kevin plexico sr. vice president, research and analysis services input

Copyright ©2010 by INPUT. All rights reserved.

Kevin PlexicoSr. Vice President, Research and Analysis ServicesINPUT

August 2, 2010

Copyright © by INPUT. All rights reserved. 2

Scope and Methodology

Trends and Drivers• Budget Environment

• Performance and Accountability

• Human Capital

• Technology Priorities

• Acquisition Trends

Technology Forecast

Conclusions and Recommendations

Agenda

Copyright © by INPUT. All rights reserved.

Scope and Methodology

3

U.S. federal information technology (IT) spending FY2011 budget request• Includes

Executive branch

Legislative and Judicial branch

Intelligence Community

Government-owned corporations

• Excludes

Embedded computer systems

IT grants to state governments from HHS and USDA

INPUT bases its analyses, segmentation, forecast, and conclusions on:• President’s FY2011 budget request and

supporting documentation

• FY2011 OMB A-11 circular and Exhibit 53 Information Technology budget artifacts

• Individual Departmental FY2011 budget plans

• Historical data on federal spending on programs and technology

• Economic forecasts for GDP & discretionary spending

• Analysis of agency plans and INPUT Opportunities Database

• Interviews with agency officials and industry experts

Scope Methodology


INPUT Survey Methodology

4

Survey Methodology•One-on-one telephone interviews with industry and government technology professionals• Web-based surveys targeting industry and government technology professionals•Respondents assured that all responses to be reported in aggregate


Trends and Drivers

Copyright © by INPUT. All rights reserved.6

Federal Outlays as a Percentage of GDP

Source: CBO; Bureau of Economic Analysis; INPUT

World War II

Korean War

Vietnam War

Defense Build-Up

CB

O E

stimates

Budget/Policy


Technology Budget Request

7Budget/Policy

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%+3%

+7%-63%

+33% +25.4%-5%

-2%


Obama Policy Priorities and Impact on Technology

8

Energy/ Conservation

Cybersecurity

Healthcare

Broadband


Health IT Funding Ecosystem

9


Cloud Computing

10

Cloud Computin

g Evolutio

n

FEDRAMPCentralized security certifications service

FEDRAMPCentralized security certifications service

SAJACCUse case validation of cloud offerings as an interim “standard”

SAJACCUse case validation of cloud offerings as an interim “standard”

BUDGET REQUIREMENTSCloud computing

alternatives analysis within the budget

process

BUDGET REQUIREMENTSCloud computing

alternatives analysis within the budget

process

Technology


Data Center Consolidation

11Technology

Data Center Network(Not Included in

Analysis)

Data Center Hardware Assets

Virtual Private Networks

Wide Area Networks

Switches, Routers, Firewalls

Local Area Networks

Physical Servers / Mainframes

Racks, Shelving and Cable Plant

Data Center IT Facilities and

Energy

Power Management & Distribution

HVAC / Cooling and Energy Consumption

High Speed Local Networks

Data Center IT Geographic

Location & Real Estate

Geographic Location of Data Centers

Building Leases, Available Floor Space

Power Source & Alternative Power Supplies

Data Center IT Software Assets

Applications, Platforms, Services

Middleware» Database Servers

» Web Servers

» Application Servers

» Message Queues

» Directory Services

» Other Middleware VMs

Physical Storage / Network Storage

Special Purpose Hardware

Op

eration

s & M

anag

emen

t


Federal Spending Continues to Outpace Available Workforce to Manage and Implement

Source: OPM, OMB, INPUT

Human Capital


Major Acquisition Reform GoalsSave $40 billion in contract spending - • Reduce contractor spending by 7% (3.5% in

2010 and in 2011) by identifying wasteful, inefficient, or ineffective programs.

Increase contracting transparency • Reduce the combined use of ”high-risk

contracts,” e.g. no-bid contracts and cost-based contracts, on new contract actions by 10% (over FY08 baseline).

Insource “inherently governmental” work • Clarify “inherently governmental” and consider

in-sourcing.

Increase the acquisition workforce • Grow the acquisition workforce by 5% and

increase expertise.

Centralize IT acquisitions• Centralization of key IT services

• Federal eMall for smaller purchases

13Acquisitions


Spending on Task Order-based Contracts

14

Source: FPDS, INPUT


Recent Developments

15

Cut 5% of FY12 discretionary budgets

Freeze on financial system modernization projects with $20M+ in planned spending

IT project reviews

Assessment of IT procurement and management practices


Technology Forecast


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


Addressable IT Forecast by Buying Segment

Source: OMB, INPUT


Market Segment Forecast

Source: INPUT


Conclusions and Recommendations


There is still reason to be optimistic. Although overall government spending may contract, IT has some level of immunity for a number of reasons:• Historical spending trends

• Initiatives and objectives dependent on IT

• Slow pace of insourcing; IT expertise is a major gap for government

• Other low-hanging fruit for spending cuts (e.g. weapons systems, manual processes, non-IT professional services, physical security, etc.)

“Near-term” technology priorities revolve around: • Leveraging shared services (e.g. cloud computing, data center consolidation, geospatial

technologies);

• Automating processes to improve delivery of citizen services;

• Advancing information security: move to real-time security, improved ID management, cyber incident sharing; and

• Investing in technology infrastructure to reduce costs and energy consumption

Security requirements will become much more robust (e.g., legislation, Cyberscope, FedRamp, etc.)• Congress still appears hesitant to put “teeth” into security compliance (e.g. cyber

coordinator budget control, security plan approval, etc.)

INPUT’s Take


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

Pay close attention to Congressional activity: • Be aware of the technology and policy implications of the numerous bills coming out of

Congress

• Election year will likely mean not much major budget cutting will occur until after elections

Keep an eye on agencies with significant changes to or expansion of mission for opportunities:• VA – Projected expans

• IRS and HHS – health care reform (kicking in at the tail end of the forecast period)

Anticipate future compliance requirements as a requirement to do business with government, such as: security of operations, carbon footprint, financial records related to government-funded projects

Recommendations


Q&A

kevin plexico sr. vice president, research and analysis services input

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