TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.Pockets of opportunity in the turbulentpublic sector IT services space: In...
TBR2 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Professional Services ...
TBR3 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.TBR’s Public Sector IT...
TBR4 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.The challenging enviro...
TBR5 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Average growth rates l...
TBR6 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Lower IT spending: dec...
TBR7 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Realigning portfolios ...
TBR8 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.SOURCE: TBR RESEARCH A...
TBR9 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector IT Servi...
TBR10 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector IT Serv...
TBR11 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Vendors will continue...
TBR12 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.While several vendors...
TBR13 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector IT Serv...
TBR14 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector IT Serv...
TBR15 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Vendors will focus on...
TBR16 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector Researc...
TBR17 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Questions?Public Sect...
TBR18 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.For further informati...
TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.About TBRTechnology Business Research (TBR) is a leading independent techn...
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The ‘Perfect Storm’ of Uncertainty Continues to Plague the Federal IT Contracting Environment – Insights from TBR’s 4Q12 Public Sector IT Services Benchmark

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The TBR Professional Services research team recorded a webinar on May 15, 2013, recapping vendor performance reported in TBR's 4Q12 Public Sector IT Services Benchmark. This deck is from that presentation.

Public Sector Practice Manager and Senior Analyst John Caucis and Analyst Sebastian Lagana shared their perspectives on the results and provided additional insights into vendor performance and the future of the public sector IT services market.

Questions for discussion included:

• What drivers are shaping the environment, and how are those drivers impacting vendors?
• Which vendors are leading in growth and margin?
• What is the competitive outlook for 2013 in the public sector IT services vertical?

Published in: Technology, Business
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Transcript of "The ‘Perfect Storm’ of Uncertainty Continues to Plague the Federal IT Contracting Environment – Insights from TBR’s 4Q12 Public Sector IT Services Benchmark"

  1. 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.Pockets of opportunity in the turbulentpublic sector IT services space: Insights fromTBR’s 4Q12 Public Sector BenchmarkTechnology Business Research Quarterly Webinar SeriesMay 15, 2013
  2. 2. TBR2 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Professional Services Business Quarterly Research Highlights and Outlook: Webinar PresenterJohn CaucisPublic Sector Practice ManagerEmail: john.caucis@tbri.comTwitter: @jcaucistbrAnalystPhotoSebastian LaganaLead Analyst, Public Sector PracticeEmail: Sebastian.lagana@tbri.comTwitter: @slaganatbr
  3. 3. TBR3 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.TBR’s Public Sector IT Services Benchmark report delivers unique insightand value through in-depth analysis in a concise, consumable formatPublic Sector IT Services Benchmark: Webinar Overview• TBR covers nine “government-centric” IT servicesvendors (i.e., firms whose primary customers aregovernment or noncommercial entities) on anongoing basis with its syndicated reports.• TBR also follows the public sector activities of sevenleading, commercial-centric IT services vendors.• The benchmark report includes analysis of fouradditional government-centric firms for a total of 20public sector IT services vendors.• TBR reports are unique due to their deep, holistic analysisof leading vendor businesses.• Financial modeling and TBR insights help customers builda better understanding of vendor business models.• TBR reports and webinars are designed to be responsiveto client timelines, to be clear and concise, and to provideinsights regarding multiple layers of an organization.• TBR’s strategic assessment provides an impartial realitycheck on how vendors are performing, relative to theirstrategic objectives and the overall market.
  4. 4. TBR4 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.The challenging environment is driving vendors to branchout from their core federal space to new markets, enhanceoperational efficiencies & optimize contract executionThe challenges in 2012 compelled public sector IT firms to prospectoutside core markets, though most will not see growth return in 2013PSBQ Public Sector Benchmark Research Highlights and 2013 OutlookPublic Sector IT Services Vendor Trends for 4Q122012 saw unprecedented turmoil in the federal ITmarket, inhibiting company’s fiscal performance and leavingvendors clamoring for clarity about the market’s direction in2013SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATESVendor guidance shows that despite efforts to diversify intonew markets, 2013 is expected to be another difficult yearcharacterized by declining revenue and downward pressureon margins
  5. 5. TBR5 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Average growth rates leveled off in 4Q12 after a period of steady declinebut remained solidly negative as federal IT spending continued to contractPublic Sector IT Services Benchmark 4Q12 Research Highlights: Key TrendsAverage revenue growth for the 20 firms in the PSBQ Public Sector IT ServicesBenchmark ticked up for the 1st time since the beginning of 2012, though mostlydue to seasonal factors as IT spending in the federal space remained constrained.
  6. 6. TBR6 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Lower IT spending: declining IT spending volumesacross federal agencies & many state governmentsVendors were impacted by the ongoing federal budget chaos, decliningIT spending and the drawdown of operations in Iraq & AfghanistanPSBQ Public Sector Benchmark Research Highlights and 2013 OutlookPrimary Market Headwinds for Public Sector IT Services Vendors in 4Q12SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATESIraq/Afghanistan: reduction in OverseasContingency Operations (OCO) fundingBudget turmoil: IT program delays & terminationsand elongated sales cycles
  7. 7. TBR7 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Realigning portfolios and market focus to growth areas in the U.S.federal, commercial and foreign markets was the mantra in 4Q12 & 2012PSBQ Public Sector Benchmark Research Highlights and 2013 OutlookPublic Sector IT Services Vendor Trends for 4Q122012 saw unprecedented turmoil in the federal ITmarket, inhibiting company’s fiscal performance and leavingvendors clamoring for clarity about the market’s direction in2013SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATESVendor guidance shows that despite efforts to diversify intonew markets, 2013 is expected to be another difficult yearcharacterized by declining revenue and downward pressureon marginsThe challenging environment is driving vendors to branchout from their core federal space to new markets, enhanceoperational efficiencies & optimize contract execution
  8. 8. TBR8 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATESPublic Sector IT Services Benchmark 4Q12 Research Highlights: Key TrendsHealthcare IT and overseas expansion drive revenues for growth leaders,while margin leaders focus on operating and contract performanceLeading growth firms are expanding in healthcare IT and international markets, and/orleveraging recent acquisitions.Margin leaders are generally achieving strong contract execution while reducing theirexpense structure.
  9. 9. TBR9 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector IT Services 4Q12 Research Outlook: Growth LeadersTraction in government-related healthcare was the common and primarydriver of top-line expansion for the growth leadersSAIC, Xerox Services & Accenture were the top growth firms in 4Q12, owing mostlyto their continued growth in the healthcare and state/local government marketsSOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES20%Year-to-YearGrowth%Top-Three Growth Leaders15%10%5%6.5%8%9.7%TBR
  10. 10. TBR10 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector IT Services 4Q12 Research Outlook: Growth LeadersMargin leaders posted higher profitability via traction in high-valueportfolio offerings, strong program execution & operational enhancementHarris, IBM Global Services and Boeing GS&S leveraged more lucrativesolutions, strong contract delivery and restructuring efforts to realize leadingmarginsSOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES20%OperatingMargin%Top-Three Margin Leaders15%10%5%13.1% 13.1%TBR 17.7%
  11. 11. TBR11 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Vendors will continue to reshape portfolios and target non-core marketsfor new revenues, but most expect 2013 to be another down yearPSBQ Public Sector Benchmark Research Highlights and 2013 OutlookPublic Sector IT Services Vendor Trends for 4Q122012 saw unprecedented turmoil in the federal ITmarket, inhibiting company’s fiscal performance and leavingvendors clamoring for clarity about the market’s direction in2013SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATESVendor guidance shows that despite efforts to diversifyinto new markets, 2013 is expected to be another difficultyear characterized by declining revenue and downwardpressure on marginsThe challenging environment is driving vendors to branchout from their core federal space to new markets, enhanceoperational efficiencies & optimize contract execution
  12. 12. TBR12 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.While several vendors saw the pace of sales growth accelerate in 4Q12,most are projecting contracting revenue for full-year 2013SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATESPublic Sector IT Services Benchmark 4Q12 Research Highlights: 2013 ProjectionThe majority of vendors expect sales to decline in 2013 — some for the 3rd year in a row.
  13. 13. TBR13 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector IT Services 4Q12 Research Outlook: 2012 ProjectionTop-line growth in 2013 will be limited to a handful of commercially-centric vendors, who will leverage continued expansion in healthcare ITSOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATESProjected Calendar 2013 Revenue Growth %10%9.5%8%1.4%TBR7.5%5%2.5%Accenture, Xerox Services and CSC expect healthcare IT in federal, state/local andinternational public sector markets to be growth drivers in 2013
  14. 14. TBR14 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector IT Services 4Q12 Research Outlook: 2012 ProjectionCACI and ManTech are expecting similarly modest growth in 2013, alsoowing to their efforts to expand healthcare IT salesSOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES2%0.7%TBR1.5%1%0.5%CACI and ManTech are positioned for marginally positive revenue expansion in2013, owing to recent acquisitions and health IT growth0.7%Projected Calendar 2013 Revenue Growth %
  15. 15. TBR15 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Vendors will focus on cost and operational discipline while chasing alimited number of opportunitiesPSBQ Public Sector Benchmark Research Highlights and 2013 OutlookSOURCE: BREAKINGGOV.COMWhile the FY13 federal IT budget request is down fromFY12, there will still be growth opportunities for IT servicesproviders within as well as outside the federal space.4Q12 TBR Public Sector IT Services Benchmark: Outlook Summary• Big data• Data center consolidation• Mobility• Cybersecurity• Cloud computing• Health IT
  16. 16. TBR16 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Public Sector Research Current Topics 4Q12 Report Key Themes• Vendor Reports:o Northrop Grumman IS&TSo Lockheed Martin IS&GSo General Dynamics IS&To Raytheon IT Serviceso SAICo L-3 Communications*o ManTech*o CACI**o Booz Allen Hamilton**o Public sector practices of: IBM Global Services HP Services CSC Accenture Dell Services Unisys Xerox Services• Vendor Benchmark• Benchmark WebinarHow does vendor fiscal performance reflect theoverall federal IT services market landscape?What strategic actions are vendors taking to adjustto market conditions or better position themselvesagainst the competition?How are public sector IT services vendorsleveraging existing partnerships? Are they formingnew alliances? How are they leveraging M&As?How are vendors managing their human capital inthe current environment?Where are vendors capitalizing on new adjacentmarket opportunities? What new markets,domestic, international or commercial, are publicsector IT services vendors eyeing to generaterevenue streams?High-growthSegmentsStrategicActionsAlliances andAcquisitionsResourceManagementGrowth andMarginPerformanceTBR’s Public Sector practice will continue tracking the activities of theleading federal IT services contractors and their commercial counterpartsPublic Sector IT Services Practice Research Outlook: 3Q12 Research Highlights*SEMIANNUAL: REPORTS PUBLISH IN CALENDAR 2Q/4Q. ** SEMIANNUAL: REPORTS PUBLISH IN CALENDAR 1Q/3Q.
  17. 17. TBR17 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.Questions?Public Sector IT Services Practice Research Outlook: Questions
  18. 18. TBR18 TBR Quarterly Webinar Series | 5.15.13 | www.tbri.com | ©2013 Technology Business Research Inc.For further information, please contact:Lindy Hanson James McIlroyDirector, Professional Services Practice Vice President, Saleslindy.hanson@tbri.com mcilroy@tbri.comJohn CaucisPublic Sector Practice ManagerEmail: john.caucis@tbri.comTwitter: @jcaucistbr, @TBRIncProfessional Services Business Quarterly Research Highlights & Outlook: Webinar PresentersSebastian LaganaLead Analyst, Public Sector PracticeEmail: Sebastian.lagana@tbri.comTwitter: @slaganatbrTwitter: @TBRincSlideShare: www.slideshare.net/TBR_Market_InsightYouTube: www.youtube.com/user/TBRIChannel
  19. 19. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.About TBRTechnology Business Research (TBR) is a leading independent technologymarket research and consulting firm specializing in the business and financialanalyses of hardware, software, networking equipment, wireless, portal andprofessional services vendors.Serving a global clientele, TBR provides timely and accurate market researchand business intelligence in formats that are tailored to clients’ needs. Ouranalysts are available to further address client-specific issues or informationneeds 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, pleasevisit our website or contact us today.Contact Us1.603.929.1166info@tbri.comwww.tbri.com11 Merrill DriveHampton, NH 03842USAThis 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. TechnologyBusiness 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 notand 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 reportis copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.

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