Market Watch: Information-security: A critical government priority

Jerry Grossman

The federal government will continue to allocate a significant portion of agency budgets to technology, especially information and communications technology products and services. The expected trajectory of IT spending suggests that federal IT outlays during the next five years will be about $350 billion.

This spending makes for an attractive market opportunity for companies that design, deliver, integrate, install and support these IT components. A fraction of these outlays, about $33 billion, or nearly 10 percent, will be allocated to information security, according to a recent report from market research firm Input Inc.

Considering the threat environment we face today, it is essential that the government protect classified and confidential information in its files. This task will be more challenging within the context of increased file sharing and the implementation of IP Version 6.

Successful systems integrators will need to understand the information security issues the customer faces, as well as the solutions that mitigate the risk of compromising of classified files.

These planned IT investments will expand dramatically the government's capacity to store and process digital information. Providing access to a large proportion of information that the government maintains is important to constituent service and informing the public. However, a sizable component of data that intelligence, defense and homeland security agencies gather is classified and subject to strict limits on its accessibility.

Accordingly, it is critical that the ongoing government investment in IT occurs in an architecture that delivers data security and access control.

The government's task is made more complicated by the broad array of new products that address elements of data security. For example, access control to facilities that house information systems, or the networks themselves, can involve several technologies. Password protection is a convention. Biometric identification has gained a foothold.

Some of these products are offered by well-known IT contractors, but many were developed and are being delivered by new, often small companies targeting defense, homeland security and commercial markets.

The Federal Information Security Modernization Act of 2002 gave agencies a framework for securing their IT systems. Subsequent reports on the status of agency information security initiatives indicate that much work remains to be done.

Information security products and procedures are widely used today, but the continuing implementation of new technologies, always with more devices and users, will prompt modifications to today's solutions. IPv6 will have an impact on both IT architectures and data security solutions.

Much like IT systems in general, an agency's systems are never finished, but are only a point along the path toward better matching of capabilities to organizational demands. From an information security standpoint, the challenge is to enlarge capacities, speed and ease of exchange while effectively securing those files to which access should or must be both limited and controlled.

The relentless march of technology, including the emergence of IPv6, will require that government continue to redesign technology and integrate it into the fabric of the workplace. This holds for back-office administrative functions, for constituent service delivery and for field operations. Federal integrators will remain critical to the government's success in meeting these information security challenges.

In-depth knowledge of the information security environment, as well as the effective tools and techniques available to meet these challenges, will provide ongoing business opportunities in the federal market well into the future.

Jerry Grossman is managing director at Houlihan Lokey Howard & Zukin, McLean, Va. He can be reached at

About the Author

Jerry Grossman is managing director at Houlihan Lokey Howard and Zukin.

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