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Deltek Pulse: Health and Human Services December in Review

As Deltek’s health and human services team wrapped up 2013, December proved to be a productive month with the release of new health and human services opportunities on par with previous months. With that backdrop, December was both a month of reflection and anticipation. Indeed, 2013 was one of the most energetic years to be involved in the health and human services market. From enrollment in health insurance exchanges to farm-bill-related food stamp drama, our vertical has experienced innovation, excitement and continued investment.

Opportunity Overview 

In December, the health and human services team saw the release of a little more than 600 solicitations with either health care or social services as a primary vertical. The word cloud below represents the frequency of terms in those solicitations. 

As one can see from the below map, California, New York and Colorado saw the largest number of health and human services-related solicitations, while 15 states had no related activity.

Notable Opportunities

Analyst’s Take 

As we look forward to 2014, there is no doubt that 2013 was merely an appetizer for the more exciting main course yet to be served in the health and human services market.

As we begin the year, our team is looking forward to the following events that could impact the health and human services vertical:

  • Continued ACA Implementation; specifically, the success or failure of health insurance exchanges
  • Extension of long-term unemployment benefits, coupled with the upcoming debt ceiling increase battle
  • The 2014 midterm elections, in which 36 states will hold gubernatorial elections. Currently, Republicans hold 29 governor mansions, while Democrats have 21. A shift in political leadership will have a significant impact on many health and human services programs

As we can see, the coming year will have plenty of political drama to keep us all entertained. However, our team continues to look forward to many new innovative projects, in the ilk of the above highlighted, coming out of states. All told, there can be no doubt that 2014 will be a stimulating year for health and human services. 

You can read more about the highlighted projects in the above links. Not a Deltek subscriber? Click here to learn more about Deltek's GovWin IQ service and gain access to a free trial.

 

 

 

 

 

 

 

 

Deltek releases annual state-of-the-states analysis: Webinar to be held this Thursday

Every year, Deltek analysts carefully comb through all 50 governors’ state-of-the-state and budget addresses to identity crucial trends in rising and falling priorities. Understandably, the past few years haven’t been so fruitful, with states cutting key programs, canceling major projects and shifting efforts to stay afloat amid recession’s strapped-budget undertow.
 
Fortunately, states are successfully weathering the storm, and this year’s report contains a bevy of potential vendor opportunities as governors’ agendas increased project items for the first time since 2008. Overall, the total number of governor agenda items rose a sharp 11.6 percent from 2012.
 
In addition to the report, Deltek is presenting a free webinar this Thursday at 2 p.m. EST so vendors can learn how to align technologies with current and emerging policy trends. Go here to register for the free event.
 
Major take-aways from “State of the States, 2013,” include:
  • Governors’ renewed interest in performance-based management, particularly in education
  • More effort to cut corrections and incarceration costs by investing in probation, parole and electronic monitoring programs
  • Heavy focus on Medicaid expansion (both for and against), and how to reduce its costs
  • Increased dedication to developing a strong future workforce by establishing a wealth of present educational opportunities, led by digital learning platforms
  • Amplified justice and public safety initiatives due to natural disasters (Hurricane Sandy) and national tragedies (the Newtown shootings)
  • Continued plans to streamline and consolidate government operations through technology
The report also breaks down governors’ 2013 goals per vertical market, with several charts detailing the number of agenda items mentioned year to year and technology-specific projects.

The full list of report graphs include:
  • 2013 by vertical
  • 2011-2013 comparison by vertical
  • 2008-2013 average by vertical
  • 2013 Agenda Item Popularity vs. 2011-2013 average by vertical
  • Top 25 cross-over agenda items
  • Agenda items with mention of technology, 2013
  • Agenda items mentioned by state, 2013
  • Community development, economic development/regulation, natural resources/environment, and transportation agenda items, 2013
  • Education agenda items, 2013
  • General government services and public finance agenda items, 2013
  • Health care and social services agenda items, 2013
  • Justice/public safety agenda items, 2013
To read the full, 33-page report, please go here. Deltek clients that subscribe to State & Local Industry Analysis (SLIA) may also request (via their Deltek Client Advisor) the Excel workbook containing all of the agenda data compiled for the report.
Lastly, please register for our free webinar this Thursday to learn more about the initiatives and implications of 2013’s state-of-the-state addresses.

 

New Jersey FY 2014 Budget Analysis: Superstorm Sandy just one ingredient in mounting budget problems

Of all the budgets rolled out by New Jersey Governor Chris Christie during his four years as governor, the 2013-14 plan might be the most important of his career. A maelstrom of structural funding issues, political ambition and environmental acts of God have placed the Garden State’s finances in a precarious position – one with no clear path to closing the estimated $2 billion revenue shortfall that analysts forecast by mid-2013.
It was just last year that Christie’s administration confidently predicted more than 7 percent revenue growth as part of the “New Jersey Comeback Plan,” and aimed to push through additional tax cuts. However, much of that growth failed to materialize, and by late September, the state found itself more than $250 million short of initial estimates. After Superstorm Sandy wreaked havoc across the Jersey Shore, the resulting economic fallout ballooned the state’s deficit woes to $451 million.
While emergency federal funds passed in January 2013 will help staunch the bleeding from that particular blow, the state still faces some daunting headwinds: a pension crisis that is expected to cost an estimated $5.5 billion annually starting in 2018; the fourth highest unemployment rate in the nation; a perilous choice on Medicaid expansion, and a strong aversion to tax increases or deep spending cuts on both sides of the aisle to help balance the ledger. Adding to this volatile equation is a governor with national ambitions and all 120 state legislators being up for reelection in November.
All-Funds Spending
 
Faced with this mix of contradictory incentives, Christie unveiled a budget on Feb. 26 that calls for more than $70 billion in all-funds spending for fiscal year 2014. This represents a nearly 9 percent, or $5.8 billion, increase over the 2013 proposed budget. However, when compared to actual spending totals provided by the governor’s office for FY 2013, that increase shrinks to a little more than $1 billion. While topping the $70 billion mark – something not seen in the past five budget years – the state’s general funds are actually operating at around 2008 levels, something Christie boasted about in his address to the state legislature.
The largest gains from last year’s proposed budget were found in the Department of Human Services ($1.78 billion; 13.3 percent increase), the Department of Labor and Workforce Development ($1.58 billion; 32 percent increase) and the New Jersey Transit Corporation ($809 million; 48.8 percent increase). The funding increases in these three departments combined make up more than 70 percent of the increase from last year’s  proposed budget. Not surprisingly, the Department of Human Services saw a big increase year over year. With responsibilities for Medicaid and other health care spending, New Jersey is like every other state in the nation struggling to keep up with rising health care costs that threaten to crowd out other budget priorities.
Christie’s decision to embrace Medicaid expansion (and the gobs of federal subsidies that go with it) will yield $227 million in savings this next fiscal year. Built into Christie’s all-funds budget for the department is a $1 billion increase in federal funding, most of which will go toward expanding health coverage to 104,000 previously uninsured, low-income citizens. The overwhelming majority of the non-state appropriated portion of the Department of Labor and Workforce Development goes toward unemployment insurance and bond funds, with about $900 million coming from the state, federal government and other funds. The budget documents do not break out funding for the N.J. Transit Corporation, but the hefty increase may reflect an underestimated price tag for running the state’s public transportation infrastructure in last year’s budget. Though the governor only recommended $1.6 billion of funding in FY 2013, the corporation wound up spending more than $2.4 billion, just $37 million less than what is proposed for FY 2014.
Environmental priorities took the biggest hit in this year’s budget cycle, with the Department of Environmental Protection losing $180 million (18 percent) of funding compared to last year. Funding for the quasi-independent New Jersey Schools Authority nearly dropped off the map, going from $200 million in proposed funds for 2013, to just $435,000 for this upcoming fiscal year.
For the complete version of this state budget analysis, please download or purchase the complete Analyst Perspective here.

General government state and local ballot initiatives: lotteries, gaming and other news

While media outlets nationwide concentrate heavily on how Tuesday’s election results will affect federal
government spending, contracting and state and local funding, I would like to shine a light on a series of state and local ballot measures that will certainly fly under the radar in the wake of President Obama’s reelection, but may nevertheless have major impact on business, procurement and IT needs. Here’s a breakdown of several measures that are sure to affect state and local lottery and gaming operations, as well as procurement law:
 
LOTTERY AND GAMING
 
Maryland:
-       Voters statewide weighed in on Question 7, the much-talked about gaming expansion ballot initiative to allow the construction of a casino in Prince George’s County. Public officials argued that tax revenues from the casino would go toward education funding. The measure was vociferously opposed (mainly by a rival casino operator in West Virginia), and led to the most expensive political campaign in Maryland’s history, with more than $90 million spent between supporters and opponents. Despite the opposition, the measure passed by a 52 percent to 48 percent margin.
 
Oregon:
-       Oregon had two proposed amendments to the state constitution that would have legalized privately owned casinos with gambling, and used the tax revenue for various budget purposes. Both measures were defeated.
 
Rhode Island:
-       Rhode Island approved a measure to allow state-operated casino gambling at the Twin River Casino in Lincoln, R.I. Another measure to allow state-operated casinos in Newport received support from statewide voters (67 percent), but failed to pass because the measure had to be approved by a majority of Newport voters. As with all new state-operated gambling venues, there will likely be substantial opportunities for vendors who provide video lottery terminals, gaming systems and other forms of electronic gambling.
 
Florida:
-       Lee County sought to allow slot machine gaming at the Naples-Fort Myers Greyhound track. Voters approved the measure, though it remains subject to authorization by the state legislature. The approval of these machines is expected to lay the groundwork for future lottery and gaming expansions in the state.
-       Volusia County also proposed installing slot machines at designated locations throughout the county. Results for this measure are not available at this time.
 
Illinois:
-       Wood Dale City and Winfield Village both put initiatives on the DuPage County ballot to prohibit video gambling. Wood Dale voted in favor of prohibition, as did Winfield Village.
 
New York:
-       The city of Geneseo voted on whether to allow video gaming. According to the Star Courier, the measure was barely defeated with a 17-vote margin of 1,730 to 1,713.
 
ODDS AND ENDS:
 
California:
-       The cities of Newport Beach and Murrieta placed a pair of initiatives on the ballot to ban the use of red-light cameras. Red-light and speed cameras are produced almost exclusively by the private sector, and cities frequently contract these services out. Murrieta voters approved Measure N to ban the use of such cameras, as did Newport Beach. A fun fact I learned while writing a paper on red-light cameras for my public policy graduate school program: Since 1990, every time the use of red-light or speed cameras has been put to a referendum, the public has overwhelmingly voted to prohibit their use.
-       The city of Santa Rosa voted on a measure to alter the city’s charter to allow the city to contract with a single vendor to provide both design and build services for projects. Previously, the charter required the city to solicit services separately. Though results aren’t final at this time, the Santa Rosa Press Democrat is reporting that the measure is likely to pass (68.4 percent to 31.6 percent).
 
Alabama:
-       A measure to amend the Alabama State Constitution to allow the issuance of general obligation bonds of up to $750 million with the goal of providing financial incentives to existing companies within the state as well as attracting new industry passed with a 69.3 percent to 30.66 percent margin.
 
Florida:
-       The town of Redington placed a measure on the Pinellas County ballot proposing alterations to the town charter codifying a requirement that bidding and purchases be done through a competitive bidding process “whenever practical.” Results are not available at this time.
 
Analyst’s Take
 
As for the large swatch of lottery and gambling initiatives, with the exception of Rhode Island and a few other governments, most of the measures were to legalize privately owned and operated gambling establishments, not state-run facilities with concrete contracting possibilities. Still, for many states, the first step toward state-run gambling is permitting the practice in the private sector. While this may not lead to business opportunities in the immediate future, keep an eye on the state and local governments that passed gambling referendums. Chances are that three to five years down the road, a lot of these governments will be looking to get into the lottery and gaming business as well.

 

General government state and local ballot initiatives: Education

While media outlets nationwide concentrate heavily on how Tuesday’s election results will affect federal government spending, contracting and state and local funding, I would like to shine a light on a series of state and local ballot measures that will certainly fly under the radar in the wake of President Obama’s reelection, but may nevertheless have major impact on business, procurement and IT needs. Here’s a breakdown of several measures that are sure to affect the state and local education landscape, lottery and gaming operations, and procurement law:
 
EDUCATION
 
Illinois:
-       In Chicago, voters have tentatively passed Ballot Measure E, which would provide $78 million for improvements to Chico Unified School District campuses. That is a hefty amount, and there is sure to be a fair amount put toward upgrading the district’s technology infrastructure.
 
Arizona:
-       Prop 204 would have approved a 1 cent per dollar sales tax hike. Approximately 80 percent of the revenue from the tax hike would have gone toward bolstering education funds; contractors within the state largely supported its passage. The measure failed by a 2-1 margin.

Coconino County, Arizona:
-       A measure to increase the operating budget for the Page Unified School District in Coconino County would have led to a $1.16 million increase in funding through 2017-18. The measure failed to pass.
 
Maricopa County, Arizona:
-       The West-MEC bond will lead to almost $75 million in bonds to pay for new campuses and vocational training centers for the Western Maricopa Education Center. The initiative will also result in new facilities in Buckeye and North Phoenix, and improvements to existing facilities in Glendale and Surprise. According to the Phoenix Arizona News, the measure was overwhelmingly approved.
 
California:
-       The passing of Governor Brown’s proposition for a sales and income tax increase (Prop 30) was a major win for education. The measure is expected to raise $6-$9 billion in additional revenue for schools. Brown’s measure will raise taxes on high-income earners and be retroactive to all revenue earned since January 1, 2012. This measure will presumably stave off massive cuts to California’s education system that would have had devastating long-term effects on education procurement in the most populous state in the nation. 
 
-       Butte County’s Gridley Unified School District failed to pass a measure to borrow $11 million to “improve student access to computers and modern technology.” 
 
Many states and localities had ballot initiatives seeking to secure funding for education and schools through the issuance of bonds, tax increases or other forms of borrowing. In the vast majority of these cases, the intention was not to find new money, but rather find ways to continue status-quo funding or bolster large funding shortfalls. While this will not necessarily result in a wave of new spending on education or education IT, at the end of the day, the money will be used to preserve existing programs and contracts that would otherwise be canceled or discontinued without new sources of revenue. This represents more of a “staunch the bleeding” act for many governments, but if it means that existing contracts have enough funding to be re-bid moving forward, that will still result in a net gain for government contractors.

Anti-Affordable Care Act initiatives pass in wake of Obama victory

As the dust settles from the two-year-long presidential campaign, and life begins to return to normal in swing states, voters in four states registered their continued disapproval of various provisions of the Affordable Care Act (ACA).
 
In a move that harkens back to pre-Civil War states’ rights advocates, voters in Alabama, Wyoming and Montana overwhelmingly approved ballot measures that seek to nullify the ACA’s most controversial provision: the individual mandate. In Alabama and Wyoming, the question was on amending the state constitution to prevent individuals from being compelled to participate in a health care system, and preserve individual rights in making health care choices, respectively. Montanans approved a measure with similar language that did not amend the state constitution.
 
Missouri, which had previously passed an anti-individual mandate ballot initiative, voted to prohibit the establishment, creation or operation of a health insurance exchange (HIX). State legislative Republicans proposed the initiative to prevent Democratic Governor Jay Nixon from establishing an exchange by executive order. This, however, will not prevent the federal government from running Missouri’s HIX when the state fails to meet the ACA’s deadlines.
Finally, the voters of Florida, which has not been officially called as voting for Governor Romney or President Obama, narrowly rejected a constitutional amendment prohibiting the individual mandate.
 
Each of these ballot measures, with the exception of the Missouri initiative, are widely agreed to be symbolic. States cannot nullify a duly-passed and constitutional law. Though many believed the Civil War had settled this issue, the ballot initiatives prove that a wide majority of voters in the states mentioned disagree. Interestingly, in each of the states (Missouri, Alabama, Wyoming and Montana), the ballot questions were agreed to by a larger margin than Governor Romney carried each state. This means that President Obama voters, ostensibly Democrats, switched their vote to approve measures that oppose the president’s signature achievement.

Election Day ballot initiatives fund public safety

Vendors and citizens nationwide are likely celebrating the passing of many public safety bonds and projects on local ballot measures in Tuesday’s election. While not all initiatives were approved, the newly sanctioned initiatives may represent new money up for grabs, or they may represent old projects solidifying funding to maintain their current status. Governments putting levies, bonds, surcharges, and other funding methods up for vote is not a new practice, but it is certainly something vendors should have an eye on.
 
In King County, Wash., voters approved a levy to secure $119 million over the next six years for its automated fingerprint identification system (AFIS). According to the Seattle Times, the majority of the money is going to staff and administration costs; only $1.6 million is going to new AFIS technology. Most local ballot initiatives follow a similar trend – the majority funds go to personnel or infrastructure, leaving only a fraction allocated to technological improvements.
 
These ballot initiatives are an important funding source used to supplement the general fund. They patch up shortfalls or fund important projects that may otherwise not receive funding. In King County, levies have been used to fund AFIS for more than 20 years. The general fund has not been tapped for the project, which leaves precious resources available for other projects.
 
Analyst’s Take
 
Local ballot initiatives are the life source for many public safety projects, especially 911 systems. They usually provide funds that agencies could not otherwise obtain, and are used to keep existing projects running. It’ll be worth it for vendors to look at the results of these ballot initiatives to gauge the public’s approval of certain projects and help determine the government’s budget.
 
Lastly, many projects are often stalled for months or even years while seeking ballot approval; therefore, vendors should understand the budget approval process for localities nationwide. This will enable vendors to determine time frames for projects depending on the locality. Knowing a project’s funding is up for vote every five years may deter some vendors, but important public safety projects are rarely disapproved by popular vote.

The waiting game is over: States must act on Obamacare

“The law is the law, whether you like it or not. It doesn’t matter if you like it. It’s the damn law.” 

Many governors and insurance department heads awoke this morning with Mississippi Insurance Commissioner Mike Chaney’s words ringing true after last night’s reelection of President Obama. States holding out for a change in federal leadership on health reform now have fast decisions to make. The numbers are staggering for Mississippi: one in five people lack health insurance; it leads the “States of Misery” in health, poverty, and crime statistics; and has the highest level of obesity in the country at 34.9 percent. Despite Governor Phil Bryant calling for a stall on Obamacare, Chaney is creating a health insurance exchange (HIX) under his own authority, and with an Obama victory, plans to file a blueprint on November 16, unless he receives a court order from “some idiot out there trying to stop me.” Though his words could be considered somewhat crude, the logic behind them is solid: State’s ignoring the law does not mean the law disappears, and these words come from someone against Obamacare.

 

Exit polls from last night showed that roughly a third of voters listed health care as an important factor in their vote. Despite Obama being reelected, several states had voter efforts approved to limit Obamacare, including Missouri, Alabama, Wyoming, Florida, and Montana. Although some states were opposed to health care reform from the beginning, those that started the exchange planning process are finding that they have run out of time, and will likely adopt the federal exchange until a state-based exchange can be built.

 

With a scramble to hit the 2014 deadline, procurement strategies may be expedited, like Connecticut’s sole-source award to Deloitte for both its HIX and its integrated eligibility system. Expect to see even the early innovators relying heavily on federal hub resources for the first enrollment period. As Chaney pointed out, there is no more waiting; the Affordable Care Act is the law. Deltek will be watching as blueprints are submitted to the Center for Consumer Information and Insurance Oversight by November 16, 2012, and how federal-state relationships play out as the nation addresses health care reform.

 

As always, be sure to follow Deltek’s Health Care and Social Services Team on Twitter @GovWin_HHS, or connect with us through LinkedIN. Stay tuned for more information around a new Health Insurance Exchange Vertical Profile addition in the near future!

 

 

Voting machines: Near-term procurements; mobile election future

After the 2000 U.S. presidential election debacle, when confusion swirled around Florida’s butterfly ballots, and almost 2 million votes were disqualified for reasons such as “hanging chads,” the Help America Vote Act (HAVA) was signed into law in 2002. HAVA required all states and localities to update their election processes, including replacing manual-lever voting machines and paper-based voter rosters with computerized versions.
 
HAVA also established the U.S. Elections Assistance Commission (EAC), which is an independent bipartisan body that oversees states’ adherence to HAVA mandates, and administers federal grant funding to assist states in acquiring and maintaining electronic and optical-scan voting systems. HAVA did not include standardized requirements for states to follow; instead, it was vague enough to allow states to revise their own election processes and draft new implementation plans. The EAC, on the other hand, was tasked with establishing voluntary voting system guidelines (VVSG), a voting system certification program, and accredited test laboratories to ensure basic functionality, accessibility and security are met by all electronic and optical-scan voting systems acquired by state and local governments.
 
In FY 2003, $899 million in federal HAVA grant funding was set aside for U.S. states, territories, and the District of Columbia to begin transforming their election processes and procuring voting systems. Five additional rounds of grant funding have been awarded to states since then: FY 2004 ($1.48 billion); FY 2008 ($115 million); FY 2009 ($100 million); FY 2010 ($70 million); FY 2011 ($1.29 million).
 
 
 
Due to the injection of federal funding and looming implementation deadlines, 2005 saw a spike in procurement for voting technology products and services. A smaller increase occurred in 2010, the year before federal funding was expected to drop off. In anticipation state and local governments’ procurement of voting systems picked up before federal funding dried up. The average grant award during those first two years ranged from $15 million to $25 million, with Texas ($57 million in FY 03 and $74 million FY 04) and California ($94 million in FY 03 and $169 million in FY 04) receiving the most funding. To date, $3.25 billion has been awarded to grantees, 63.1 percent of which has been spent on upgrading voting systems, and 13.6 percent on implementing voter registration systems.
 
Less than 35 percent of all votes cast in 2000 used an electronic or optical-scan voting machine. That number increased to nearly 65 percent in 2004, and reached 89 percent in 2008. With a market like this you can imagine HAVA  mostly benefited major voting technology vendors, such as Hart InterCivic, Inc; Dominion Voting Systems (formerly Diebold Election Systems); and Election Systems & Software (ESS).
 
In 2012, you would think the story of voting technology opportunities is nearing its happy end. Think again. This story has merely turned to the next chapter, for the following reasons: First, federal HAVA funding has taken a nose dive and may never get back to FY 2004, or even FY 2009 levels. Second, those now 8-year-old voting machines, like all computers, will soon need to be upgraded or replaced. This will force cash-strapped states to pony up money they don’t have to replenish battered voting machines. Lastly, the next generation of mobile and Web-based voting systems has yet to enter the market.
 
All this in mind, over the next three years, states will attempt to ready themselves for the 2014 and 2016 election cycles by looking for affordable options that keep them HAVA-compliant in the short term. Many states and localities that purchased their voting machines outright in 2004 and 2005 may opt to lease this time around. Many more will look for maintenance and repair services to extend the life of ailing equipment to maximize their return as they wait for next-generation technology.
 
In the long term, mobile and Web-based voting systems are expected to replace everything. Though the technology may exist to vote in this November’s election from the comfort of your home or the convenience of your smartphone, there is no way to guarantee the high level of security needed to use these voting methods for a U.S. presidential election. Even though some states are experimenting with online voting by allowing military and overseas voters to submit their ballot via the Web, the technology for secure online and mobile voting is still another 10-12 years away.
 
In anticipation of these technological advancements, the EAC along with the National Institute of Standards and Technology (NIST) have created a committee to proactively rewrite the federal guidelines for the next generation of voting systems.
 
To learn more about this and other state and local procurement trends and opportunities, be sure to check out Deltek's GovWin IQ product and follow the State & Local General Government Team on Twitter at @GovWin_GenGov.
 
 
Source: U.S. Election Assistance Commission (EAC). http://www.eac.gov/

Future of Federal IT Environment Requires Fundamental Changes of Hardware Vendors

In our newly published Federal Information Technology Hardware Market report, we forecast that demand for vendor-furnished IT hardware by the U.S. government will decrease from $28.7 billion in 2012 down to $20.2 billion in 2017, a compound annual growth rate (CAGR) of almost -7%. Our team started by envisioning what the federal IT environment will look like in 2017 and the game-changing trends that will shape that future.
In preparation for writing the report, entitled Federal Information Technology Hardware Market, 2012-2017, we looked at many trends to envision the year 2017 and the most impactful trend, by far, is the fiscal state of the federal government. Risks from China's and Japan's flagging economies (undermining their ability to continue financing our government's out of control spending), the Eurozone crisis, and continued federal revenue shortfalls indicate a tougher time annually financing federal government spending.  Those threats and the ballooning national debt and interest payments on it mean that annual pressure to cut agency budgets will only intensify.
In 2014 alone, the administration is asking agencies to cut their IT budgets 10% and make suggestions of how to reinvest that money to save even more (though no sure promises to allow agencies to re-invest have been forthcoming). However, the continued agency approach of cutting spending while making only incremental changes in what they fundamentally do and how they do it, won’t meet the challenges that lie ahead. Moreover, no matter who is elected president, the administration through OMB will continue to challenge agencies to ‘Do More With Less.’  
However, changing technology approaches, such as cloud computing, and eventually some degree of wholesale ‘IT-as-a-Service,’ can enable agencies to keep doing more with less.  Amidst consolidation initiatives to increase efficiencies and reduce spending, agencies have been experimenting, with some degree of hard-won success, with the technology capabilities offered by innovative vendors and utilized more broadly in the commercial market. In the future, agencies will continue to quickly evolve their technology strategies and approaches and shift how they invest.  With greater budget pressure, agencies will become less and less risk adverse, especially as a generation of federal IT professionals retires, and the next generation of young innovative IT professionals take charge. 
Game-Changing Trends
In the report, our team highlights five game-changing trends that portend to disrupt and reshape the federal IT environment and market over the next five years. These trends spell the final death-knell business-as-usual, as well as strategies to morph over time for federal contractors as a whole, and hardware vendors in particular:  
·         Managing Data Not Infrastructure – Agencies will realigning their IT investments to focus on managing and securing data instead of managing infrastructure. The data-centric approach is anticipated to increase the agility of agency IT environments, reduce costs, and enable agencies to adopt emerging technologies more easily. Cloud computing and hardware agnostic mobility are driving this change. SOA, data center consolidation, and data management are enablers.
·         Increasing Efficiency – Agencies are seeking ways to improve operational efficiency and increase employee productivity while at the same time reducing costs.  Mobility and Big Data are two factors forcing this change.
·         Enterprise Services – Agencies are moving from IT environments characterized by system-specific siloes to environments based on services oriented architectures that emphasize system interoperability and the ubiquitous availability of data. This transition toward enterprise services is not only breaking system specific siloes, it is also changing the way agencies invest in and utilize technology solutions.  Shared services, cloud computing, and network computing are examples.
·         Accelerating Innovation – Agencies are introducing standards-based common operating environments (COE), adopting data-centric policies, and turning toward services oriented open architectures to increase the agility of their IT environments. This enables them to leverage innovative new technologies, such as cloud computing, mobility, and Big Data more rapidly.
·         Consolidating Acquisition Avenues – Agencies are being pushed by OMB to drive down the cost of buying commodity IT products.  Agency CIOs are establishing strategic sourcing contracts or turning to GSA vehicles to consolidate commodity IT acquisitions. Agencies with long standing sourcing programs already in place are relying more heavily on these contracts, while agencies without established programs are taking steps to introduce them within the next one to two years.
Conclusion
To the degree and speed that these game-changing trends fundamental change the federal IT landscape, they could cause a shake-up in the federal IT competitive environment which will hit unprepared hardware vendors especially hard.  If the trends bring about fundamental change in the federal landscape too slowly and the fiscal pressures continue unabated, the future scenario will be even more dire and disruptive. 
Hardware vendors selling in the federal market need to adjust what they offer and how they sell to federal customers.  Cloud computing, thin-client adoption, mobile computing, and enterprise services will transform the hardware market and present both challenges and opportunities for hardware vendors. Hardware vendors need to be determining and implementing go-forward strategies now that will keep them viable in the federal market into the future.
About the Report
Our Federal Information Technology Hardware Market, 2012-2017 report provides companies with a detailed view of the future federal IT hardware market and a market forecast for the next five years. It includes forecasts for the federal hardware market overall and the following technology segments:
·         End-User Devices
·         Storage and Peripherals
·         Infrastructure (Servers and Mainframes)
·         Communications and Network Equipment
It also includes hardware profiles for the top ten agencies with agency drivers in each of those technology segments. The report is designed to enhance a vendor’s federal planning process with relevant strategic analysis and provides recommendations that guide hardware vendors to maximize their market positioning to best take advantage of the changing federal IT environment.

 

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