Steve Charles

OPINION

2014 budget points way to new opportunities

Focus on cyber, consolidation and modernization

More shared services, consolidation and cloud computing - that’s where the Office of Management and Budget expects to find IT savings in 2014. More citizen-facing innovative applications, more mobility for the government, and more cybersecurity  - that’s where the White House will support higher spending.

In a nutshell, you could summarize the administration’s 2014 IT budget request as follow-through on initiatives already launched.

It’s true that the request is up by about $1.7 billion over estimated 2012 IT spending, bringing the total to $82 billion. But the days of wine and roses have not returned. The current OMB is cautioning that although the request rose 2.1 percent, the average annual growth rate since they took over has been less than one percent, compared to 7.1 percent per year during the Bush years.

The key to continued sales success is understanding how the spend is changing and how it serves the executive branch’s goals. The truth is the government is trying to stay in sync with the macro trends in IT and with the best practices for greater efficiency. At the moment, those trends include:

• Infrastructure consolidation, virtualization, use of shared and cloud services, and tough control over questionable investments as ways of reducing costs. And you see this manifests in 2014 through continued emphasis on those very things. TechStat and PortfolioStat are the OMB’s investment control mechanisms. It’s no accident memos came out recently about updating the PortfolioStat process and re-emphasizing shared services (specifically financial services) as we head into 2015 planning season.
• Agile, fast application deployment; focus on customers/constituents, and cybersecurity are targets of investment. And those are areas OMB is emphasizing in the IT explainer section of the budget request (page 71 of this document).

OMB says the PortfolioStat sessions have already identified 98 opportunities for reducing spending. Much of this is common sense -- consolidating mobile data and voice contracts or duplicative e-mail systems. Now it will go after bigger fish, such as redundant applications like enterprise financial management and human resource systems, with strong emphasis on sharing the best of breed as services across agencies.

Also in 2014, OMB wants to somehow bring together data center consolidation and what it calls commodity IT (similar infrastructure and applications that are used by all agencies). Plus it will redouble efforts to get rid of seldom-used applications while increasing cloud computing, not just for e-mail and development-and-test, but also for software as a service in applications across the board.

So where will the investments be?

First of all, it’s important to remember the opportunities in cost-cutting itself. It takes effort and some spending to close data centers, switch applications, and join shared services. Just as so many technical service providers learned in telecommunications and data networking, they and newcomers will learn how to shepherd agencies through these 21st century initiatives. For example, some day the General Services Administration will establish a methodology for certifying cloud services brokers.

Beyond that, though, constituent-facing innovation as detailed in the year-old Digital Government Strategy -- that’s one place where contractors will be able to identify new money. Mobile devices, services, applications and the conversion of online services to mobile should continue to be growth areas. But old applications will have to die, to help fund the new.

In a latter day version of the inter-agency e-government efforts started in 2001 (known as Quicksilver projects), OMB is reiterating emphasis on use of Presidential Innovation Fellows to get together with vendors and agencies to try and foster six-month projects resulting in new applications.

Cybersecurity is a second area ripe for new investment. The push for continuous network monitoring will continue. OMB wants more use of two-factor authentication. Everything will be subject to review in CyberStat sessions conducted by OMB with agency C-level execs.

More than ever, suppliers must emphasize security, rapid deployment, cost reduction, and repeatability in their products. The growth in PCs, LANs, data centers, e-mail, and desktop application suites that characterized an era dating back to the early 1980s is unequivocally over. We’re now in an era of ROI emphasis, commoditizing network and storage services and enterprise applications across agencies, rapid and agile development, repurposing applications for mobile, and cybersecurity.

The second half of 2013 is essentially a continuation of 2012 initiatives and budget authorities. Sales until September will require blocking and tackling, leavened with understanding of the 2012 authorities under which spending will mostly take place. Thanks to the budget deal enacted in March, some agencies are under continuing resolution for the rest of the year, while others have gotten actual budgets or at least re-programming authority so they have more flexibility under sequestration. These include Veterans Affairs, Department of Defense, and the Transportation Security Administration.

Soon, agency managers will face the task of figuring out 2015 IT plans. Agencies work on them over the summer, and then forward them to the Office of Management and Budget in the fall. Technology vendors should start talking now to customers about their long term plans, keeping in mind the big areas OMB is supporting: cybersecurity, consolidation of infrastructure, application rationalization, mobility, and outward facing innovations.

About the Author

For the past two decades Mr. Charles has helped hundreds of technology manufacturers succeed in the government marketplace. His breadth and depth of expertise on every dimension of the government technology ecosystem provide technology manufacturers with a strategy and clear focus for the greatest success. Mr. Charles is adept at mapping technology product lifecycles and revenue models with appropriate channel and contract vehicle strategies in light of current procurement law, regulations and policy. He receives glowing reviews from the training workshops he facilitates to help sales teams understand the sales tactics needed to address each step in the government acquisition process. Mr. Charles is actively involved in government-industry associations including TechAmerica, ACT-IAC, Coalition for Government Procurement, and the National Contract Management Association. He meets regularly with leaders in government and industry to increase understanding and positive action. Mr. Charles co-authored The Inside Guide to the Federal IT Market, a how-to book for technology companies selling to the government. He is regular contributor to Washington Technology.

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