Long sales cycles, complex procurement rules and lower margins have, in the past, dissuaded many commercial IT firms from federal work. Today, as economic uncertainty confronts many in the "outside" world, the reverse holds true, and government contracts look very appealing.
Despite corporate budget deficits, McLean, Va.-based market intelligence firm FSI forecasts the Bush administration will spend $53.1 billion on IT in fiscal 2003,a 9.5 percent gain from projected 2002 spending. That's the biggest increase in more than five years. Additionally, government IT spending is expected to grow 11 percent annually to $63.3 billion in fiscal 2007, according to a recent report released by Input, a Chantilly, Va.-based researcher specializing in technology and government.
Near-term spending is projected to focus on three primary goals for the nation: winning the war on terrorism, increasing homeland security and revitalizing the economy. Government agencies are currently looking at disaster recovery, mirroring sites and technologies. To that end, the terrorist attacks have added a sense of urgency to new and better storage and server solutions. More traditional security issues, such as virus-protection and firewall protection, are also being stressed in the federal government. Virus-protection and firewall solutions are, moreover, the two most likely security measures to be outsourced by end users (13 percent and 11 percent, respectively), according to Scottsdale, Ariz.-based In-Stat/MDR's LAN research panel service.
A shrinking federal workforce has created an increased demand for outsourced services. Federal spending on commercial services, which includes outsourcing, professional services, systems integration and processing services, is expected to grow faster than all other public IT segments, according to Input, from $14.2 billion in 2002 to $28 billion in 2007.
As federal agencies become smarter IT buyers, you'll have to think strategically about the kinds of technologies the government will want. The keys to victory may include building new contacts and relationships, as well as finding the appropriate skills and financial resources to satisfy your government customers in the long term.