Deltek Forecasts Army IT Spending Will Fall Through 2021

According to Deltek’s new Federal Information Technology Market, 2016-2021 Forecast Report, spending on information technology goods and services by the Department of the Army will decline from $11.3B in FY 2016 to $10.2B in FY 2021, a compound annual growth rate (CAGR) of -1.9%.

Deltek forecasts that Army spending on commercially-provided communications and network services will decline at the fastest rate, followed by IT services and hardware. Spending on software will rise, providing the strongest area of business opportunity for vendors.

Network modernization will continue to be the Army’s primary area of focus for the next several years as the Service integrates multiple strategic, tactical, and component level networks into a single Army-wide network plugged into the Department of Defense’s Joint Information Environment. Army NETMOD is a hardware-intensive activity that should benefit vendors offering communications and networking gear. However, the end-state that Army is working toward includes extensive use of cloud computing and software-defined capabilities.

Army cloud efforts will focus in two areas: 1) the construction of FedRAMP+ certified commercial data centers at Army facilities, providing secure on-premise cloud services at lower cost, and 2) the adoption of commercial cloud services provided through the Army Private Cloud Enterprise (APCE) Services contract vehicle. Army’s move to the cloud will take place alongside its efforts to eliminate thousands of redundant applications and close hundreds of data centers; hard work that Deltek believes will continue well past the official completion date of FY 2018.

Improving the Army’s defensive cyber posture will also continue, with a focus on hardening network infrastructure, developing combined hardware/software systems, and training personnel. Hardening infrastructure will occur as part of the move to the Joint Information Environment so vendors should also look to the Defense Information Systems Agency for related spending in this area. In addition, Army is budgeting $100M over the next 2 fiscal years to build a new headquarters for Army Cyber Command at Fort Gordon, Georgia.

Training personnel, meanwhile, will center on completing the fielding of 41 Cyber Mission Teams and on realizing the DoD-wide goal of standing up a Persistent Training Environment. Army is the lead acquisition agency for the PTE, meaning that procurements related to the PTE are likely to come out of ARCYBER, the Army’s point agency for cybersecurity. Deltek sees opportunity for vendors providing offensive cyber capabilities as well. With the DoD and Congress codifying strike-back policies, the demand for offensive capabilities should grow. Lastly, the Army will retain an abiding interest in deploying software-defined capabilities on its networks. Look for these to be in demand as NETMOD flattens and consolidates Army networks into a single landscape.

Underlying all of this is the Army’s quiet implementation of an enterprise data strategy intended to create a unified environment for the employment of big data analytics. Efforts tagging data, engineering interoperability, trustworthiness, and visibility into data sets will continue to attract funding as Army moves toward the enterprise goal of a unified environment over which automated analytics programs can keep watch. Deltek expects the demand for cybersecurity-related big data capabilities to remain robust, as well as for the Army to continue directing funding into big data related R&D and high performance computing.