"as a service:" a foundational shift in government acquisition

Market Connections, Inc. and Professional Services Council present

“As a Service:”A FOUNDATIONAL SHIFT IN GOVERNMENT ACQUISITION

OCTOBER 2014

© 2014 Market Connections, Inc.

CONVERGENCE STUDY | MARKET CONNECTIONS, INC. & PROFESSIONAL SERVICES COUNCIL

Study Objectives

“AS A SERVICE:” A FOUNDATIONAL SHIFT IN GOVERNMENT ACQUISITION 2

• Benchmark current state of the convergence of technologies and services in the federal marketplace.

• Assess important contractor attributes in providing a converged solution.

• Understand the use of, and opportunities around “as a service” acquisition model for technology solutions.

• Assess benefits and barriers to the adoption of an “as a service” model.



Audience Demographics

Civilian Agencies

68%

Defense Agencies

21%

Congress11%

Federal Agency Type

Upto $60M42%

$61M to $999M

27%

Above $1B32%

Contractor Annual Revenue


34%

43%

43%

46%

47%

63%

76%

% 20% 40% 60% 80%

Drafting/writing RFP

Make final decision or approve the purchase

Allocation of budget dollars

Identification of potentialcontractors/suppliers

Evaluation proposals/bids/quotes

Determination of requirements,specifications or features

Identification of need for product/service

4

Involvement in IT AcquisitionGOVERNMENT

“AS A SERVICE:” A FOUNDATIONAL SHIFT IN GOVERNMENT ACQUISITION

Which of the following tasks have you been involved with in the selection or acquisition of IT products and services?

Note: Multiple responses allowed, percentages will add to > 100%.


Familiarity with Convergence


How familiar are you with the convergence of technologies and services in the federal marketplace?

26%

47%

14%

13%

Government

Very Familiar

SomewhatFamiliar

Heard of It

Not familiar

36%

54%

10%

Contractors


Convergence Definition


The combination of technologies and services to create new

solutions and new approaches to deliver mission results.

“Services” throughout this survey refers to the use of

contractor personnel to perform functions in support of

government missions.

It does not refer to acquisition

advisory and assistance

services that could create

a conflict of interest.


Key Findings


• We are in the early stages of awareness and understanding, and contractors are ahead of government.

• Convergence is about more than IT.

• There are significant disconnects between industry opportunity areas and government adoption plans.

• Convergence brings both opportunities and barriers to adoption.


8

Impact of ConvergenceGOVERNMENT vs. CONTRACTORS


4%

21%

47%

23%

5%4%

19%

47%

28%

2%0%

20%

40%

60%

No impact Low impact Moderateimpact

High impact Don't know

Federal Employees Contractors

To what extent is the convergence of technologies and services in the federal marketplace impacting your organization or agency?

Nearly 75% of respondents report moderate to high impact


6%

56%

19%25%23%

19%

28%

16%

0%

20%

40%

60%

Low impact High impact

10,000+ employees 500 - 9,999 100 - 499 Less than 100 employees

9“AS A SERVICE:” A FOUNDATIONAL SHIFT IN GOVERNMENT ACQUISITION

Impact of ConvergenceSMALL vs. LARGE CONTRACTORS

= significant differences

To what extent is the convergence of technologies and services in the federal marketplace impacting your organization?


10

Impact ReasonsCONTRACTORS


We're seeing a shift in our entire

business model, moving from a

standard purchase of products to a

service model.

GOVERNMENT CONTRACTOR

HIGH IMPACT

Our firm will be delivering our

capability 'as a service' in the future

rather than 'as a product,’ and we will

have to bundle others’ services to

provide a complete solution.


HIGH IMPACT

“

”

We are starting to see more

‘convergence’ (Shared Services, ‘As a

Service’) opportunities, but the

playing field is dominated by the larger

firms (Accenture, IBM, etc.) and we

really haven't been able to play more

than a supporting role (Enterprise

Architecture, Program Management,

etc.). We expect the market for middle

tier players to grow, however.


LOW IMPACT



Impact of ConvergenceFEDERAL DIFFERENCES BY JOB ROLE

2% 30%

41%

10%

43%

41%

52%

21%

15%

34%

4%

4%

3%

0% 20% 40% 60% 80% 100%

IT/Tech Svcs

Prog mgmt/execution

Exec mgmt/command

No impact Low impact Moderate impact High impact Don't know


To what extent is the convergence of technologies and services in the federal marketplace impacting your organization?


12

Impact ReasonsGOVERNMENT


Declining agency budgets are

driving re-evaluation of how we

acquire technology and services.

FEDERAL RESPONDENT

HIGH IMPACT

Provides state of the art technological

solutions faster and at a lower life cycle

cost than if we were to procure only

the technologies without the services.

FEDERAL RESPONDENT

HIGH IMPACT

“

”

My agency is reluctant to implement

the principles of convergence. Most

systems are siloed solutions. As an

senior IT manager, I'd like to see that

change, but it is very difficult.

FEDERAL RESPONDENT

LOW IMPACT

We are slow to adopt, much less

consider, outsourced solutions due to

regulations and security.

FEDERAL RESPONDENT

LOW IMPACT


Technology Convergence TrendsGOVERNMENT vs. CONTRACTORS


To what extent do you agree with the following statements?



To what extent do you agree with the following statement? It is important for a federal agency to work with a company that can deliver services and technology in an integrated solution

Technology Convergence TrendsDEFENSE vs. CIVILIAN DIFFERENCES

3%

17%

19%

15%

78%

68%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Civilian

Defense

Disagree Neither Agree nor Disagree Agree

Importance of working with a company that can deliver services and technology in an integrated solution


20

Top Four “As a Service” BenefitsGOVERNMENT vs. CONTRACTORS


What do you see as the main benefits of “XaaS” for the federal government? Select the top three.

32%

41%

48%

56%

38%

39%

43%

50%

0% 20% 40% 60%

Improvedperformance

Rapidly deploynew services

Scalability

Pay only for whatis needed

Government

32%

41%

48%

56%

38%

39%

43%

50%

0% 10% 20% 30% 40% 50% 60%

Government Contractors


24%

43%

33%

23%

25%

31%

35%

35%

0% 10% 20% 30% 40% 50%

Improved reliability

Little or no capitalexpenditure

Enables sharing ofresources and costs

Improved security


21

“As a Service” BenefitsGOVERNMENT vs. CONTRACTORS


What do you see as the main benefits of “XaaS” for the federal government? Select the top three.



22

Top Barriers to “As a Service” AdoptionGOVERNMENT vs. CONTRACTORS


10%

33%

24%

46%

28%

33%

45%

60%

0% 20% 40% 60% 80%

Upredictable costs

Vendor or solution lock-in

Budget constraints

Security issues/risks


What, if anything, would hinder or prevent federal agencies from moving to implement the XaaS model?



23

Barriers to “As a Service” AdoptionGOVERNMENT vs. CONTRACTORS


21%

31%

10%

26%

27%

36%

28%

12%

16%

17%

20%

21%

21%

23%

0% 10% 20% 30% 40%

Not sure how to implement

Lack of procurement guidance

Intellectual property issues

Cultural barriers

Loss of control

Requirements not well-defined

Desire to own the solution


What, if anything, would hinder or prevent federal agencies from moving to implement the XaaS model?



Federal “As a Service” Current Use


Of the following XaaS areas, where is your agency or organization with respect to implementation and use?

20%

20%

22%

23%

29%

31%

0% 5% 10% 15% 20% 25% 30% 35%

Training

Platform

Monitoring

Infrastructure

Software

Communications


Opportunity Areas for “As a Service”


CONTRACTORS: What are the top three greatest areas of “XaaS” opportunity in government over the next three years?GOVERNMENT: Of the following XaaS areas, where is your agency or organization with respect to implementation and use? (Plans to implement in next 12 months or beyond 12 months)

25%

21%

21%

21%

20%

17%

56%

41%

58%

64%

43%

35%

0% 10% 20% 30% 40% 50% 60% 70%

Platform

Monitoring

Infrastructure

Software

Communications

Training

Government Plans Next 12 Months and BeyondContractor Perceived Opportunities Next 3 Years

GOVERNMENT vs. CONTRACTORS



93%

89%

92%

90%

81%

84%

84%

86%

0% 20% 40% 60% 80% 100%

Understand customermission

Cost competitive

Secure solutions

Subject matter expertise


26

Top Important Characteristics of ContractorsGOVERNMENT vs. CONTRACTORS


How important is it for a contractor to have the following characteristics when aiming to deliver a converged solution to the federal government? (Top 2 ratings)


69%

69%

72%

82%

66%

69%

71%

77%

0% 20% 40% 60% 80% 100%

Ability to bring latesttechnological innovations

End-to-end solutions

Speed of delivery

Experience providingconverged solutions


27

Important Characteristics of ContractorsGOVERNMENT vs. CONTRACTORS


How important is it for a contractor to have the following characteristics when aiming to deliver a converged solution to the federal government? (Top 2 ratings)



RELEASE EVENT: October 14

• In-depth results

• Panel discussion with government and contractors

www.pscouncil.org/convergence

http://www.marketconnectionsinc.com/convergence

http://www.marketconnectionsinc.com/convergence


29

Lisa Dezzutti, President & CEO | Market Connections, Inc.

703-378-2025 x103 | [email protected]

Cathy Cromley, Director of Business Development | Market Connections, Inc.

703-517-4419 | [email protected]

Dave Wennergren, Sr. Vice President, Technology Policy | Professional Services Council

703-778-7557 | [email protected]


mailto:[email protected]

