Home of Systems Integration

P> Whenever a list of the biggest employers in the Washington area is published, systems integrators almost always make it to the top.

"Everybody in this town is a systems integrator," said Robert Dornan with Federal Sources Inc., a market research firm.

According to a 1995 survey by George Mason University, 240 of the area's 2,331 technology firms call themselves systems integrators. They employ more than 30,000 people, second in the technology sector to the region's 309 technical services companies, which employ nearly 50,000.

Overall, integrators represented the third greatest number of companies in the region after software engineering (341) and technical services (309) -- and even many companies in the latter two categories increasingly call themselves integrators.

So what exactly is systems integration? Why has the industry emerged in Washington?

Think of the federal government as Fortune One -- the world's largest consumer of information technology -- and think of the integrators as their private consultants for hire. Out of this trend emerged the industry today called systems integration.

Systems integration implies linking hardware and software -- usually with armies of programmers. Today, a systems integration company must perform a preliminary evaluation, redesign or construct a system, put it together and even maintain it as more and more organizations outsource their information systems, said Ann Cohen, EDS vice president for government services. Increasingly, integrators must use commercial software and hardware. In the past, they designed and built systems from scratch.

But the operative concept is building complex systems that provide information utilities for organizations, private or public.

Even companies such as Boeing or TRW, whose primary business focus is in another industry in another state, say they have a substantial systems integration presence here.

That is no coincidence, said Paul Brands, president and CEO of American Management Systems, Fairfax, Va.

The federal government gave birth to the systems integration industry because of its need for complex information systems -- avionics for weapons systems, systems capable of processing millions of tax returns or benefits claims.

Initially, systems integration meant building information systems and electronics for the Defense Department and NASA. And at civilian agencies, mainframe suppliers such as IBM Corp. and Unisys Corp. dominated the integration business.

Ross Perot changed all that. In 1982, the Army awarded the Viable project to Plano, Texas-based Electronic Data Systems Corp -- the first major federal contract to a company other than the computer supplier. The U.S. Army put out a request for proposals asking vendors to organize its administrative services. Once the Army did that, civilian agencies followed suit.

But even after that initial award, agencies still weren't accustomed to an outside company doing systems integration. Agencies often chose to perform that role themselves, said Cohen.

The market forced their hand. The infotech world continued to offer more alternative suppliers -- and so-called open systems made it more complex to link technologies.

In addition, procurement reform designed to break IBM's monopoly worked so well that by the mid-1980s government agencies regularly bought software and hardware from many different companies.

Agencies found they couldn't link these systems alone, creating huge demand for systems integrators. They set up shop in the sleek, low-slung glass buildings now visible from most points along the Beltway. And the Microsofts and Compaqs and Dells of the world began courting them as the selling channel to their biggest customers.

So despite their low brand-name recognition, integrators wield tremendous power in the information technology industry.

"This area is one of the fastest-growing and underappreciated high-technology centers," said Olga Grkavac, vice president of the Information Technology Association of America.

Fifty percent of all government procurements -- including systems integration jobs -- take place in the Washington area and 50 percent of all the work is done here, said Dornan. Federal systems integrators "absolutely need a local presence," he said.

Indeed, government downsizing has been good for Washington-based systems integrators. Operations have been consolidated around the center -- and contractors have had to follow.

So the Washington area will continue to attract integrators because of the area's proximity to the federal government, the number of companies in the region and the highly educated work force.

"As it became evident that the government was the biggest purchaser of infotech management services, everyone wanted to be close to the center," said Dan Bannister, president and chief executive officer of DynCorp, and chairman of the Northern Virginia Technology Council.

Still, big questions loom. Despite the increasing commoditization of information technology, the emergence of the Internet as a computing utility has made the integration challenge even greater.

How does one design an Internet-based information system using such technologies as Netscape, Windows NT and Java? Just as everyone thought Microsoft would dominate the way IBM once did, along came a slew of hot new technologies from Sun Microsystems, Netscape and others.

Suddenly, infotech is again more complex, and it would seem logical that the model of systems integration, which emerged in the Washington area, should now have much broader application.

The question that remains is whether area integrators have the marketing and sales skills to attack new opportunities seemingly ripe for their picking.