In recent interviews with TechTarget, industry leaders–including Force 3’s Greg Kushto–cited an uptick in federal IT procurement activity during the government’s fiscal fourth quarter and expected FY 2018 to feature security and cloud investments.


IT solution providers planning to pursue federal government business can take heart: There will be more IT dollars in the budget for fiscal year 2018 compared with 2017.

If they follow the money, track agency priorities and meet federal requirements for the jobs being offered, channel companies could tap into new growth opportunities and take a bigger bite out of the federal IT budget in the next fiscal year (FY), which begins Oct. 1.

That said, as September comes to a close, many systems integrators, cloud providers and managed service providers are taking the time to assess their fourth quarter engagements and have begun evaluating their companies’ ability to help federal departments and agencies meet the new set of priorities being implemented by President Donald Trump’s administration.

Federal agencies, meanwhile, face complex decisions that include everything from where and how to use cloud computing to what data to select for analytics projects and what vendor’s technology will be suitable to protect government information from cyberattacks.

IDC, a market research firm in Framingham, Mass., projects the federal IT budget for FY 2018 at $95.7 billion. While the “official” figures declare an increase of around 1.1% compared with FY 2017’s budget of $94.0 billion, a closer look at the numbers reveal that the original FY 2017 budget, set over a year ago, was first tallied at about $89.9 billion. IDC contends the FY 2018 budget actually represents a 6.3% increase over what was originally proposed for FY 2017.

“This could be considered one of the largest year-over-year federal IT spending increases we’ve seen in recent years,” said Shawn McCarthy, research director at IDC Government Insights, in a statement regarding his research for a newly published report.

Spending patterns

Will FY 2017 spending patterns point the way toward what’s to come in the next federal IT budget? IDC’s analysis highlights several areas of spending in the soon- to-conclude fiscal year. McCarthy said the larger-than-originally planned portion of the FY 2017 budget was spent, in part, on “security improvements, Defense Department (DoD) programs, cloud migration, system upgrades and grants to help states improve their Medicare and Medicaid Management Systems,” McCarthy said.

In an interview with SearchITChannel, McCarthy cited IDC estimates identifying DoD as the department that will spend the most on IT in FY 2017, some $30 billion. The U.S. Department of Health and Human Services is in second place at $12 billion and the Department of Homeland Security (DHS) is third, spending approximately $6.5 billion.

He added 60% of IT spending goes toward IT services such as hosting and managing data, upgrading software and hardware, business process support, performing business analytics and hiring programmers to customize technology solutions. The remaining 40% goes toward various types of software to support infrastructure management, hardware and other machines such as mobile devices that attach to the network.

McCarthy identified another growth area that he said will impact federal government IT spending next year: cloud providers that have ecosystems of software developers creating innovative software offerings on cloud platforms.

“These application developers will build solutions that meet the needs of whatever federal agencies want,” McCarthy said. “They’ve become savvy and they are able to offer solutions that meet federal requirements such as the Federal Information Processing Standards and the Federal Information Security Management Act,” he added.

Now executives at federal agencies say they have a budget and a lot of people in place and they are really starting to execute.

Greg Kushto, Senior Director of Solutions Engineering, Force 3 LLC

McCarthy said his recent research on spending also indicates activity around the federal government’s Data Center Optimization Initiative (DCOI), which requires agencies to report on their data center strategies and transition to more efficient infrastructure such as cloud computing services. Since the start date for meeting DCOI requirements begins this fall, IT solutions providers can expect agency IT directors to be busy on several fronts during FY 2018. Federal data centers “will find themselves being evaluated on key metrics, including power usage effectiveness, effectiveness of their energy metering, level of virtualization, server utilization, facility utilization and more,” McCarthy said in a statement.

He added: “Instead of managing devices, IT directors will move toward managing pools of resources and looking for ever-greater efficiencies. Essentially, DCOI requires a change in core skill sets, and it applies measurement and goals in a way that, frankly, can’t always be met by older legacy systems.”

Spending stalls, then flows

As IT solution providers adjust to changes in technology requirements, they are also navigating the shifts taking place among executives charged with making budget decisions.

Greg Kushto, Senior Director of Solutions Engineering at Force 3 LLC, a network security and data center technology company headquartered in Crofton, Md., noted earlier this year when the new administration took office there was a slowdown in the decision-making process that stalled many projects. Agencies had been holding onto money allocated to them in the FY 2017 budget due to the uncertainty around the presidential election. But since spring, when budgets, allocations and Q4 procurement got sorted out, agencies have been spending money, Kushto said.

“Now executives at federal agencies say they have a budget and a lot of people in place and they are really starting to execute,” Kushto said. 


Read the full article at TechTarget online for additional insights from Greg Kushto and other industry experts.

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