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Defense Business Process Engineering Spending, FY 2010-2013

The Defense Department Inspector General (DoDIG) recently released an update on the status of changes it recommended in summer 2012 to ensure the integrity of business process re-engineering assessments for some of the DoD’s largest Enterprise Resource Planning (ERP) system implementations.  According to this report, the six project management offices queried for the assessment reported that in the past year four of the tracked ERP projects experienced cost decreases of $681 million.  These projects included the Army’s Logistics Modernization Program (LMP), the Navy’s enterprise ERP, the Air Forces Defense Enterprise Accounting and Management System (DEAMS), and the Defense Logistics Agency’s Enterprise Business System (EBS) eProcurement module.  The remaining two projects – Army’s General Fund Enterprise Business System (GFEBS) and the DoD’s Defense Agencies Initiative (DAI) experienced $299 million in cost increases.  Of this total, the increases connected to DAI amounted to $213.6 million, due largely to maintenance and other support services related to the implementation of Oracle Release 12.

I have written previously about the Defense Agencies Initiative, pointing out at the time that $52 million of the DAI’s projected $99 million FY 2014 budget was slated for development, modernization, and enhancement (DME).  Given the numbers reported by the DoDIG, it appears that vendors providing support for DAI will continue to benefit from being in the right place at the right time.  Spending on the DAI reinforces my belief that vendors should continue to seek opportunity in DoD business systems efforts because they are expensive, complex, long-term, and, in some cases, mandated.  In today’s tightening market following the money means looking for the priorities set out by Congress and then positioning oneself accordingly.

This brings me to another subject in the DoDIG’s report – business process re-engineering.  The National Defense Authorization Act for FY 2012 directed the DoD to streamline ERP business processes to derive program and cost efficiencies.  This got me thinking about IT services because the government relies heavily on vendor support for services like BPR.  If Congress mandated that the DoD increase/improve its use of BPR, I thought it might be worth digging up whatever data I could find on BPR spending.  Because not all BPR spending is clearly reported as such, there are limitations to the ability to parse spending on BPR-related work from other IT services.  This in mind, a search of the USASpending.gov database did provide some data that could prove instructive.

For example, the total value of BPR-related contracts awarded by the DoD from FY 2010 to FY 2013 was $112.2 million.  This spending breaks down by fiscal year as follows:
 
 
Spending on business process training and education, as well as on formal BPR services, is included in this dataset.  As we can see, the overall trajectory of spending is down significantly from FY 2010.  This trend is consistent with overall IT services spending at the DoD.  Yet the data also shows a “recovery” of sorts in FY 2012, suggesting a kind of “cyclicality” to BPR services spending.  So far, reported spending in FY 2013 has been miniscule, but we should keep in mind the fact that the DoD has only reported spending through Q2.  As the following chart of spending by quarter from FY 2010 - FY 2013 shows, the majority of spending always occurs in Q4.  Therefore, if spending in FY 2013 is in keeping with historical norms, we should see a flood of obligations in August and September.
 
 
Finally, I’ll wrap up by providing a look at the same spending data by top 10 most used Product Service Codes.  This perspective illustrates that BPR activity at DoD is common in areas other than just IT, suggesting a greater breadth of business opportunity for professional services vendors than those with offerings purely in the IT space.
 

 

 

 

A Look at the Defense Agencies Initiative (DAI) ERP Program

Since Congress first mandated in 1994 that the Department of Defense achieve full auditability of its financial statements, the DoD has engaged in multiple lengthy and costly efforts to implement Enterprise Resource Planning (ERP) Systems. Former Defense Secretary Leon Panetta recently pushed up the date by which the DoD is supposed to be ready for full auditability from FY 2017 to September 2014. Congress then adopted this date into the National Defense Authorization Act (NDAA) for FY 2013, a development that put considerable pressure on the DoD to accelerate the pace of its ERP deployments. The date changes are beneficial for the contracting community because the DoD is unlikely to meet its updated deployment schedule. This suggests that despite the difficult fiscal climate the DoD will continue funding ERP deployments and all of the related work associated with these systems. Funding means contracts and contracts mean business opportunity.
 
One of the many systems being implemented is the Defense Agencies Initiative (DAI). Per the FY 2014 Exhibit 300 for the DAI, the program leverages the Oracle E-Business Suite, version 11i, to modernize Defense agency financial management capabilities in 7 process areas: Procure to Pay, Acquire to Retire, Order to Fulfill, Time & Attendance, Budget to Report, Cost Accounting, and Grants Accounting. The DAI is a holdover project from the Business Transformation Agency that is now under the purview of the Defense Logistics Agency. Work on the various elements of the DAI is directed by the DAI Program Management Office (J623) which resides under the Information Operations (J6) Program Executive Office (J62) at DLA.
 
Background
 
Implementation of the DAI began at the BTA in 2006-2007 with the award of a 5 year contract to Computer Science Corporation (CSC) for the DAI Financial Business Management Solution. Since that initial award DAI implementation efforts have also commenced at the Defense Threat Reduction Agency (DTRA), TRICARE Management Agency (TMA), Defense Technology Security Administration (DTSA), Defense Prisoner of War Missing Personnel Office (DPMO), and Washington Headquarters Service (WHS). Readers should keep in mind that this list is limited to those customers for DAI which could be confirmed. According to the DAI PMO, the Defense Applied Research Project Agency (DARPA) and the Office of Economic Adjustment (OEA), Defense Security Service (DSS), and Defense Media Activity (DMA) also have been prepped for the implementation of DAI.
 
Assuming it is the DoD’s intention to eventually implement DAI across all of the Defense agencies, the following agencies remain potential candidates for DAI deployment, implying that further contract support may be planned.
 
 
Contract Support
 
The following contracts have been identified as related to DAI implementation efforts over the period from FY 2007 to FY 2013. As we can see, a number of these are expiring in FY 2014, 2015, and beyond, providing the potential for follow-on work to be procured, or for new contracts to be competed to perform deployment services and support for the agencies listed above. In addition, the possibility exists that more contractor support for DAI sustainment will be required.
 
 
Historical Spending
 
Historical spending to date on the contracts listed above is as follows. Curiously, there is a considerable discrepancy between the reported base and all options value of these contracts. Likely this is because many of the contracts have remaining option years on them to be exercised. Also, it is possible that spending on many of the contracts remains unreported.
 
 
 
Lastly, the chart below depicts spending on these contracts over the period from FY 2010 to FY 2013. Obligations on these contracts began ramping up in fiscal 2010 to reach a high point in fiscal 2012. Now, in fiscal 2013 it looks as if spending is slowing, probably due to the uncertainty surrounding Sequestration.
 

Conclusions
 
Wrapping up, there is good news and bad news. The bad news for the DoD is that much like the challenges facing Army ERP implementations, the Defense Agencies Initiative will likely struggle to hit full deployment milestones for all of the participating agencies by the September 2014 deadline mandated in the FY 2013 NDAA. The challenge of meeting the deadline becomes even more daunting when potential cuts from Sequestration are taken into account. Should Sequestration be imposed in its current form, funding for many of the DoD’s ERP deployments would undoubtedly take a hit. This does not mean that funding will dry up. It will simply be reduced.
The good news is that in chaos there is opportunity. Given the legislative mandates, the DoD is likely to continue spending on ERP implementation. In FY 2014 the budget for DAI is $99M, out of which $52M (52%) is for development, so funding for DAI this fiscal year is not a problem, assuming an FY 2014 budget is passed. Even if the DoD is forced to operate under another Continuing Resolution at FY 2013 baseline numbers, the funding for DAI will be similar (DAI DME funding in FY 2013 is $63M). In short, DoD ERP implementations like the DAI are likely to remain excellent places in the next few years to seek out business opportunity in trying economic times.

 

 

Is Pursuing Work on Army Business Systems Still Worth It?

In February 2013, the Defense Department’s Office of the Inspector General (DODIG) published Report No. DoDIG-2013-045 entitled Army Business Systems Information Technology Strategy Needs Improvement. This report concluded that the Army Office of Business Transformation (OBT) had not developed and implemented a comprehensive strategy for “adequate governance and program management” of its four large Enterprise Resource Planning (ERP) systems: the Global Combat Support System-Army (GCSS-A), General Fund Enterprise Business System (GFEBS), Integrated Personnel and Pay System-Army (IPPS-A), and Logistics Modernization Program (LMP). The estimated life cycle cost of implementing these systems is $10.1 billion and during its investigation the DODIG concluded that the lack of a comprehensive ERP implementation strategy puts the Army at risk of not being able to achieve full financial statement audit readiness by fiscal 2017.
 
The DODIG’s report got me wondering if there might still be business related to Army ERPs that is worth pursuing. On one hand, these are mature systems the development and deployment of which has been underway for a long time. On the other hand, $10 billion is a lot of money and vendors are always searching for more work. As I pondered the worthiness of dedicating scarce bid and proposal dollars to competing for ERP related work, I ran across this chart illustrating the upcoming milestones for each of the four ERP systems:
 
This chart prompted me to go back to last year’s Exhibit 300 Business Cases for the four systems in question. Reading these made me realize there are some potential gaps between the deployment dates and the major contracts in place supporting the systems. For example:
  • GFEBS – Accenture’s GFEBS Support Contract # N0010404AZF12 officially expires in June 2015
  • GCSS-A – Northrop Grumman IT’s, GCSS-A Support Task Order # 1, ITES-2S Contract # W91QUZ07D0005 officially expires in September 2017
  • IPPS-A – Booz Allen Hamilton’s System Integration Services for IPPS-A Task Order # 2Y09, ITES-2S Contract # W91QUZ06D0019 officially expires in June 2013. A follow-on contract for Increment II is being competed now.
  • LMP – CSC’s Wholesale Logistics Modernization Contract # DAAB0700DE252 officially expires in December 2016.
The impending expiration of the Accenture contract for GFEBS support and the current competition of a follow-on for IPPS-A illustrate the potential here. There are of course no guarantees that sustainment contracts for these systems will be competed in the future, but given the size and complexity of these systems I think it is reasonable to expect that follow-ons will be needed. Take LMP as an example. LMP has been deployed, but sustainment services for some posts and installations are still required. In fact, the Telesto Group provides these services for LMP at Anniston Army Depot (#W911KF12C0020).
 
Army program managers also have an ongoing need for Independent Verification and Validation (IV&V) work and program management support for these systems. Program offices across the DoD have been shedding government personnel for years in favor of contract personnel. Continually frozen federal salaries and efforts to shrink government should continue that trend, meaning contract personnel will be hired to step into the breach.
 
Finally, there is an ongoing need for work related to the Army Enterprise Systems Integration Program (AESIP), which converges all of these ERP systems. SAP’s Contract # W91QUZ10F0012 for AESIP Hub Services & Common Operating Environment Convergence just expired in March and recently two awards for AESIP enterprise infrastructure services were made. More are expected.
 
Wrapping up, my point is to illustrate that even though the Army has been implementing its ERPs for decades it is not too late to get in the game. Ten billion dollars is a lot of money and dedicating some of your scarce bid and proposal dollars to compete for it could be well worth the expense.

NASCIO divulges state CIO priorities in annual survey top tens

The National Association of State Chief Information Officers (NASCIO) recently published its 2013 State CIO priorities and priority technologies, based on its annual state CIO survey. The survey is a valued peak into the minds and wish lists of state IT executives, and when compared against past priorities, we can see that consolidating existing IT infrastructure and optimizing it for the future (particularly for the cloud) will be among the highest priorities for CIOs this year.
 
 
In this year’s top three, we see a fairly consistent pattern among the states of shifting away from the budget cutting, cost-saving measures of the post-recession years, toward much-needed reinvestment in long-term IT infrastructure. Among last year’s top three, consolidation/optimization remains number one, but budget and cost control falls to number five, and governance drops off the list completely. The second spot this year goes to cloud services, which didn’t even make the list until 2011. Security makes a triumphant return to the top three after being a middle-of-the-pack priority since 2009. In my opinion, these three priorities are all connected and track fairly well with what Deltek has seen in the market over the past few years.
Initiatives to consolidate or upgrade existing data centers have been, or are taking place in Oklahoma, Texas, Florida, New York, Pennsylvania and North Carolina. Among these states, New York, Pennsylvania, North Carolina and Texas require significant cloud capabilities for their new consolidated data centers. In many cases, states are looking to the private sector to implement these initiatives and guide them on the right path. Of course, as the importance of cloud-based IT services rise, so do concerns about secure technologies. While security is no longer the barrier to cloud entry that it has been in the past, it is and will remain one of the top concerns for CIOs as they continue integrating the cloud into their existing IT infrastructure.
2013 CIO Technology Priorities
NASCIO also queries its members about their top 10 priority technologies. While the shakeup from last year’s top three is less pronounced, we continue to see a distinct pattern emerging in the minds of state CIOs. It is clear that many envision a future government workforce that is mobile, virtual and able to access workplace resources from anywhere on the planet. While this likely falls short of representing a harbinger of doom for the face-to-face,  brick-and-mortar way of doing state business, the investment in these top three technologies may very well be laying the groundwork for such a future.
 

 Not surprisingly, the new top technology pursued this year is cloud-based services. This comes as no surprise to Deltek, which has seen an explosion of cloud-related procurement in the last three years, as well as procurements for other technologies with specific cloud-integration components built into solicitations. We are quickly approaching the point (if we have not reached it already) where cloud integration requirements for state technology RFPs are the norm, not the exception.
Also notable is the journey of mobile workforce technologies, which hung around as a low-level CIO priority from 2007-2009, dropped out of the top 10 entirely in 2010-2011, and returned this year with a vengeance as the number two priority technology. As cloud computing continues to make it easier for government employees to virtually access their workplace from remote environments, governments are planning to put some serious dollars into making sure their workforce has the mobile computing tools necessary to take advantage of this new environment.
 For the full version of this AP with a complete breakdown of policy and technology priorities, click here (subscription required)

Arizona Releases Statewide Strategic IT Plan For 2013 To Improve Efficiencies

The Arizona Strategic Enterprise Technology (ASET) Office has released a Statewide Strategic IT plan for fiscal 2013 which builds on Governor Janice Brewer’s agenda by leveraging technology to enable a “more innovative, efficient, and sustainable government.”
In July 2011, Arizona’s Government Information Technology Agency merged with the Arizona Department of Administration’s Information Services Division to form the ASET Office, which now develops and executes the statewide IT strategy, while providing capabilities, services and infrastructure to ensure the continuity of mission critical and essential systems for the state.
As part of the Statewide Strategic IT Plan, which was developed in conjunction with the Governor’s Office, eight transformational initiatives were identified, defined and scoped to develop the strategic plan for 2013. These initiatives are expected to have a significant impact on the state as a whole - ensuring the business continuity and security of statewide assets, while providing citizens with the ability to access state services anywhere, any time.
Below, we highlight each of the initiatives which encompass the strategic plan for 2013, and detail how these will help the state moving forward:
1.     Implement a Continuous Improvement Culture - As part of the Governor’s commitment to reform state government, the Government Transformation Office (GTO) was established within the Department of Administration to implement a statewide continuous improvement program focused on education, process improvement projects, and capital impact.
 
Moving forward, Arizona will coordinate with the GTO to adopt improved and efficient policies and procedures. This coordinated effort will result in automating policies and procedures that are free of waste and inefficiency.  With an emphasis on service excellence and customer centricity, Centers of Excellence will be established throughout the state, which will offer recognition and reinforcement to best practices, while providing an opportunity for continued shared learning, as well as a continuous improvement culture.
 
2.     Accelerate Statewide Enterprise Architecture Adoptions and Asset Management - Over the past year, Arizona has made significant progress on the adoption of a statewide Enterprise Architecture (EA) strategy and framework. An EA advisory committee was established, a charter was developed and ratified, and an EA framework was selected. Accelerating this planning methodology throughout the state will result in “a more agile, efficient organization with more effective decision-making capabilities.”
 
As part of the EA expansion, Arizona will start with an assessment of technology contracts, infrastructure and applications. It will also begin to define and adopt a statewide Data Governance Model to improve the quality and accessibility of information. Together, these
capabilities will accelerate the business decision-making process, streamline the planning and procurement of statewide assets, and reduce the overall cost of doing business.
 
3.     Implement A New Statewide Enterprise Resource Planning (ERP) Solution - In January 2012, Governor Brewer addressed her plan for operational reform. The state’s accounting system which is a central operational system for the state’s employees, customers, and vendors is an outdated system with antiquated software and no external support. When the system fails, the consequences will span beyond the state and will ultimately impact our schools, businesses, and community. Therefore, Arizona plans to implement a statewide ERP system that will replace the Arizona Financial Information System (AFIS) and a number of other central and agency-specific administrative systems. It will also provide new administrative system functionality that will benefit the entire state. The benefits from replacing this outdated system will be more efficient and effective business processes, better informed and faster decision making, and improved business continuity.
 
4.     Expand E-government and Mobility Capabilities - In order to fulfill its vision, Arizona will begin to develop a statewide web platform to provide agencies with full content management functionality, mobile compatibility, and user identity management. Ultimately, this will allow agencies to deliver services faster, more consistently and securely, and to any device utilized by its citizens.
 
The state web portal (www.az.gov) is the gateway to Arizona, which contains invaluable information about how citizens work, live, play, and interact with state government. A collaborative approach with key stakeholders will be established to modernize the state web portal by developing a new design, adding new capabilities, and making it easier for citizens to access state services.
 
5.     Implement Critical Business Continuity Improvements at the State Data Center - The State Data Center currently houses technology systems that are mission critical to the continuity of business. There are more than 140 state entities that leverage the data center’s infrastructure, services, and capabilities. Ensuring these systems are operational and secure is absolutely critical to the functions of the state. Arizona will begin initiatives to upgrade critical aspects of the facility itself, ensure redundancy and continuity of critical systems, and increase capacity to support the growing number of agency customers.
 
In addition to upgrading the current environment, Arizona will also facilitate the foundation of a cloud-computing environment by beginning to build a comprehensive virtualization infrastructure. By providing capabilities such as self-provisioning, service monitoring, and capacity management, the state will begin to provide state agencies with a cost-effective model for moving to “the cloud.” This will also allow for an improved way to plan and manage the cost of IT. Moving IT costs from a capital expenditure (CAPEX) to an operational expenditure (OPEX) model will result in a consistent sustainable model that will improve IT cost planning.
 
6.     Implement a New Statewide Infrastructure & Communications Network -The AZNet program was established several years ago to ensure Arizona has a cost effective, efficient and consolidated shared telecommunications infrastructure to meet the needs of government agencies, their employees and the public. The next generation of the program is in progress to refresh the current infrastructure. This refresh will be an expansion of the central ring, which will extend out network capabilities to agencies that are currently unable to receive services on the state network. Ultimately, this program will provide improved business continuity, reduced costs, and improved connectivity.
 
Additionally, the Digital Arizona program is playing an active strategic role in changing the definition of infrastructure and addressing middle-mile issues throughout the state of Arizona. The impact of this program is far reaching and will benefit education, economic development, public safety, and healthcare.
 
7.     Enhance Statewide Security and Privacy Capabilities and Training - Protecting citizen data, as well as the privacy of state employees, are of the highest priority for state agencies. Due to the sensitivity of government data, the state’s environment of diverse technologies and data sources requires adoption of robust and effective operational security and privacy programs.
 
As part of this initiative, Arizona will strengthen cyber security and privacy operations by supporting essential cyber-security technologies and continuing the implementation of a single-sign-on solution for all state employees. In addition, Arizona will optimize incident reporting and deploy an enterprise log aggregation solution for real-time threat detection and notification. Lastly, the state will strengthen cyber-security awareness by providing state employees with training on security and privacy policies, standards, and procedures that are essential to preventing security and privacy incidents.
 
8.     Streamline Project Oversight, Improve Transparency and Strengthen Project Management - To truly transform state government, it’s critical that Arizona clearly defines its project deliverables and executes with precision. This requires a level of maturity in several areas including program and project management, as well as oversight. In addition, Arizona must improve efficiency, increase transparency and escalate accountability in the state’s project oversight process.
 
Leveraging the GTO and lean principles, Arizona plans to simplify the Project Investment Justification (PIJ) document and streamline the process from end to end. Through automation, Arizona will provide agencies with the ability to self-report and provide more accurate, current, historical, and aggregate reporting capabilities.
Our Take:
Overall, Arizona’s Statewide Strategic IT Plan outlines the various steps and investments the state is planning to make for fiscal 2013. As part of this IT transformation, Deltek expects opportunities in the areas of IT refresh, systems integration, communications, cybersecurity and IT services to arise as a result of these strategic initiatives.
Looking ahead, interested contractor’s should use Arizona’s past strategic IT projects to create business development justifications for IT solutions that will allow the state to accomplish its goals of creating greater efficiencies, while providing an innovative, sustainable government.

 

Deltek Pulse: general government services and education October review

As everyone gets back into the routine that fall brings, the uptick of procurement opportunities in October shows state and local governments are getting back to business as well. For most states and localities, budget season is around the corner, and many agencies have already submitted their budget requests, which will include funds for everything from routine IT software and services to major capital IT projects.
 
A total of 1,317 IT-related general government services solicitations were identified in October, and we’ve highlighted the top 10 most common procurement categories below:
 
  • Software  – 195 solicitations
  • Telecom/IT Maintenance & Support Services – 204 solicitations
  • LAN/WAN Equipment – 95 solicitations
  • Telecom/IT Implementation Services – 73 solicitations
  • IT Consulting Services – 49 solicitations
  • Desktop/Tablet/Laptop Computers – 40 solicitations
  • ERP/Human Resources/Financial Systems – 35 solicitations
  • BI/Analytics Solutions – 6 solicitations
  • VOIP/ACD/IVR Telecom Systems – 14 solicitations
  • Content/Document Management Systems – 13 solicitations
 
Here is a look at current tracked general government IT opportunities:
 
The New York Office of General Services released a request for information (RFI) on October 4, seeking IT task order support services. The state is looking to transform its IT equipment repair process from a decentralized, ad-hoc model, to a structured, centralized and proactive system. 
 
The city of Baton Rouge, La., released an RFI on October 29, seeking Internet bidding and reverse auction services. It is anticipated that information received in response to this RFI may be used to develop a future procurement.
 
The Texas Department of Information Resources (DIR) released a request for offers (RFO) on October 30, seeking cloud services. The cloud contracts awarded from this RFO will allow vendors to respond to statements of work (SOWs) from DIR customers (e.g. state agencies, localities, state universities, K-12 school districts) to perform services in the following categories: cloud infrastructure as a service (IaaS), cloud platform as a service (PaaS), cloud broker, and cloud assessment.
 
The New Jersey Office of Management and Budget is looking to replace its 30-year-old planning and budgeting system with a new budget preparation and monitoring system. The new budget system will integrate with the new comprehensive enhanced decision and information system of N.J. (EDISON), composed of ancillary and external decision-support systems throughout the state. The RFI responses for the replacement budget system were due by October 29.
 
Here is a look at current tracked education IT opportunities:
 
The North Carolina Department of Public Instruction (NC DPI) closed the bid for the N.C. Education Cloud project’s identity and access management system on October 5. NC DPI confirmed the following nine vendors submitted proposals: Deloitte & Touche, LLP; Verizon Business Network Services; IBM Corp.; Vexcel Corp.; Onwire Consulting Group, LLC; TechDemocracy, LLC; Identity Automation, LP; Tremolo Security, Inc.; and Mycroft Inc. A short list of finalists will be determined in early November 2012.
 
The Pennsylvania Department of Education released a procurement notice listing a need for help desk and LAN support servicesat local education agencies throughout the commonwealth. This is interesting in that only four other state agencies have put out or planned similar bids for help desk services in the past year: the Department of Labor and Industry, the Department of Environmental Protection, the Department of Conservation and Natural Resources, and the Pennsylvania State Police.
 
Notable awards
 
Bay City, Mich., approved a contract for an advanced meter infrastructure system to multiple vendors on October 1: Elster (AMI provider), ElectSolve (MDM supplier), Badger Meters (Meters) and Katama Technologies Inc (project management services). The total budget for this project is $6.7 million.
 
The Los Angeles Community College District, the largest community college system in the nation, confirmed a partial award to Oracle for a student information system (SIS) valued at $12 million. The LA Community College District released an intent to award notice, naming Ciber, Inc as the selected vendor to perform implementation services for the new SIS, though the contract has yet to be finalized.
 
The city of Columbus, Ohio, has awarded a contract for applicant tracking and testing management software to NeoGov Inc. The contract was awarded for $121,000 over four years. After releasing an RFI in January 2011, the city opted to postpone the project for a year. Ultimately, the city decided to make an award based off the submitted RFI responses.
 
Trends in state and local IT procurement
 
California recently passed a bill to move IT procurement from the Department of General Services to the California Technology Agency. California will join at least seven other states that are planning or have recently undergone IT transformations/reorganizations that have affected oversight of IT procurements: Tennessee, Oklahoma, Connecticut, Hawaii, Arizona, New York, and North Carolina.
 
October’s market analysis
 
The State & Local Education Data Systems, 2012 report by Randi Powell was released on October 4. The report focuses on how the near completion of most statewide K-12 longitudinal data systems should not be ignored by vendors looking for long- and short-term opportunities related to student-teacher performance tracking. These data systems will initiate new tracking and data sharing both vertically (federal-state-local) and horizontally (interstate, interdistrict, and intradistrict).
 
The State of City & County IT, 2012 report by Chris Dixon was released on October 18. In this report, Deltek, in partnership with the Public Technology Institute (PTI), conducted a survey of city and county CIOs and IT directors. The survey covered organizational and fiscal issues, IT investment priorities in the coming year, and buyer perceptions of IT vendors. The 84 cities and counties that responded to the survey represent a significant and wide-ranging market sample, and an estimated $570 million in annual IT spending.
 
A free report on theTop State and Local Opportunities for FY 2013,by Derek Johnson, was released on October 28. The report details the year’s premier state and local-level general government opportunities. At the top of the list, $600 million in estimated contract dollars, with an additional $10 billion award to be shared by multiple, qualified firms. Learn how your company can make an informed bid for FY 2013 dollars. Included in the report are insights on estimated contract values, key points of contact, background information on projects, and related procurement timeframes.
 
What’s on tap for November?
 
Deltek will recognize American Education Week, November 11-17, with a week-long blog series highlighting our top education IT procurement opportunities, as well as education IT market reports and analysis.
 
Stay connected to Deltek’s General Government Services team via Twitter @GovWin_GenGov for real-time updates on trends, analysis and opportunities in the state and local IT market.

 

Hawaii Details 12-Year IT Roadmap To Streamline Business Processes While Improving Efficiency

Earlier this month, Hawaii unveiled a plan to overhaul the state’s use of technology to streamline business processes to improve the delivery of government programs and services.
As part of this, the newly-created Office of Information Management and Technology developed a 12-year roadmap which outlines the necessary steps that will drive the decade-long business and technology transformation. The Transformation Plan was developed in consultation with state agencies and after a thorough review of national best practices and lessons learned from other states. The effort is one of the key initiatives under Governor Neil Abercrombie’s New Day Plan, which calls for a transformation focused on jobs and investments in people to “ensure long-term economic prosperity and resilience.”
“A solid foundation must be built that will enable the state to continuously adapt in order to provide services, now and in the future,” said Hawaii CIO Sanjeev “Sonny” Bhagowalia. “This 12-year plan, which includes two years of planning and 10 years of implementation in multiple phases, will revolutionize the way information is managed to improve how programs and services are delivered to the public.”
As reported, Governor Abercrombie appointed Bhagowalia as its first chief information officer in 2011, after recognizing that a large-scale effort was needed. Hawaii said the state has “not significantly invested in technology for more than 30 years,” while noting that “transforming the state’s $11 billion business enterprise with 220 business functions and services across 35 distinct lines of business is an enormous endeavor.”
The Transformation Plan will morph the current paper-based and inefficient business environment into a future environment that is more cost-efficient, digital, and mobile-accessible. It will also consolidate the state’s 743 fragmented legacy systems into fewer, but, integrated, enterprise-wide solutions that facilitate improved information sharing.
Currently, Hawaii spends about 1.4% of its annual budget on technology, while most states invest around 2% to 3%. Industry best practices suggest spending between 3% and 5% of the annual budget on technology to realize the greatest benefits.
  1. Streamlining and improving current business processes and applications to directly benefit the public.
  2. Leveraging the state’s investment in shared support services and technology infrastructure.
  3. Establishing a strong organization-wide management and oversight framework, including policies, processes, performance measures, program management and organizational change management.
As part of the transformation, Hawaii has identified 11 top strategic technology priorities, which include:
  1. Enterprise Resource Planning (ERP) - Hawaii is moving forward with implementation of an enterprise-wide ERP system that will replace the large majority of the current central systems within the Enterprise Support Services band.
  2. Tax Modernization - This involves a strategic initiative to explore ways to streamline and modernize tax processing away from the current Integrated Tax Information Management System (ITIMS). It will expand the overall use of electronic tax filing, electronic payment, improved analytics, and improved case management processing to streamline and decrease cycle times for the citizens of the state.
  3. Health IT - Envisioning a more effective, efficient, patient-focused healthcare system, Hawaii’s Transformation Plan includes a four-point strategy of innovations for Delivery System Improvements, Payment Reforms, Health IT and Healthcare Purchasing. Hawaii is seeking systemic improvements in public health through measuring health status, performing assessments, and the tracking of preventions, promotion, and outcomes. The State will look to use Electronic Health Records and a secure exchange of information to improve care coordination, reduce duplication and waste, empower patient engagement in their health, and enable public health analytics to shape policy decisions that will improve the overall health system.
  4. OneNet/Enterprise Services Network - A single network, OneNet, will look to fulfill the network needs of all state departments and employees and citizens with guaranteed performance levels.
  5. Adaptive Computing Environment (ACE) - Establishes a consistent configuration for computing devices across the State using pre-approved vendors. State employees can order standard systems that are engineered to operate most efficiently in the OneNet environment. Choices are provided based on job classification for mobile/tablet solutions, laptop/desktop, or a strictly virtual environment for certain work. These systems require fewer support resources than non-standard configurations, enhance overall support effectiveness, and reduce total cost of ownership.
  6. Shared Services Center - For the future State vision, the goal will be to have five fully meshed functional shared services centers (SSC) distributed across the islands to provide high availability, redundancy, fault tolerance, data backup and replication, disaster recovery, and always-on services to Hawaii. Connections between shared services centers will be provided with dedicated high-speed fiber optic lines with service providers and State wireless connections acting as redundant and backup links respectively.
  7. Information Assurance & Privacy - Hawaii has a fully integrated Security Operations Center (SOC) and Computer Security Incident Response Centerv (CSIRC) to: provide uninterrupted security services while improving security incident response times; reduce security threats to the State; and enable quicker, well-coordinated notification to all State Departments regarding security threats or issues.
  8. Mobile ComputingHawaii is aiming to establish a standard mobile applications solution pattern and approach with standard methods, skill development, contractor resources, and tools/technologies in conjunction with the adoption of preferred smartphones and tablets. Since mobile application development has a very small footprint in the State at this time, this initiative will need to analyze, pilot, and invest/implement in a standard approach, capabilities, and tools for developing mobile applications.
  9. E-Mail, Collaboration and Geospatial This effort is looking to provide several integrated services in a single environment, including integrated multi-media online communications services; collaboration and conferencing services, and multimedia content and information services.
  10. Open GovernmentSeeks to establish a State of Hawaii data.gov internal and public-facing website to facilitate the sharing of master data sets.
  11. Hawaii Broadband - Hawaii currently has many broadband projects underway as part of the Hawaii Broadband Initiative (HBI) with departmental participation that highlights the importance of the program. An assessment of the current program illuminates the fact that there must be strong unification of these disparate efforts within an established, disciplined program management framework with continual progress reports.
Our Take: Overall, we applaud the actions taken by the new CIO to outline how the State of Hawaii can streamline its operations while improving efficiencies through the use of technology.  With this in mind, Deltek expects opportunities in the areas of IT refresh, systems integration, portal development, broadband, and IT services to arise as a result of these significant IT efforts.
In terms of contracts, Hawaii currently has over 154 active GovWin tracked opportunities. The following is a breakdown of Hawaii’s top 5 opportunities (in terms of value) across all market verticals:
  1. Pharmacy Benefit Management Services and Fiscal Agent Services In Support of Pharmacy Claims Processing; Value: >$30 million; Primary Requirement: IT Professional Services; Award Date: February 2013.
  2. Statewide Telecommunications Equipment; Value: >$30 million; Primary Requirement: LAN/WAN Equipment; Award Date: January 2014.
  3. Hawaii Broadband Initiative; Value: >$30 million; Primary Requirement: Fiber Optic Materials & Components; Award Date: June 2013.
  4. Health Insurance Exchange Services; Value: <$30 million; Primary Requirement: Information Technology; Award Date: November 2012.
  5. Third Party Administrator (TPA); Value: <$30 million; Primary Requirement: Information Technology; Award Date: July 2013.

 

Federal Software Market Forecast Indicates a Contraction is Ahead

Last week, we released a new report, Federal Software Products Market, 2012-2017, where we delve into the driving trends and challenges that will shape the size and direction of the federal software marketplace for the next few years and beyond. What strikes us about this particular segment is the combination of market forces at play that are transforming the landscape and strongly impacting what, how much and how federal agencies will purchase and manage their software portfolios now and in the future. 
In the report, we discuss several near-term trends that we see in the federal technology market coalesce around several key areas:
  • Agencies are looking for was to shift to managing data versus infrastructure.
  • Drive to maximize efficiency is accelerating the move toward automation and analytics.
  • Increase of mobile computing progresses in tandem with 24/7 demand for information access.
  • Operational models are shifting towards services, placing greater emphasis on acquiring and expanding capabilities through managed services (SaaS, communications, security).
  • Push to accelerate innovation and technology adoption, like automation and analytics.
  • Agency strategies of moving towards common operating environment and standard enterprise architecture will leverage economy of scale, and require consolidation of acquisition avenues (contract vehicles/BPA).
Given these and other trends, there are several positive market drivers helping to sustain the federal software segment and numerous negative inhibitors that will suppress federal spending, and therefore growth. Here are just a few we recognize.
Market Drivers
  • Pockets of sustained spending on custom software developments, particularly in the sciences and high performance computing.
  • Business system modernization and standardization will insulate certain software investments.
  • Software is at the core of priority systems for defense spending. Similarly, VA and HHS are driven by iEHR and other major systems heavily reliant on software
  • Continued demand for software will be augmented by a push for COTS and standardized/enterprise solutions.
  • Cyber security is expected to be a growing mission area for agencies. Security software spending and automation will enable personnel to focus on complex security issues.
Market Inhibitors
  • Integration and consolidation efforts will be ongoing in the near term, maintaining software funding. Then (after FY14) savings start to be realized, lower spending levels.
  • Push for standardization is expected to increase implementation of COTS and enterprise solutions, lowering long term costs.
  • Rationalization of Defense applications will contribute downward pressure in Defense software spending.
  • Strategic sourcing initiatives are enabling agencies to leverage cost saving through negotiated prices and economy of scale.  
Deltek’s Federal Software Forecast
As a result of these trends, drivers and inhibiters, Deltek forecasts demand for vendor-furnished software products by the U.S. Government will decline slightly from $13.5 billion in 2012 down to $13.3 billion in 2017 at a compound annual growth rate (CAGR) of -0.2%. (See chart below.)
 
 
 
Implications
  • Agencies will be pressured to make “controlled cuts” to “near-sequestration” levels regardless of whether or not sequestration actually occurs.
  • Agencies are moving toward cloud computing and mobile computing in a drive to maximize efficiency and adopt innovative technologies while also reducing costs.
  • Enterprise licensing and strategic sourcing will reset software expenditure levels to new baselines as agencies fully implement new policies and rationalize their software portfolios.
  • Standardization and modernization of both infrastructure and enterprise software will consolidate acquisitions, but drive growth in key areas such as mobility and cybersecurity.

 

Enterprise Everything – Notes from the 5th Annual AFCEA NOVA Warfighter IT Day

Discussion of the DoD's new enterprise approach to IT dominated discussion of services, networks, and cyber security.
As expected, the Department of Defense’s transition toward enterprise services dominated discussion at this year’s annual Warfighter IT Day, organized by the Northern Virginia Chapter of AFCEA.
Army Deputy CIO/G6 Mike Krieger kicked off the event with a discussion of the ways that the Army is moving forward with the enterprise IT approach championed by the DoD CIO and Army leadership. In the 2+ years since the Army began migrating to DISA’s enterprise email offering the Army has learned a number of useful lessons. For one thing, Mr. Krieger stressed, DISA’s email system has provided cyber security capabilities in excess of what the Army previously employed. The Army, Mr. Krieger stated, has learned that security is an enterprise problem that requires an enterprise solution and that behaving like an enterprise creates an infrastructure that is inherently less vulnerable.
In addition, the enterprise approach provides several other benefits that the Army is just now realizing. For one thing, when the migration to enterprise email began, the Army had no visibility into the number of BlackBerry devices it owns and maintains. This has changed for the better as the Army now has enterprise-level visibility into and management of users of the mobile devices on its networks. Equally important, Mr. Krieger stressed, is the fact that every enterprise initiative provides an opportunity to learn how to properly re-architect networks and systems as enterprise capabilities. He expects this learning process will accelerate the pace of change. Finally, there is the financial management benefit. Thanks to the enterprise approach, direct costs and the impact of events can be tracked, remediated, and the after effects can be evaluated, thus providing the Army with the possibility to manage IT proactively. In itself this is a very positive development for the Army and DoD.
DISA Vice-Director, Rear Admiral David Simpson followed up Mr. Krieger’s comments with a presentation on the cyber warfare benefits that DISA and DoD as a whole can glean from the department’s enterprise approach. Changing the environment in which cyber adversaries can act, is critical for making DoD networks more secure, Admiral Simpson said. Citing the example of the Allied response to the German submarine threat during the Battle of the Atlantic in World War II, Simpson explained that DoD’s enterprise approach is intended to dictate the IT environment to adversaries. This means collapsing the current variety of systems and networks that provide adversaries with a large surface attack area into enterprise networks, and eventually a DoD cloud, thus reducing vulnerabilities.
Dr. Ed Siomacco, Deputy Chief of Staff for Corporate Information/CIO, Army Materiel Command, carried the theme forward with a focus on the Army’s implementation of large Enterprise Resource Planning systems. After commenting on the importance of ERPs for reducing the number of legacy systems the Army currently operates, Dr. Siomacco emphasized that the Army needs industry’s assistance addressing challenges it faces gleaning business intelligence from its ERPs.
Major General Mark Bowman, Director C5/CIO, Joint Staff, J6, followed Dr. Siomacco with a discussion of the evolution of DoD toward the Joint Information Environment (JIE). Calling the JIE the “CONUS extension of common IT infrastructure for U.S. forces operating within the Future Mission Network (soon to be renamed the Mission Partner Network),” General Bowman emphasized the J6’s intent to test-drive the collaborative joint network environment with an international coalition partner within the next year. General Bowman cautioned industry and military personnel alike that enterprise solutions should be used even in cases when their performance is not perfect. For example, much like enterprise email, which General Bowman has strongly supported in the Army, technologies like thin clients and VoIP are being evaluated by the DoD for adoption on an enterprise basis, along with enterprise SharePoint and an Action Tracking System.