Defense Dollars: Get Your Share

What's more, service providers are particularly well-positioned to make significant inroads as evidenced by the high proportion of spending dedicated to services.

Government IT spending is relatively concentrated, with five sectors accounting for three-quarters of the $155 billion spent in FY 2004, according to a recent report by Input, a provider of government market intelligence. Four of these five sectors are defense-related encompassing the four branches of the military. The Navy rang up $37 billion, closely followed by the Army with $34 billion. The Department of Homeland Security rounded out the top five, with immigration tracking projects receiving $10 billion in awards from the government.

Looking ahead to FY 2005, which began Oct. 1, the Input/Output Report is already tracking more than $114 billion in program awards covering more than 1,300 technology-related contracts.

Services continue to make up the vast majority of overall federal IT spending, with two categories offering the best opportunities for solution providers. Professional services should lead the way in 2005, considering they made up 70 percent of total IT spending in FY 2004 at $108 billion. This covers product management, quality control, software development, consulting, planning/analysis, education/training and operations support.

Networking and telecommunications services spending accounted for another $19 billion in FY 2004. Categories that should be of keen interest this year to the channel include wireless services, local/long-distance telecommunications, video teleconferencing, LAN/WAN, switches and routers and VoIP.

What are key areas for spending in 2005? Let me know via phone at (732) 919-1530 or e-mail at [email protected].