Where to find growth in a tight DOD market

immixGroup analyst Stephanie Meloni explains where to find the growth areas inside an otherwise shrinking Defense Department IT budget.

Even though the Department of Defense is absorbing most of the Federal IT budget’s cuts for fiscal 2015, it’s not all bad news. There are still notable opportunities in existing systems, cyber and information sharing for technology companies selling into the DOD.

Ever since the 2015 budget requests were unveiled, we’ve been awash with foreboding predictions ranging from cuts in forces within the DOD, suspension or elimination of modernization programs and acquisitions, aircraft being hangared for good, and so on. According to pundits, DOD is being forced to tighten their belts despite a threat environment that’s growing ever more complex.

While we’re still awaiting the specific numbers for IT budget requests from the military services (the final information won’t come until early April), we know that DOD’s fiscal 2015 IT budget request will be $35.4 billion – 6 percent lower than the fiscal 2014 budget.

DOD is actually shouldering most of the federal IT budget’s 3 percent overall reduction.

So the military is in fact working to reinvent itself as a leaner, meaner machine – but to do that, they also have to be more flexible and technologically advanced.

Here are three areas where the IT product community has some clear opportunities to provide that flexibility and technological sophistication.

Existing Systems

DOD has always been risk-averse, and that can lead to problems in new technology acquisition. By working to avoid problems and expense in modernization projects, their processes have become sluggish.

That’s led to very high costs to sustain legacy systems – most of their IT budget is taken up with that legacy system maintenance, which leaves very little room to explore new initiatives and programs.

This translates into a real opportunity for industry.

By necessity, government will be listening for ways to save on existing system sustainment costs. For other modernization efforts, implementation needs to be very well-planned, anticipating problems that may lead to cost increases down the line.

Cyber

Often mentioned as a “protected” area within the budget, cyber budgeting is likely to see growth over the next few years. DOD is increasing its request for cybersecurity spending this year – up slightly to $5.1 billion for fiscal 2015. Some of this funding will go toward more special cyber mission teams – DOD expects to have about 6,000 cyber mission specialists operational by 2016.

Information Sharing & Analytics

Government will be looking closely for ways to have industry help identify cost savings, improve processes, collaborate and share information, and analyze their data.

DOD analysts want and need better access to their data, which may spell receptive environment for information sharing technologies. The most compelling technologies will enable analysts to cut the time and effort it takes to manipulate data, so they can spend more time on actual analysis.

Other attractive tools and applications will help the DOD identify ways to reduce areas of wasteful spending and find patterns to help with operational efficiency.

It’s simple: DOD has to stretch its limited budget; technology investment is the way they see that budget consciousness happening. Technology companies would be well advised to work with partners that understand the DOD’s missions, agency-wide, to create strategies that will make their dollars go farther while extending their current capabilities.



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