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What Agencies Really Spend on Cloud: A Case Study

Several years ago, Deltek’s Federal Industry Analysis team developed a sophisticated system for estimating what the actual federal information technology budget is every year. FIA did this because the figures released by the Office of Management and Budget capture only a portion of yearly IT spending, meaning government contractors had only part of the picture to work with when it came time to set strategic goals. The deficiencies in OMB-provided estimates on cloud computing spending are no different than the overall IT figures. They also don’t capture everything that is being spent, leading vendors to develop flawed assumptions about where money is going toward cloud efforts.

Basing strategic goals on the estimates provided by federal agencies is a big unstated risk to government contractors. Bid and proposal dollars may be pushed in the wrong direction, sales targets may be set unrealistically high/low, etc., and yet these kinds of decisions are made all the time using the government’s partial data. How far off are the government figures when it comes to spending on cloud?  Let’s look at an example.

According to the Department of the Interior, it spent approximately $11.4 million on cloud services in FY 2014. The programs on which the money was spent are:

So far so good, right? Sure, however, the numbers you see are only part of the picture. According to data from Deltek’s Cloud Computing Database the actual amount that DOI customers spent on cloud services in FY 2014 was at least $21.6 million; $10 million more than was reported by the DOI. The table below shows these investments.

Comparing the two tables we can see that the investments listed in table one don’t match those in table two. This is because DOI contracting personnel reported spending data by service rendered (table two), not by investment title. It follows, therefore, that an investment called “Cloud Hosting & Support Services” could related to one of the program investments mentioned above.

The point of this exercise is to offer a word of warning when it comes to strategic planning. The fact is that the IT spending data provided by federal agencies is incomplete, meaning it can strongly skew our view of where a respective agency’s IT investment dollars are going. Understanding this can make the difference between setting realistic and unrealistic goals, so having the right tools is critical for making the best possible decisions.

 

Industry Leaders Chime In on Likely Federal CIO Priorities

New federal CIO Tony Scott is being welcomed with cautious optimism by federal IT industry leaders.  Most believe he has the right skills and experience for the job. 

A recent Federal Times article speculates about Scott’s likely priorities as CIO:  cybersecurity, IT workforce, and IT project performance. 

Cybersecurity heads the list of expected priorities for the new federal CIO.  Backed by administration support, cybersecurity is allotted $14B in the president’s FY 2016 budget request.  Protecting federal data and networks is a high priority for the administration.   Scott will play a vital role in coordinating cyber efforts, capitalizing on technology and communicating policies to department and agency CIOs.  Forums where CIOs can share best practices and challenges, such as the CIO council, will be very valuable in these endeavors.

Scott is also expected to address IT workforce issues.  To bring government to the cutting edge of technology, the IT workforce must undergo continual training and also bring in private sector expertise.  According to OPM, nearly 50% of the federal IT workforce is over 50 years old.  While age doesn’t limit expertise or creativity, it does call for continual training to be on the cutting edge.  Industry hopes that that training extends beyond the traditional IT workforce and stretches to contract, acquisition and program personnel.

Federal industry executives also believe Scott will focus on IT project performance.  They suggest that the focus should be on using data to improve projects rather than looking at reporting requirements as just required mandates.  

Industry experts also see the new CIO as playing a role in the implementation of new digital service teams across agencies.  The federal budget request calls for creating teams at 25 agencies.     

Scott is the first federal CIO who comes to government with experience as a CIO.  He brings a private sector perspective to the business of government, along with commercial best practices.    “He’s going to be looked at as somebody to be a coordinator and also a leader in terms of identifying what are the top priorities and really leading the federal CIO community,” according to Jason Kimrey area director of Intel Federal.   Federal and industry IT leaders are hopeful that Scott will make a positive and lasting impact on federal IT.

 

Opportunities for Cloud Providers in the FY 2016 Budget Request

As part of the President’s Budget Request for Fiscal Year 2016, the Office of Management and Budget released figures for spending on cloud computing that agencies anticipate they will make.  The figures released this year don’t provide the same granularity into spending on service delivery types and deployment models that the same data has provided in past years.  The data does, however, more closely align with spending on other categories of information technology investments in that it has been divided into operations and maintenance (O&M) and development, modernization, and enhancement categories (DME).  Putting spending (FY 2015 estimated and FY 2016 forecast) into O&M and DME buckets helps OMB understand the percentage of overall agency IT dollars that are going into cloud vs. other types of investments. It also helps industry understand where new investments are being made versus spending on steady state programs.

Top Ten Agencies Forecast to Spend on Cloud in FY 2016

Here is a list of the top ten federal agencies by forecast cloud spending in FY 2016. Keep in mind that only Civilian sector agencies were included in the data as the Department of Defense has not yet released detailed information for FY 2016.

The spending forecast in this chart totals just north of $2.4B, representing only a small percentage of what agencies spend annually on IT.  Of the agencies listed, the surprises that stick out to me are Labor and the Office of Personnel Management.  Both of these agencies are small compared to the agencies around them, especially Homeland Security and Treasury, and yet they intend to spend considerable amounts of money on cloud.

Where the New Dollars Are

How much of this spending will be new dollars?  The chart below illustrates these forecast totals in terms of O&M and DME.

As we can see, the forecast spending picture takes on a different flavor once we know where new investment is intended.  From this perspective Labor remains an attractive target for business development efforts; OPM less so.  It is Commerce, though, which emerges as the greenest field of all.

Labor and Commerce: Green Fields for Cloud Providers in FY 2016

The graph below shows the four organizations in the Department of Labor where DME (i.e., new) dollars are forecast to be spent on cloud computing in FY 2016.

The specific programs in each organization slated to receive this funding are:

Departmental Management

  • Digital Government Integrated Platform (DGIP) - $84M
  • Enterprise Consolidated Network (ECN) - $17M                                                                                                                
  • Customer Service Modernization Program (CSMP) - $1M
  • Integrated Acquisition Environment - $1M
  • National Core Financial Management System (Shared service provided by the Department Of Transportation) - $8M

Wage & Hour Division

  • Strategic Enforcement Achieves Compliance System (SEACS) & Prevailing Wage System (PWS) - $3M

Employment & Training Administration

  • ETA BPM IT Modernization - $1M

Mine Safety and Health Administration

  • MSHA Internet/Intranet Maintenance - $1M

At the Department of Commerce the following organizations forecast spending DME dollars on cloud computing in FY 2016.

The specific programs in each organization slated to receive DME funding are:

U.S. Patent and Trademark Office

  • USPTO Patent End-to-End 2 (PE2E-2) - $87M
  • USPTO Network and Security Infrastructure II (NSI-2) - $24M
  • USPTO Trademark Next Generation 2 (TMNG-2) - $9M
  • USPTO Fee Processing Next Generation (FPNG) - $8M
  • USPTO Consolidated Financial System (CFS) - $8M
  • USPTO Dissemination Capability (DC) - $6M

National Oceanic and Atmospheric Administration

  • NOAA/NWS Integrated Dissemination Program - (IDP) - $4M

Bureau of the Census

  • Census IT Infrastructure - $3M

Departmental Management

  • BusinessUSA - $2M

Department of Commerce

  • Commerce Business Application Solutions (BAS) - $1M

Despite the allocation of new dollars for cloud efforts at the USPTO, the Next Generation requirements are almost certain to be fulfilled under the Software Development Integration and Testing – Next Generation (GovWin IQ Opp #37269) and SDI-NG for Small Business (GovWin IQ Opp #63628) contracts awarded in 2011. Work for the other efforts may remain in play.

 

The 2015 NDAA Mandates Open Architecture for Defense IT Systems

Provisions in the annual National Defense Authorization Act legislation affect the Defense sector of the federal information technology market over many years.  Consider, for example, the mandate in the FY 2012 NDAA calling for the Department of Defense to utilize cloud services provided by commercial partners.  The DoD has been working ever since to find a viable way of implementing this mandate.  The far-reaching impact of NDAA provisions thus make it imperative that federal contractors understand how the legislation will affect their business at the DoD in the future.
 
The FY 2015 NDAA promises to have a significant impact as it features an important provision calling for the DoD to adopt open architecture for all of its IT systems. Specifically, Section 801 calls for the Under Secretary of Defense for Acquisition, Technology, and Logistics to create a plan that “develops standards and defines architectures necessary to enable open systems approaches in the key mission areas.”  The discussion about using modular approaches to acquisitions has been evolving at the DoD for several years, resulting in a shift in the length and complexity of contracted efforts.  Rather than procuring a single end-to-end solution, Defense customers tend increasingly to initiate program procurements in increments.  These increments have shorter time spans and defined objectives that set parameters for the acquisition of the next increment. In Section 801, Congress gives this “modular” approach the weight of law, meaning vendors should expect to see even more short-duration, lower dollar value, limited objective procurements.
 
Equally important is the call for DoD to develop a strategy for using open architecture.  The department is currently in the process of creating a unified transport network based on internet protocol.  This may work well for newer systems, but thousands of legacy systems across the DoD remain locked in proprietary configurations.  A clause in Section 801 mandates that the USD AT&L submit a report which “outlines a process for the potential conversion [of legacy systems] to an open systems approach.” Engineering those systems to operate on an open architecture will unlock data, make the systems interoperable, and enable Defense customers to transition more easily from one IT support vendor to another.
 
If this sounds like the next, deeper level of the Joint Information Environment, you are right on target.  IT vendors should take heed and get ahead of the curve because in all probability open architecture is going to be a requirement for every unclassified (classified too?) solution that the DoD procures in the future.  If your solution isn’t open, it won’t be purchased.  End of story.
 
The open architecture requirement will also compel Defense customers to take a hard look at commercial cloud as an alternative.  Why spend money engineering an antiquated legacy system to operate on an open architecture when you can hire a vendor to host the data and implement a comparable, new interoperable system? 
 
In short, the 2015 NDAA should stimulate business opportunity at the DoD as funding locked in Operations and Maintenance funding for legacy systems moves into new efforts to re-engineer and/or cloud-enable those systems for use in an open architecture.

 

State of the Union – Potential Opportunities and Impacts for Federal Contractors

In Tuesday night’s State of the Union address, President Obama highlighted issues and initiatives he hopes to tackle in his last two years in office such as improving “middle-class economics,” building U.S. infrastructure, and increasing cybersecurity.  

Reading between the lines we can attempt to predict the impact some of these initiatives may have on the federal contracting community.

The potential upside for federal contractors:  

  • Obama’s plan to improve infrastructure in the form of trains, bridges, ports, and internet speed and access could provide opportunities for heavy construction and IT contractors. 
  • Strengthening cybersecurity efforts may provide companies with additional opportunities to sell cybersecurity services and solutions to the federal government, as well as the commercial market.  
  • Easier, more affordable access to higher education and increased training will provide employers with a larger, better trained labor pool. 
  • The president’s Precision Medicine Initiative may provide contracting opportunities in the area of health IT, health informatics, medical research, medical technology, and medical devices. 
  • Revisions to the tax code may adversely or positively impact contractors and other companies depending on specifics of proposed tax code changes.  
  • The president’s commitment to continue to fight terrorism may provide opportunities for defense contractors. 
  • Obama’s statements about surveillance and privacy allude to continued funding for intelligence agency surveillance programs, but with emphasis on simultaneously safeguarding citizen privacy.  

The potential downside for federal contractors:  

  • Obama’s call for higher wages in the form of equal pay for women and increasing the minimum wage, may negatively impact companies’ profitability.  
  • The appeal for guaranteed paid sick leave for all employees may place a financial burden on small businesses.  
  • Potential new cybersecurity legislation could impose additional security requirements for federal vendors and service providers.  
  • Revisions to the tax code may adversely or positively impact contractors and other companies depending on specifics of proposed tax code changes. 

The President’s FY 2016 Budget Request, due for release in less than two weeks, will bring to light many of the proposals and initiatives mentioned in the State of the Union address, and is rumored to contain a substantial increase over current year budget levels.

For detailed budget information and federal contractor impacts, watch for Deltek’s future analysis of the President’s FY 2016 Budget Request in the coming weeks.

 

Defense-Wide Appropriations in the 2015 Omnibus and an FY 2016 Look Ahead

Despite the fact that many folks are focused on the upcoming release of the President’s Budget Request for Fiscal Year 2016, there is value in continuing to delve into the Defense-Wide portion of the recently passed Omnibus budget for 2015. Eight months remain in FY 2015, a span of time over which a great deal can change, and in which a lot of money will be spent. This said, I’ll try to whet appetites for the coming fiscal year, by offering a few expectations for the Defense-Wide portion of the FY 2016 budget.

A High-Level Look at FY 2015

Deltek’s high-level look at the FY 2015 Omnibus revealed that total funding for DoD is set at $553.9 billion ($490.2 billion in base budget, $63.7 billion for Overseas Contingency Operations (OCO)). Of the base budget, funding for Defense-Wide programs equals $52.4 billion.  This total represents a slight drop from the funding received in FY 2014, but an increase from the funding levels requested in the President’s Budget for FY 2015. Digging into the funding by area in the base budget reveals relative stability in the three largest parts of the base budget – operations and maintenance, procurement, and Research, Development, Testing, and Evaluation.

Operations & Maintenance

Taking a step back now to O&M funding for FY 2015, one thing that caught my eye is a dramatic reduction in funding for acquisition workforce development from $213 million to $83 million.  The DoD is in the throes of reforming its IT acquisition practices, including an attempt to carry out smaller procurements consistent with an agile acquisition approach.  Having properly trained personnel is critical to the success of this endeavor.  So, cutting funding for workforce development implies that either Congress believes the DoD’s acquisition workforce is sufficiently trained for the demands placed upon it, or that the pace of Defense technology procurement will be dropping to the point that the current acquisition workforce will be able to handle it.  Does anyone in industry believe that either of these scenarios is realistic?

Most of the other items under O&M also suffered reductions.  Here are a few of the most significant:

  • Joint Chiefs of Staff - $440 million vs. $462 million requested
  • Special Operations Command - $4.55 billion vs. $4.76 billion requested. Almost $25 million of this cut comes to the budgets of prominent SOC IT programs, including $9 million less for C4IAS, $9.1 million less for HQ C4 SITEC, $4 million less for the SOF deployable nodes program, and $2.5 million less for SOF tactical communications.
  • Washington Headquarters Services - $592.5 million vs. $611 million requested
  • All non-Military Intelligence Programs, non-cyber IT programs had their funding cut by $46 million

There are also a couple of additions:

  • Defense Logistics Agency - $385.4 million vs. $381.5 million requested, including the addition of $12 million for DLA’s Procurement Technical Assistance program.
  • $10 million for insider threat detection enhancements.

Procurement

There aren’t many changes in procurement funding at the Defense Agencies as practically all are fully funded.  The one item worth noting is a $23.4 million investment in major IT equipment at the National Security Agency. The NSA had originally requested $3.4 million and was given an additional $20 million.

Research, Development, Test, and Evaluation

Moving now to RDT&E, there are a number of funding changes to list.  First, let’s examine the notable reductions:

  • Information and Communications Technology - $324.4 million vs. $334.4 million requested
  • Electronics Technology - $169.2 million vs. $179.2 million requested
  • SOF Technology Development - $36.7 million vs. $39.7 million requested
  • C3 Systems - $239.3 million vs. $243.3 million requested
  • Sensor Technology - $302.8 million vs. $312.8 million requested

Balancing these are a number of notable funding increases:

  • Defense Research Sciences - $332 million vs. $312 million requested
  • Combatting Terrorism Technology Support - $94.7 million vs. $69.7 million requested
  • Defense Rapid Innovation Program - $225 million for a brand new program
  • Network Centric Warfare Technology - $380.4 million vs. $367 requested
  • Defense Technology Analysis - $22.1 million vs. $12.1 requested

Lastly, funding for the Defense Health Agency contains a couple items of note.

  • First, funding for Base Operations and Communications received $1.83 billion vs. $1.7 billion requested. This funding includes $50 million apiece for Facilities Sustainment, Restoration, and Modernization of Air Force, Army, and Navy medical facilities. The DHA is undergoing a major IT infrastructure consolidation effort and much of this funding will go to continuing that work.
  • Second, the Integrated Electronic Health Program received $9.2 million, the amount requested in the President’s Budget, to continue the procurement process.
What to Expect for FY 2016

Given the stability in these portions of the budget over the last two years, what should industry expect for FY 2016?  Basically, more of the same.  When the Budget Control Act was passed in 2011 it set spending caps that bottomed out in FYs 2014 and 2015, respectively.  FY 2016 was projected to be the year when budget caps began creeping up once again.  By all indications, this expectation remains intact.  Both the White House and the Joint Chiefs of Staff have expressed expectations that the DoD’s base budget request will be as much as $60 billion higher in FY 2016 than it was in FY 2015.  Even if this total is an overestimate, chances seem good that Congress will approve a base Defense budget higher than the $490.2 billion approved for FY 2015.  In this case, the Defense-Wide portion of the DoD’s base budget can be expected to come in at levels consistent with recent years – so, around $52 billion total for O&M, Procurement, and RDT&E.

 

Army FY 2015 Omnibus Funding: Highlights and Observations

Just before the holidays Congress passed the “Consolidated and Further Continuing Appropriations Act for Fiscal Year 2015.”  Shortly thereafter, Federal Industry Analysis posted a quick analysis of the Defense portion of the bill that highlighted some of the legislation’s high-level funding plusses and minuses.  This post dives a little deeper into the Army portion of the FY 2015 Omnibus bill to unearth some additional details and outline some of Army’s IT spending priorities over what remains of the fiscal year.

Top Level Numbers

Recapping the Army top-level budget numbers from the earlier blog, we can see that the Service’s budget didn’t take as hard a hit as may have been expected.

 

Operations and Maintenance Funding

Receiving $1.2 billion less for Operations and Maintenance will hurt programs in progress.  This includes IT programs, the funding for which was cut by $71.7 million compared to the Army’s FY 2015 request in the President’s Budget.  A $5 million reduction in the non-Cyber IT programs run by the Army National Guard is also called out specifically in the bill.  Similarly, the budget for Army Service-Wide Communications will receive a haircut, dropping from a requested $1.62 billion to $1.61 billion.  The $100 million cut is made in the budget of the Integrated Personnel and Pay – Army (IPPS-A) program thanks to what Congress deemed an “excessive” amount requested compared to the actual requirement for IPPS-A.

The news in O&M is not all bad, however, as the Army’s Facilities, Sustainment, Restoration, and Modernization Budget receives a $400 million increase from $2 billion to $2.4 billion.  Some work centered on the installation of cyber-physical systems for energy management at Army facilities is likely to be funded from this budget line.

Procurement Funding

The addition of $400 million to the Army’s procurement budget will provide a boost for vendors chasing new business.  Most of the largest Army programs in procurement will be funded 100% in FY 2015, so anticipate that the next 3 fiscal quarters will be busy as Army contracting shops rush to push out acquisitions in a “shortened” year.  As the following list shows, however, the picture is not rosy for every program.

  • Aerial Common Sensor Program – $130 million vs. $185 million requested
  • Network and Mission Plan – $105.4 million vs. $114.2 million requested
  • WIN-T Ground Forces Tactical Network – $664 million vs. $763 million requested
  • Defense Enterprise Wideband SatCom Systems – $3.5 million vs. $5.4 million requested
  • IPPS-A – $17 million vs. $33 million requested
  • Joint Battle Command – Platform (JBC-P) – $88 million vs. $98 million requested
  • Total Communications and Electronics Equipment – $2.83 billion vs. $3.24 billion requested

Research, Development, Test, & Evaluation Funding

Lastly, RDT&E funding will be up slightly.  This is good news for some initiatives and programs, including the following:

  • Basic Research – $460 million vs. $424 million requested. This will benefit vendors who maintain research facilities and are part of research consortia.
  • Sensors and Electronic Survivability – $46.3 million vs. $33.5 million requested. The increase includes $7.7 million for cyber security training funding and $5 million for Force Protection Radar Development
  • Advanced Weapons Technology – $38.5 million vs. $28.5 million requested
  • High Performance Computing Modernization Program - $221.6 million vs. $181.2 million requested. FIA has been forecasting that HPC is an area where increased investment would be made.

And the not so good news for other programs:

  • Advanced Field Artillery Tactical Data System – $1.3 million vs. $22.4 requested.  The reduction of $21 is due in part to Increment II program delays.
  • Army Integrated Military Human Resources System – $68.5 million vs. $138.5 million requested
  • Technology Maturation Initiatives – $44.5 million vs. $74.7 million requested
  • Combined Arms Tactical Trainer (CATT) Core – $34.7 million vs. $42.4 million requested
  • Brigade Analysis, Integration, and Evaluation – $85.3 million vs. $105.3 million requested
  • Army Integrated Military Human Resources System (A-IMHRS) – $68.5 million vs. $138.5 million requested

 

Will the Defense Inspector General Further Delay the DoD’s Migration to the Cloud?

Recently, the Department of Defense’s Office of the Inspector General published an audit report critical of the department’s efforts to implement its 2012 cloud computing strategy.  Citing material weaknesses in the execution of the strategy, including the failure to adequately train acquisition personnel who procure cloud services, the failure to fully develop cloud service broker management capabilities, the failure of DoD components to obtain proper waivers from review authorities to use non-DoD approved clouds, and the failure of the DoD CIO to develop a detailed written process for obtaining a cloud computing waiver, the OIG concluded that the department had put data at risk while also not reaping the cost savings benefits that cloud computing offers.

The DoDIG report is the latest in a series of similar reports from other government agencies that also revealed systematic flaws in efforts to leverage cloud computing.  Taken together, these audit reports point to the disruption that cloud computing is causing in federal agency information technology environments.  This disruption is not necessarily related to technology difficulties, although these are a concern.  Rather, it is related to weaknesses in the policy and governance processes that guide agency IT investments.  Cloud computing is creating challenges that agencies simply aren’t equipped to handle, a problem made worse by policies like Cloud First, which has forced agencies to dive into a technology for which they aren’t prepared.

In the DoD’s case, the lack of policy and governance oversight is particularly perplexing considering the glacial pace at which the Defense Department has moved toward using commercial cloud solutions.  The DoDIG’s audit now threatens to bring that progress to a halt as the DoD CIO and defense components consider how to respond to the OIG’s recommendations.  A real question at this point is should they bother to respond at all.  Several elements of the OIG report are based on assumptions and policies that have changed considerably since the DoD Cloud Computing Strategy was released in June 2012.  Take, for example, cloud brokering, which acting DoD CIO, Terry Halvorsen, has de-centralized.  In addition to the Cloud Brokerage Project Management Office at the Defense Information Systems Agency there are now cloud brokerages at the Army’s Program Executive Office Enterprise Information Systems and the Navy’s Space and Naval Warfare Systems Command.

Similarly, the DoDIG castigates the department for failing to implement an enterprise contract for commercial cloud services.  The goal of implementing an enterprise contract, however, no longer resembles the reality of the situation at the DoD.  When acting CIO Halvorsen gave the Services the ability to procure commercial cloud services he effectively eliminated the need for an enterprise level cloud contract.  In other words, the DoDIG calls the DoD CIO to account for not implementing an irrelevant procurement strategy.

None of this is to say that the DoD has somehow miraculously solved its challenges. There is indeed a pressing need for acquisition training and contract clauses that will ensure a proper level of cloud service and data security.  Similarly, if it is to be retained, the waiver process needs to be improved. In itself, it is unclear if waivers will be necessary given DISA’s enhanced role as certifier of cyber security requirements for commercial providers.  DISA’s imprimatur is effectively a waiver, if the commercial solution meets security requirements.

Improvements are needed, but one wonders if it is not a counter-productive use of time for the DoD CIO, DISA, and the Services to spend time addressing a critique that does not fit current conditions.  The implementation of the Joint Information Environment addresses the use of commercial cloud solutions in a way that should assuage the cyber security concerns of the DoDIG.  Furthermore, the de-centralization of cloud procurement is intended to eliminate the acquisition bottleneck at the DISA Cloud PMO while also reducing costs.  These are solid steps toward removing barriers to commercial cloud use at the DoD.  Will they be allowed to bear fruit or will they be suffocated by the weight of adherence to outdated policy demands?

 

Predictive Analytics Use at the Department of Defense

 

Back in September, an organization at the National Defense University called the Center for Technology and National Security Policy published a research paper entitled Policy Challenges of Accelerating Technological Change: Security Policy and Strategy Implications of Parallel Scientific Revolutions. Looking past the long title, one finds an in-depth consideration of the implications of emerging technologies for U.S. national security and the DoD. Considering the CTNSP is part of the defense establishment, I believe it is worth taking a few minutes to examine what the authors say, particularly since their comments fit seamlessly with the recently announced Defense Innovation Initiative (DII). Papers like this can point to areas of investment and in a time of falling budgets, any insight is welcome.

The report discusses more subjects than I can cover here, so in today’s post I’ll zero in on its comments about big data analytics. Use of big data analytics in the DoD is nothing new. In fact, based on recent contract spending data (see chart below), we can see that defense customers spent nearly $138 million on big data analytics over the five years from fiscal 2010 to fiscal 2014.

 

Big data analytics in this context are defined as advanced analytics programs offering visualization and modeling capabilities that enable statistics-based prediction/forecasting. Think Mathematica, MATLAB, Splunk, Statistica, Tableau, etc. and you have an idea of the programs included in this data.

According to the CTNSP report, employing these kinds of analytics on a vastly greater scale will be the key to controlling and exploiting the data that defense organizations will be gathering from the expansion of unmanned systems, robotics, and the Internet Protocol-enabled “Internet of Things.” The uses for such analytics include the analysis of intelligence data, cyber security, and the transition to a “health maintenance-based, rather than a disease-based medical model,” that will enhance the operational readiness of U.S. military personnel. The report’s recommendations have a clear implication – that the DoD should greatly ramp up its spending on predictive analytics and the training of its personnel to use them.
In recent years, however, just the opposite has been taking place. Examining the data presented above from the perspective of spending per fiscal year (see chart below), we see that defense spending on PA peaked at $42 million in FY 2012 and has declined since.

Undoubtedly the recent pressure placed on DoD’s budget by sequestration is the primary reason for reduced spending on PA. The question is will this trend continue. My guess would be no, for the simple reason that the DoD cannot afford to neglect developing its PA capabilities. To do so at a time when more data is coming at defense analysts than ever before would be folly. Add the increasing use of automated systems to the mix and the answer is obvious – the DoD must spend more on PA. Currently the department is in a period of retrenchment as it struggles with new budget realities. Once this retrenchment has run its course, defense customers are likely to turn their attention back to acquiring PA capabilities. The DII points the way forward in this respect and for industry partners it’s a welcome signpost of spending ahead.

 

Observations from TTC’s Internet of Things for Defense Symposium

The Department of Defense and U.S. federal law enforcement community are increasingly interested in what has come to be called the “Internet of Things.”  Labeled the “IoT” for short, the Internet of things consists of a growing network of small, low power, low bandwidth, low cost sensors and devices that are connected to networks and which send and receive data.  Think of the sensors that automatically turn on room lights or flush toilets and you have an idea of some of the uses for IoT technology.  Additional uses for IoT technology, however, are about as varied as one can imagine.  For example, the General Services Administration recently awarded a contract to IBM to outfit its facilities with sensor technology that will allow more efficient monitoring of energy use.  Similarly, tiny sensors can be used to monitor jet engine performance, or just about any other structure in the world.

As many of the speakers at the Technology Training Corporation’s IoT symposium discussed, the DoD is eyeing sensor technology to determine how it might best be used.  There are even several use cases already in progress.  Rear Admiral Scott Jerabek, Director of Command, Control, Communications and Computer Systems, at U.S. Southern Command kicked off the symposium by listing a few of these uses in his area of responsibility.  Noting that USSOUTHCOM employs IoT technology in its GeoShare program for humanitarian assistance, Jerabek also explained that the Navy is investigating a “nano-satellite network,” in addition to developing a Deep Sea Web of low observable, wide area capabilities to track dark targets at sea.

Subsequent speakers, like Air Force CTO Frank Konieczny, detailed multiple other uses for IoT technology that the defense establishment is considering. These include:

  • Base Facilities Maintenance – trash pickup, light replacement, food replenishment
  • Vehicle management – maintenance prediction, location tracking
  • Secured, smart workplace – presence for workers integrated with facilities management
  • Logistics and transportation – inventory/tracking, automated assembly/packing, geo-location in supply chain
  • Robotics – autonomous drones and vehicles, sensor based maneuvering

Needless to say, the expansion of networks to everyday items carries with it tremendous risks as well as benefits.  Multiple speakers mentioned the need to build security protocols into IoT devices so that they could be resistant to hacking.  Enhanced network security will be necessary as well given the vast expansion of data that networks will be handling.  Advanced analytics for continuous monitoring will be required, but not only that, analytics will need to be deployed to make sense of all the data and make decisions based on it.  In short, IoT will render the already big data world in which we live even bigger.

Herein lay other challenges.  Chief Warrant Officer 5, Ricardo Pina, Chief Technology Officer and Senior Technical Advisor to the Army CIO/G-6, pointed out that an organization like the Army currently does not have the network infrastructure required to handle the flow of data that an Army IoT would create.  This is one of the primary factors driving the Army’s modernization of its networks using multi-protocol label switching (MPLS) technology.  A standardized protocol will be required to enable seamless integration and use of IoT and the DoD is betting that this standard will be Internet Protocol.  Effectively, the new IP-based Joint Information Environment will enable the DoD to vastly expand its use of IoT technologies.  This expansion will in turn drive investment in the analytics and any attendant services required for IoT implementation.  Vendors therefore take note.  The business opportunity in the area of IoT is growing, particularly among informed defense customers.

For more information on upcoming symposia, visit the Technology Training Corporation. I’ll see you at the one on Software-Defined Networking scheduled for December 9-10, 2014.

 

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