Federal Dollars Exist, But May Be Hard to Come By

Government opportunities exist for high-tech players, but the Yankee Group and Gartner Inc. both warn that cashing in may not be as easy as it seems.

In a recent report, Yankee found that the federal government's spending on technology is a hot spot when compared to the growth of private

"Federal government IT spending is growing, but it remains to be seen if it will sustain IT's recovery," Carrie Lewis, a Yankee senior analyst, said in a statement. "One certainty is that the opportunities for capturing federal IT spending are not equal. Vendors seeking to compete for federal IT dollars need to carefully evaluate the opportunities."

Lewis advises companies to "be skeptical, ask questions, and test all assumptions. Find out if this opportunity represents long-term sustainable IT growth or short-lived growth."

The firm said spending indications show opportunities such as security and e-government, which have captured the attention of vendors seeking high investment returns. But these opportunities will cycle through as priorities shift, Yankee warned.

Still, Yankee said that not every IT opportunity at the federal level is fleeting, noting that ITO (network and seat management), BPO (accounting, financial and HR) and AO (ERP, SCM and CRM) will provide for future profits.

While Yankee insisted that vendors seeking to capture federal IT dollars should evaluate the opportunities for the best results, Gartner states that it’s the government itself that needs to provide a more stable path to federal IT dollars.

Gartner reported that successful government sourcing and technology procurements start with a sound strategic plan -- not a specific market -- as many government sourcing and technology procurement efforts fail to deliver optimal value to customers and constituents

"The way government agencies source and procure technology is deeply rooted in the historical practices and challenges of government itself," said William Kumagai, managing VP for Gartner Consulting, in a statement. "The net result is that large IT procurements often take more than a year to complete, an alarming number are curtailed by protests from the vendor community and most fall short of meeting ever-increasing customer expectations."

Gartner said to address these challenges, government agencies need to optimize the way they acquire solutions from, and partner with, the private sector by developing an effective sourcing strategy. Putting the pressure on the government agencies, the market researcher said they must determine their organization's current and future business needs and compare these needs against the current state of their agency's technology-based solutions and identify the improvements needed.

Gartner also recommended that agencies evaluate their procurement resources and processes and leverage best practices. "If an agency has not completed a large systems integration procurement or an advanced technology sourcing effort recently, getting help should be considered," Kumagai said. "It's likely that what is being attempted has been done before, and that best practices have already been identified at the expense of others."

The third step, the firm said, is to build contracts with terms and conditions, statements of work and key measurement criteria that are established and negotiated to protect the needs of the government agency.

The final step is related to implementation, oversight and continued evaluation of the project. Agencies must select an effective project team and use dynamic progress checks to ensure the project is evolving with the agencies' needs, Gartner stated.

"Many governments have determined that technology has much to offer in achieving government agencies' objectives. But progress must be monitored at the beginning of a project, as well as every step of the way," Kumagai said. "Technology will change over time, and the perceived needs evolve as the project evolves. To reach a new desired state, the agency must be prepared to grow and the vendor relationships must allow for that possibility."