Modernization of U.S. Federal Government IT, Market Scenario
“Although the federal government spends roughly $90 billion annually on IT, these systems remain outdated and poorly protected. The administration will increase the use of modern technologies, retire highly insecure and outdated systems, and direct modernization cost savings to mission-driven outcomes,” said the 2019 budget proposal released by the White House Feb. 12, 2018.
IT market is past the phase of fast growth spurred by rise in computing power in 1990s and mobile in 2000s, neither it is stagnated. The IT market growth rate does not reflect the deep internal market dynamics. The overall IT market growth fueled by data growth is offset by rapidly changing market structure – we witness cannibalization of traditional monolithic IT model by cloud and microservices. The rate of cannibalization exceeds the rate of IT spending induced by data growth and obsolesce. New generation of developers view monolithic legacy IT systems as dinosaurs, unnecessarily overcomplicated unmanageable obsolete structures that should be gradually replaced by distributed fabric of intermingling APIs, serverless platforms and microservices.
The situation in the US Federal IT market is different from private sector. Federal legacy IT systems are becoming increasingly obsolete and unsustainable:
- For historical reasons most of the federal legacy IT systems are monolithic architectures of mind boggling and unjustifiable complexity, gradually becoming unmanageable as a result of obsolesce and endless patching;
- Many systems are built upon outdated software languages and hardware parts that are unsupported;
- Many legacy systems are vendor-locked into proprietary software and hardware, complex and obsolete pricing models;
- The federal IT workforce is ageing and under par when compared to the private sector;
- The federal government spends about 75 percent of its total IT budget (reaching into $100 Billion category) on operations and maintenance (O&M), essentially burning the amount corresponding to GDP of a small country to keep afloat severely leaking IT ship.
- Legacy systems are ongoing cybersecurity concerns. The annual federal cybersecurity budget is already in all-time high $20 Billion, another figure unsustainable in the long run.
- Government IT market is notoriously hard to penetrate for mid-size technology vendors due to a barrier of regulations and security concerns. Yet, paradoxically enough, this barrier prevents intrusion-prone high-security-risk legacy systems from being upgraded.
The federal cybersecurity spending has reached into the territory of 10% of overall IT budget while the private sector spends on cybersecurity about 4-6% of IT budget.
Now, the multibillion question – if this vicious cycle can be broken and how. The answer lies in transformation and transition of the federal IT organization to lean, robust and agile system through adoption of concepts and technologies that work for private sector.
The report offers a market scenario of radical redesign of the Federal IT, based on successful practices and patterns of the private sector. Case studies of the radical IT redesign in the private sector demonstrate that modernization of obsolete IT systems may reduce IT budget by 20%-40%. The working assumption of this market scenario is reduction of the Federal IT budget by 20% over four year period, technically and organizationally this is possible.
The report provides insights, philosophy and market scenario of the US Federal Government IT modernization, covers key concepts, approaches, models and technologies to facilitate modernization. The report offers a market scenario of radical redesign of the Federal IT, based on successful practices and patterns of the private sector.
The report provides detailed year-by-year market forecasts for the technologies, product and services associated with US Federal Government IT modernization by management and technology segments:
- Transition planning, coordination, management
- Function as a Service
- Integration, API Management
- Software development platform, DevOps, code repository
- Hyperconverged infrastructure
- Cloud platforms
- Cybersecurity: endpoint security, bolt-on solutions.
- The report provides detailed year-by-year market forecasts of IT modernization for DoD, Intelligence Community and major civilian agencies.
- The report provides detailed year-by-year market forecasts of HR market segments essential to facilitate IT modernization.
- The report lists 28 Federal IT projects representing market opportunities in modernization of legacy systems.
- The report highlights profiles of startup technology companies that can make a difference in Federal IT market and provides company-by-company estimates of revenue gains and market impacts on Federal IT market.
Table of Contents
1. Market Report Scope & Methodology 5
1.2. Research Methodology
2. Executive Summary
2.1. Changing IT Market Landscape
2.2. Making Case for Radical Redesign of the Federal IT
2.3. Key Findings
2.4. Modernization of the U.S. Federal Government IT Market Forecast
2.5. U.S. Federal IT Modernization Market Forecast by Defense, Intelligence Community and Civilian Agencies
2.6. Market opportunities in Modernizing of Legacy Systems
2.7. US Federal IT Market: Technology Companies That Can Make a Difference
List of Figures
Fig. 1- Short Term Goal – Annual IT Spending Cut; Long Term Goal: Lean, Agile, Robust and Secure Government IT
Fig. 2- Modernizing the US Federal Government IT: Key Concepts and Approaches
Fig. 3- Vision of the New Federal IT
Fig. 4- Modernization of the U.S. Federal Government IT Market Forecast, $Mln
Fig. 5- Potential Impact of Modernization on the U.S. Federal Government IT, Market Forecast, $Bln
List of Tables
Table 1 – U.S. Federal IT Market Forecast, $Bln
Table 2 – U.S. Federal Cybersecurity Market Forecast, $Bln
Table 3 – Modernization of the U.S. Federal Government IT Market Forecast, $Mln
Table 4 – U.S. Federal Government IT Modernization Market Forecast by Management and Technology Segments, $Mln
Table 5 – U.S. Federal IT Modernization Market by Defense, Intelligence Community and Civilian Agencies, $Mln
Table 6 – Major Civilian Agencies: IT Modernization Market Forecast by Agency, $Mln
Table 7 – U.S. Federal Government IT Modernization Market Forecast by HR Segments, $Mln
Table 8 – Technology Companies That Can Make a Difference in Federal IT Market