tbr public sector it spending benchmark report
Post on 19-Oct-2014
1.419 views
DESCRIPTION
IT budgets in the public sector have taken a beating since late 2010, with growth stalling due to defense cuts and budgetary turmoil throughout 2011. Several big vendors saw revenues decline, while a select handful adjusted their course in response to market conditions and managed to grow their top lines. TBR tracks 16 key players in this vertical on a quarterly basis, and our data and insight indicates that in 2011: • IT services firms serving the public sector realigned portfolios to follow the budgetary reprioritizations in the federal government’s IT spending; • Vendors were compelled to focus on margin performance in lieu of top-line growth through operational excellence and a focus on strong contract performance; • Some companies are looking beyond their core market in the U.S., hoping to leverage their capabilities to gain traction with international government clients as well as new clients in the commercial sector.TRANSCRIPT
TBR
TECHNOLOGY BUSINESS RESEARCH, INC.
The Challenging Federal Technology Market:Insights from TBR’s Public Sector IT Services Benchmark
PROFESSIONAL SERVICES BUSINESS QUARTERLYSM
Original Webinar Date: March 21, 2012Presenter: John Caucis, Public Sector Practice Manager ([email protected])
TBR Webinar SeriesSpring 2012
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
Today’s Presenter
2
John CaucisManager, Public Sector Practice Technology Business Research, Inc. (TBR)
Twitter: @jcaucistbr
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
2011 was a difficult year for IT vendors serving the public sector … How have vendors been impacted?
3
The market environment in 2011 was hostile to growth.
What was the state of the market and what were the headwinds to growth?
How are vendors coping?
What is the outlook for 2012?
of vendors in the Public Sector Benchmark saw their revenues decline in 2011
12 of 20
SOURCE: TBR PROFESSIONAL SERVICES PUBLIC SECTOR BENCHMARK STUDY
Key Takeaways: State of the Market
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
The series of continuing resolutions delayed spending decisions and extended acquisition cycles.
Federal IT spending in FY11 was ultimately less than the funding authorized.
Defense cuts and the draw-down of operations in Iraq and Afghanistan also impacted top-line performance and tempered vendors’ outlooks for 2012.
Key Takeaways: State of the Market
The tumultuous federal budget process and lower IT spending restrained growth for most federal IT contractors in 2011
4
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
Growth data reflects how market conditions have grown progressively more challenging since 2010
5
Key Takeaways: State of the Market & Growth Trends
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
Vendors are undertaking a number of measures to cope with the challenging market environment …
6
Key Takeaways in 2011: Vendor Actions
• Enhance the business development processes.
• Portfolio reshaping
• Align portfolio and strategies with shifting federal spending priorities.
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
Generate new revenue streams …
7
Key Takeaways in 2011: Vendor Actions
• Expand into adjacent and parallel markets; diversify revenue bases.
• Leverage acquisitions to enhance positioning and capabilities in areas that will receive continued funding prioritization.
• Expand alliance ecosystems to enhance offerings in areas where spending will be sustained or grow (e.g., cloud).
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
And preserve margin performance …
8
Key Takeaways in 2011: Vendor Actions
• Reduce operational drag.
• Enhance contract delivery and performance.
• Minimize unprofitable activities.
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
Government-centric scoring leaders IBM, Harris and Accenture tended to be the growth and margin leaders
SOURCE: COMPANY DATA; TBR ESTIMATES
TBR Scoring Summary: Scoring Performance & Ranking in 3Q11
9
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
Growth in federal IT spending is expected to be marginal in 2012 (and likely again in 2013)
Outlook 2012: Market Trends
• The 2012 Federal IT budget request is $80.9 billion, up 2.7% from $78.8 billion in the 2011 budget.
• TBR estimates 52% of the spend will be civilian, rising 2.5% to 3.0%; 48% will be defense-related, with flat to 0.5% growth.
• Not all departments/agencies will see an increase; some are facing steep cuts.
10
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
Federal IT spending in 2012 will be focused on cutting costs and doing more with the same (or less)
Outlook 2012: Market Trends
• Federal IT buyers will prioritize solutions that streamline and simplify operations.
• Spending on new IT infrastructure will be limited.
• Growing interest in social media, mobility & analytics
11
TBR
The Challenging Federal Technology Market: Insights from TBR’s Public Sector IT Services Benchmark ©2012 Technology Business Research Inc.
TBR Public Sector Resources:TBR Public Sector Professional Services Business Quarterly Reports:• Vendor Reports:
o Northrop Grumman (Information Systems & Technical Services)o Lockheed Martin (Information Systems & Global Solutions)o General Dynamics (Information Systems and Technology)o Raytheon (Intelligence & Information Systems, Network Centric Systems & Technical
Services)o L-3 Communications (C4ISR & Government Services)o SAICo ManTecho Booz Allen Hamiltono CACI
• End of the quarter benchmark also includes Harris IT, ITT (Defense & Intelligence Solutions), KBR and NCI for scoring purposes only
• Public sector operations of commercially-centric IT services firms in the benchmark:o IBM Global Serviceso HP Serviceso Accentureo Dell Serviceso CSC
o Unisyso Xerox Services
12
TBR
TECHNOLOGY BUSINESS RESEARCH, INC.
About TBR
Technology Business Research (TBR) is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors.
Serving a global clientele, TBR provides timely and accurate market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis.
TBR has been empowering corporate decision makers since 1996.
To learn how our analysts can address your unique business needs, please visit our website or contact us today.
Contact Us
[email protected] Merrill DriveHampton, NH 03842USA
This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.
All reports are available in PowerPoint and PDF. If you are viewing a PDF and require access to data, tables, etc. for use in internal documents, please visit www.tbri.com
and download the PowerPoint version.