile case
management, registries
Performance management driving
need for data and BI
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Health Care Reform Act – Cost and IT
Implications
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
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Availability of Appropriated Funds Varies But
Pay Outs are Minimal
Stimulus Funds Obligated and Paid Out Technology, Facilities Modernization/Construction, R&D, and Training
$8,457
$7,791
Paid Out
$5,508
$2,215
$1,106
16% 62%
$2,513
$791
$409 $190 $606
$14 $251 $74 $112 $12 $498
57% 46% 57% 37% 28% 19% 64% 87% 70% 24% 20% 56%
Percent of Appropriated Funds Obligated
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1% 20%
Source: Recovery.gov
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S&L Impact of Federal Stimulus To-Date
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
Goal 1: Save $40B
Goal 2: Increase
Contracting Effectiveness
Reduce contractor spending by or 7% (3.5% in 2010 and in
2011) by identifying wasteful, inefficient, or ineffective
programs
Reduce the combined use of no-bid contracts and cost-based
contracts on new contract actions by 10% (over FY08
baseline)
• Strengthen contract management and review
• Closer oversight of all contract types, particularly solesource and other non-competitive contracts
Goal 3: Insourcing
Goal 4: Increase
Acquisition Workforce
Clarify “inherently governmental” and consider insourcing. Examples in 3/31 guidance: security (including
cyber), lead systems integration, strategic planning,
acquisition management
Grow acquisition workforce by 5% and build skills
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Rise in Task Order Vehicles at the Expense of
GSA GWACS and Schedules
There has been a sustained
shift in reliance on agencyspecific Task Orders…….
…at the expense of GSA
schedules and GWACs.
Source: INPUT, FPDS
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Technology Forecast
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IT Budget Requests vs. Actual
Only once since 1994 has
actual IT spending been
less than a president’s IT
budget request.
Source: OMB, INPUT
FY10 figures are OMB estimates.
*Enacted
**Assumes 103% of FY11 request.
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Addressable IT Forecast
Total IT Budget - CAGR 4.9%
140
Contracted Portion - CAGR 5.4%
121.4
120
Market Size ($B)
100
111.7
97.7
93.6
95.4
86.0
105.6
84.1
94.7
111.9
102.5
86.4
80
60
40
20
0
2010
2011
2012
2013
2014
2015
Source: OMB, INPUT
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Market Segment Forecast
Professional
Services
7.1%
Systems
Integration
6.3%
5.6%
Outsourcing
5.2%
Software
Products
Comm & Network
Services
4.9%
Computer
Equipment
3.0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Five-Year Compound Annual Growth Rates
Source: INPUT
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Addressable S&L IT Market, 2009-2014
Source: INPUT
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Conclusions and
Recommendations
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INPUT’s Take
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)
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INPUT’s Take (cont.)
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
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Recommendations
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
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Q&A
www.input.com
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