Across the Digital Nation: Three companies to watch in the shifting technology market

Rishi Sood

Despite the overall market contraction expected for 2003, state and local spending on external technology services will grow significantly over the next three years.

In fact, government organizations will rely heavily on vendors to help resolve issues such as budget planning, consolidation and customer service, as well as mitigate the effects of long-term structural problems, including internal skills shortages and enterprise architecture.

Three core areas will see continued investments in 2003: cost containment (enterprise resource planning and cost avoidance tools), revenue generation (tax systems, photo enforcement, ticket collections) and "hardening" the infrastructure (security, business continuity, infrastructure outsourcing).

One company that likely will benefit from the current market environment is Affiliated Computer Services Inc., Dallas. The company's focus on emerging business process outsourcing opportunities and its ability to tailor services around key revenue generation and cost avoidance functions will be major competitive differentiators.

ACS is well-positioned to capture increased strategic outsourcing engagements as public-sector organizations confront skills shortages. The company also will benefit from the continued integration of its acquisitions by extending the footprint across major agency segments, as well as moving greater services into the downstream market.

Another company to watch is American Management Systems Inc., Fairfax, Va. The firm has re-emerged from corporate and organizational challenges that hindered its performance in previous years. The firm's new chief executive officer, consolidated government unit and sharpened market focus have helped the company shed baggage and reassert a leadership position in the marketplace.

Recent wins in Iowa and Massachusetts reflect the company's ability to be a true alternative for public-sector enterprise resource planning development. In the past, AMS has been successful in developing alternative contract approaches that may be especially useful in the current market environment. Moreover, the firm's depth of expertise in tax and human services should help it capture new opportunities in 2003.

Over the past two years, Unisys Corp., Blue Bell, Pa., has been able to transform the company's dedication to the public-sector marketplace. Unisys traveled from the brink of selling its federal government unit in 2000 to capturing one of the most visible outsourcing contracts with the Transportation Security Administration.

Buoyed by a new public-sector management team, strengthened by a partnership-based model and tuned to drive services revenues, Unisys has made the necessary steps to capture market share in the public sector overall and seed key growth opportunities within the state and local market.

Given the shift in the composition of IT spending in 2003, and perhaps beyond, there will be notable setbacks for state and local firms. In particular, companies that are overconcentrated in pure consulting services or in hardware delivery appear to face leaner times.

Similarly, companies that are unable to extend their services focus to include deeper integration, outsourcing and solution sales will suffer from a slower pace of activity.

Lastly, companies that do not properly position themselves in the federal market may be hindered in retaining market positioning as opportunities flow down to the state and local market. Already, there is a growing list of vendors actively involved in homeland security, bioterrorism, identification and transportation issues that may provide a leg up as these opportunities emerge in the state and local market over the next 18 months. *

Rishi Sood is a principal analyst with Gartner Dataquest in Mountain View, Calif. His e-mail address is

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here


  • POWER TRAINING: How to engage your customers

    Don't miss our Aug. 2 Washington Technology Power Training session on Mastering Stakeholder Engagement, where you'll learned the critical skills you need to more fully connect with your customers and win more business. Read More


    In our latest Project 38 Podcast, editor Nick Wakeman interviews Tom Romeo, the leader of Maximus Federal about how it has zoomed up the 2019 Top 100. Read More

contracts DB

Washington Technology Daily

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.