Q&A: CSRA Execs On How To Fix Federal IT Infrastructure

Eyes On Washington And Federal IT

CSRA President and CEO Larry Prior thinks the federal government's IT infrastructure is in a state of disrepair, so much so that in order to begin to fix it, the government will have to invest in it on the same magnitude it invested in Y2K.

With the federal solution provider space continuing to consolidate and President Obama proposing that the government spend over $3 billion a year on refreshing the IT infrastructure, Prior said the federal IT market is growing with opportunity and competition.

CSRA came into being only a little over six months ago after government solution provider SRA merged with the government services portion of CSC. The deal created a $5.5 billion, 19,000-employee government solution behemoth.

Recently, CRN sat down Prior; CTO Yogesh Khanna; and Ben Gianni, vice president of delivery, to discuss how CSRA is looking to tackle both the opportunities and challenges in the federal market. Here's what they had to say.

CSRA came together just six months ago. What has happened in that time and what is the company focusing on now?

PRIOR: Initially, we spun really fast and [got the right team in place] really fast and well, and now we are spending some time integrating our ERP [systems].

The business development team is off to the races with pretty strong book-to-bill [ratios]. We are good at managing our costs, and we look for that day where we are driving organic [revenue] growth.

If we keep progressing in business development with great technology products, we are going to get there, and it will be a fun journey.

What is your timetable for when you expect to reach organic revenue growth?

PRIOR: We put out the guidance for the year, which was an improvement over what we have done, in the rear-view mirror, so, negative 4 percent to flat we think in 2018, and what we do in 2019 will look really strong.

What we are counting on … is growing our backlog. If you look at any company in our space, when you are growing backlog by 5 percent [each year], you will get to that tipping point where you transition to new revenue growth.

Is there something that is tipping the scales toward that revenue growth that the company didn't have before the split?

PRIOR: Frankly, in CSC, we had under-invested in the [North American public sector] business. SRA has made an investment there and has really good leadership and talent in business development.

They now populate a lot of our lead business development roles. And we are thrilled by the performance that they are having and the path they have laid out for us ahead.

Before the merger, you were talking about how quickly you were expecting the synergies to show themselves. Has that been meeting expectations?

PRIOR: No, it has actually surpassed all of our expectations. We had told the market that we were looking to save about $80 to $100 million in costs and we have more than doubled that.

Much of that has already been achieved and I think that as analysts and investors look at us, they have a growing confidence that our margins are real and substantial and they understand that it is [being driven] by the mix of our fixed-price contract base.

It really derives from the work that we do, with our heavy emphasis on IT and at times delivering fixed-price consumption-based models that are so integral to everything as a service.

What opportunity is there in the federal marketplace right now?

PRIOR: With the federal budget, all indications are [for] real growth over the next five years across the federal IT market space.

A lot of folks are thinking and modeling a 3 percent [compounded annual growth rate] for IT, but, the federal government is really emphasizing its investment in cyber, which will be north of 5 percent. There is also an expectation of double-digit growth in both data analytics and cloud enablement technologies.

What about the military? What opportunities are in that space?

PRIOR: When you think of where and what the military is doing, they are much more focused on those networks that are currently integral on their current operations.

So, as you think about that architecture … they [are] absolutely looking to move from physical IT structure to virtual and they are considering what a hybrid cloud architecture would look like.

Is there a concern for federal organizations about losing data flow during operations when making this switch?

PRIOR: There is absolutely a paramount concern that you do nothing to interrupt the flow of data [while] they execute operations.

There is a kind of standard distribution curve with who is most conservative versus who is most aggressive. We have seen really good, aggressive actions by folks like the FAA -- we have helped them put in place the drone registry -- and, as you would expect, a bit more conservativism on the part of the [Department of Defense] and services as they really guard the resiliency and the availability of the networks and data flows that they depend on.

What is your take on President Obama's call for a $3 billion revolving fund to replace the government's antiquated IT systems with more secure and efficient modern IT systems?

PRIOR: The president's budget recommendation absolutely recognizes a fundamental challenge: that we need to refresh legacy hardware and software across the federal government and we probably need an investment that is on the magnitude of Y2K. And I believe $3 billion is a wonderful place to start, and a catalyst for all agencies to start to think about those upgrades.

I think it was triggered by [the 2015 data breach in the federal Office of Personnel Management]. That event made people think about the hygiene of the network, and as they looked at what needs to be done with revisions, controls, patches and bug fixes, they started seeing things that were fairly antiquated in the network.

I think that the $3 billion initiative is a siren call to fix that infrastructure.

How far into disrepair is that infrastructure and do you think Congress will pay attention to the president's recommendation?

PRIOR: As you run into potholes and bridges that are in need of repair … the IT infrastructure is in worse [shape]. It fundamentally needs a refresh.

I think the recommendation is a great idea and It's going to be richly debated as to how it will be funded and managed.

I think 18F [the government's digital services agency] … has done tremendous work and we loved working with them, especially on the FAA project [in which CSRA assisted in the creation of a drone registry], and so I think the underpinnings of success are there.

But the question is: How will the Congress weigh in and what results will come from it?

What does a next-generation IT infrastructure look like in the federal space?

KHANNA: The next-generation version of IT infrastructure is, really, mostly software. IT has become code, it's highly virtualized, highly automated and it enables a development of services that are really built on top of this new growth platform that uses open technologies such as cloud computing and all the technologies that go with cloud.

Next-gen is supposed to be simple and easy to use. It provides the users the ability to provision services that used to take months and often a year or more [but that] now takes months, weeks and even minutes sometimes.

It is supposed to be resilient and highly scalable … all delivered through a consumption-based model where you pay only for what you use.

Is everyone making this move quickly?

KHANNA: There is a continuum of agencies moving [quickly] and some are not. It's not exactly a standard distribution curve; it's probably biased toward conservatism, but there are islands of excellence …

Those that are progressive players [in the federal government] have already made the move, so the challenges typically manifest themselves in those that are still on the conservative side. They are struggling with the basics.

What are some of the struggles you run into moving clients to newer architecture?

KHANNA: A few years [ago], IT infrastructure was hardware centric with the appliances and gear sitting in lots of data centers using multiple flavors of different technology. Even if you standardized on a certain technology you were still using different types of operating systems. It gave rise to a lot of heterogeneity and a lot of sprawl of data centers …

So, now the challenge is thinking … ’How do I take inventory of everything I got and how do I standardize on something that is literally made on dozens of flavors and then how do I virtualize this stuff?’

A lot of the apps that run in the environment of some of these conservative enterprises are still legacy apps that are customized and built for the environment that was hard-wired to [them].

How is it different for a CIO to make these changes in the government space than in the commercial space?

PRIOR: It's a different leadership challenge within government … CEOs, CFOs and chief marketing officers [in the commercial space] have a competitive drive to move to next-gen IT architecture as they try and improve cost structure and competitiveness …

On the government side, you have to have strong leadership that is committed to the user experience. It really requires the trust of CIOs who really lead to start the journey to their digital future … and those CIOs that are the best and brightest are already on the journey. They have already enrolled their peers across other agencies to join them.

It is a much tougher challenge than what you are seeing on the commercial side.

Is security a larger concern when you are moving these government clients to cloud?

GIANNI: There is a perception with some that security is more challenging in the cloud and we would actually [disagree with] that and give you a couple of examples of why we think security can be and often times is better in the cloud.

With the establishment of FedRAMP [The Federal Risk and Authorization Management Program] and the government working with industry to certify [cloud providers] … at the highest levels for cloud security, … we think the cloud offers great promise in terms of changing that perception.

The other thing that we are excited about is the way that technology is evolving to meet that perception … We like to partner with technology firms … we are excited about the promise that the technology has to neutralize many of the perceptions that organizations have about security in the cloud.

What is your roadmap for this year? How is CSRA aiming to outpace its competition?

PRIOR: For us, it begins with people … when we compete against the folks that are new to the federal marketplace, our competitive advantage is that we love the mission of government and want to improve the user experience for citizens, for neighbors and for communities.

Second, we bring a depth of knowledge around enterprise IT where we can walk the talk and bid and compete on any IT project regardless of complexity or scale so [that] we are a partner of choice.

Having that foundation of mission, and having that foundation in enterprise IT, it gives us permission to think about helping all of our federal government clients [and] all of our state and local clients move to next-generation IT.

How do you think your new scale will help you as you go to market this year?

PRIOR: I think scale only works if it also brings focus, and that commitment to mission, enterprise IT, and next-gen IT. If you just bulk up for size and get confused about your essential purpose, scale doesn't work and it is a negative …

At the forefront, it's got to be depth of technical expertise that contributes to this digital journey … And with that commitment to mission, you are attracting both large strategic partners and small, cool, digital companies that need some help and [can] assist in the federal marketplace.

Can you address the opportunity for federal providers in the health care market?

PRIOR: We clearly are benefiting from improved growth in both health care IT as well as the civil market. When you look at the [federal fiscal year 2017] budget request, that federal health market is north of $20 billion. For [the] civil market, it is close to touching $22 billion.

So, that is a nice addressable market. [The federal government is] doing really cutting-edge IT work [in the health care sector] ... It is a real busy market for us …

What opportunities are there in the health care market?

KHANNA: I at least anticipate a lot of innovation happening, particularly in the data analytics space. I mean, health care has been collecting a lot of data for many, many years.

Now, we have technology and capabilities around the next-gen infrastructure and next-gen applications and data analytics capabilities. [They] give us an incredible opportunity to now analyze that data and really focus on things like fraud detection -- and that is a huge issue in health care -- and I think it's going to spur a lot of opportunities that are going to have a lot of [opportunity] to create value for that space.

Are there any initiatives in health care that are going to be generating opportunity for you moving forward?

PRIOR: I would give two examples … The advances in science are fundamental and spectacular, so [for example] everything around the [human] genome and what it means for kind of granular and focused care that is possible, is incredible. I think the data, the size of the files and the IT infrastructure that is needed to support that advance in science are really, really cool.

I think the focus on user experience, on patients' experience… is to be applauded.

You also see government rally around big, new challenges. The Zika Virus is a great example and we have begun to outfit some data analytics [around it] for a couple [of] labs for one of our government customers.