Proliferation of data collection drives business intelligence contracting market

Published: June 19, 2013

General Government ServicesJustice/Public Safety & Homeland SecurityPublic FinanceSocial ServicesSoftware

Big data has been in the news a lot lately, and I’m not just referring to the massive surveillance apparatus run by the NSA, which sweeps up nationwide phone metadata and may (or may not) do the same for Internet data. The private sector has been getting in on the act as well.

Streaming giant Netflix has been at the forefront of this trend, collecting and analyzing a staggering amount of data from its 29 million customer base, then using that information to determine, with scientific-like accuracy, what new shows to green light and even who to cast.
While some have questioned the value of such a data-driven approach, one thing is becoming abundantly clear: there is no going back. Big data and the tools to make sense of it are frequently used to sort “winning” ideas from “losing” ones in business and government.
A multitude of factors – the digitization of records, smartphone and social media revolutions, and widespread Internet availability – have coalesced into a tipping point, and we have suddenly found ourselves in a world rich with digital data and incentives to figure out what it all means.
There has never been more of a demand for business intelligence and data analytic tools, and the applications for state and local governments are endless. The move by governments toward a more data-driven approach to policymaking has been happening for some time now, and reminds me of the “CitiStat” revolution that swept the state and local landscape in the late '90sand early 2000s. Obviously the technology around data analytics has advanced since then; however, I believe the more important driver of business intelligence tools has been the expansion of information databases over the past decade.
Whether you are registering for a driver’s license, applying for food stamps, or donating money to a political candidate, your personal details are now more likely to wind up stored in a database somewhere. This trend holds true for both the private and nonprofit sectors as well, where finding out what makes your customers tick can be crucial to remaining a sustainable enterprise.
Of course, not everyone thinks this is a positive development. The potential for abuse and the erosion of civil liberties is both real and frightening, but big data and business intelligence are not inherently good or evil. They can be used for Big Brother-like surveillance or as a means for making government more open and transparent. It all depends on use and the legal barriers we place around that use. Figuring out the appropriate balance and legal oversight will be important, because as Deltek Senior Manager Chris Dixon detailed in a report released in February, governments have “significantly increased” the number of solicitations with business intelligence components since 2010.
Opportunities with BI components by status, 2001-2014

Source: Chris Dixon’s “Business Intelligence Market 2013,” Industry Analysis Report, GovWin IQ
These opportunities span every vertical market and can be delivered through either software or professional services contracts. Public safety agencies like the Chicago Police Department are considering purchasing predictive policing and crime analytics software in order to leverage their existing data warehouses for traffic, crime and accidents, police contact reports, warrant and arrest records, and other sets of data.
The Massachusetts Executive Office of Administration and Finance wants to use analytics software to root out identity theft and personal income tax fraud. The Indiana Family and Social Services Administration awarded a contract to Optum Health in 2012 for decision support and business intelligence to analyze its existing Temporary Assistance to Needy Families (TANF) data warehouse.
In 2011, the Minnesota Department of Administration awarded a consultant contract to 22 vendors in the hopes of improving operational efficiencies and budget savings across departments through the use data analytics. There is almost no limit around the use of these tools in state and local government, and virtually every agency has a need to (as statistical guru Nate Silver phrases it) locate the signal through the noise.
Analyst’s Take
We are right in the sweet spot for business intelligence and data analytics requirements. Many governments have already done the legwork of setting up the necessary database infrastructure for the information they wish to store and measure. As GovWin IQ’s numbers show, they are just now beginning to realize the endless potential of having sophisticated tools to guide better policymaking and resource allocation.
A limiting factor for this technology does exist: Governments tend to purchase it as a component or add-on to larger, more comprehensive software and professional service contracts. Finding a way to market your product to both governments and prospective software vendors for subcontracting opportunities will be critical for companies in the business intelligence market. As the amount of data and the proliferation of large-scale data warehouses continue to develop, the prospect of add-on BI components may no longer be enough to achieve the desired results of many governments, and the number of standalone business intelligence/data analytics bids may increase substantially over the next five years.
For more on the current state of the business intelligence/data analytics contracting market, see Chris Dixon’s Industry Analysis Report “Business Intelligence Market 2013” (Subscription Required).