PROFESSIONAL SERVICES BUSINESS QUARTERLYSMThe Challenging Federal Technology Market:Insights from TBR’s Public Sector IT S...
TBRToday’s Presenter                                 John Caucis                                 Manager, Public Sector Pr...
Key Takeaways: State of the Market                                                                             TBR2011 was...
Key Takeaways: State of the Market                                                          TBRThe tumultuous federal budg...
Key Takeaways: State of the Market & Growth Trends                                          TBRGrowth data reflects how ma...
Key Takeaways in 2011: Vendor Actions                                                        TBRVendors are undertaking a ...
Key Takeaways in 2011: Vendor Actions                                                       TBRGenerate new revenue stream...
Key Takeaways in 2011: Vendor Actions                                                        TBRAnd preserve margin perfor...
TBR Scoring Summary: Scoring Performance & Ranking in 3Q11                                  TBRGovernment-centric scoring ...
Outlook 2012: Market Trends                                                                  TBRGrowth in federal IT spend...
Outlook 2012: Market Trends                                                                   TBRFederal IT spending in 20...
TBRTBR Public Sector Resources:      TBR Public Sector Professional Services Business Quarterly Reports:      • Vendor Rep...
About TBR                                                                                                                 ...
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TBR Public Sector IT Spending Benchmark Report

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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.

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TBR Public Sector IT Spending Benchmark Report

  1. 1. PROFESSIONAL SERVICES BUSINESS QUARTERLYSMThe Challenging Federal Technology Market:Insights from TBR’s Public Sector IT Services BenchmarkTBR Webinar SeriesSpring 2012Original Webinar Date: March 21, 2012Presenter:John Caucis, Public Sector Practice Manager (john.caucis@tbri.com) TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
  2. 2. TBRToday’s Presenter John Caucis Manager, Public Sector Practice Technology Business Research, Inc. (TBR) Twitter: @jcaucistbr2 The Challenging Federal Technology Market: ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  3. 3. Key Takeaways: State of the Market TBR2011 was a difficult year for IT vendors serving the public sector …How have vendors been impacted? The market environment in 2011 was hostile to 12 of 20 growth. What was the state of the market and what were the of vendors in the Public headwinds to growth? Sector Benchmark saw their How are vendors coping? revenues decline in 2011 What is the outlook for 2012? SOURCE: TBR PROFESSIONAL SERVICES PUBLIC SECTOR BENCHMARK STUDY 3 The Challenging Federal Technology Market: ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  4. 4. Key Takeaways: State of the Market TBRThe tumultuous federal budget process and lower IT spendingrestrained growth for most federal IT contractors in 2011 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. The Challenging Federal Technology Market: 4 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  5. 5. Key Takeaways: State of the Market & Growth Trends TBRGrowth data reflects how market conditions have grownprogressively more challenging since 2010 The Challenging Federal Technology Market: 5 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  6. 6. Key Takeaways in 2011: Vendor Actions TBRVendors are undertaking a number of measures to cope with thechallenging market environment …• Enhance the business development processes.• Portfolio reshaping• Align portfolio and strategies with shifting federal spending priorities. The Challenging Federal Technology Market:6 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  7. 7. Key Takeaways in 2011: Vendor Actions TBRGenerate new revenue streams …• 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). The Challenging Federal Technology Market:7 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  8. 8. Key Takeaways in 2011: Vendor Actions TBRAnd preserve margin performance …• Reduce operational drag.• Enhance contract delivery and performance.• Minimize unprofitable activities. The Challenging Federal Technology Market:8 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  9. 9. TBR Scoring Summary: Scoring Performance & Ranking in 3Q11 TBRGovernment-centric scoring leaders IBM, Harris and Accenturetended to be the growth and margin leaders SOURCE: COMPANY DATA; TBR ESTIMATES The Challenging Federal Technology Market:9 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  10. 10. Outlook 2012: Market Trends TBRGrowth in federal IT spending is expected to be marginal in 2012(and likely again in 2013)• 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. The Challenging Federal Technology Market:10 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  11. 11. Outlook 2012: Market Trends TBRFederal IT spending in 2012 will be focused on cutting costs anddoing more with the same (or less)• 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 The Challenging Federal Technology Market:11 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  12. 12. TBRTBR 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 SAIC o ManTech o Booz Allen Hamilton o 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 Services o Unisys o HP Services o Xerox Services o Accenture o Dell Services o CSC The Challenging Federal Technology Market:12 ©2012 Technology Business Research Inc. Insights from TBR’s Public Sector IT Services Benchmark
  13. 13. About TBR Contact UsTechnology Business Research (TBR) is a leading independent 1.603.929.1166technology market research and consulting firm specializing in the info@tbri.combusiness and financial analyses of hardware, software, networkingequipment, wireless, portal and professional services vendors. www.tbri.com 11 Merrill DriveServing a global clientele, TBR provides timely and accurate market Hampton, NH 03842research and business intelligence in formats that are tailored to USAclients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietaryconsulting 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. TBR 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. T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .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. 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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