MCLEAN, VA, Wednesday, October 30, 2013–Despite this year’s sequestration and government shutdown, both civilian and military federal agencies will see modest increases in IT spending, with big data, mobility, and cloud technology at the leading edge of agency spending.

Total discretionary spending in FY2014 will decrease with the passing of a Continuing Resolution (CR) slightly below caps set by the Budget Control Act, and overall procurement dollars will drop in coming years. Nonetheless, IT and software spending will actually increase, as agencies continue to rely on best value commercially available off-the-shelf (COTS) solutions for operational efficiencies.

These financial statistics and technology trends were unveiled at the 9th annual Federal IT Budget Briefing hosted by immixGroup on October 22. immixGroup’s Market Intelligence organization, which prepared the content of the briefing, provides actionable information that helps technology companies identify relevant opportunities to accelerate their sales cycle and grow their federal business.

To view immixGroup’s Federal IT Budget Briefing on-demand Webinars visit www.immixgroup.com/FY14DOD  or www.immixgroup.com/FY14Civilian.

The recently passed CR funds discretionary spending levels at $987 billion – $19 billion over post sequestration caps set by the Budget Control Act (BCA). This means that unless Congress amends the BCA spending caps, we will face another round of sequestration in FY14. The federal IT budget request for FY14 was $82 billion, which is a 1.8 percent increase from FY13 appropriation levels – but, similar to last year, the threat of constant CRs and another sequestration could bring that number down. 

The need for federal agencies to maintain mission effectiveness and demonstrate improved return on investment are driving them to embrace new analytics tools and cloud technology to demonstrate cost savings. On the Defense side, the Joint Information Environment (JIE) is becoming a reality, and this is leading to DOD agencies uncovering new challenges related to storage and big data, common operating environments, infrastructure consolidation, and mobility.

“Defense agencies are capturing enormous amounts of data that needs to be managed, tagged, stored, and accessed,” said Tim Larkins, Market Intelligence Manager at immixGroup. “Storage, business intelligence and business analytics, high performance computing, enterprise search, and data management tools will all be important investments.”

“As agencies continue to consolidate infrastructure and move toward enterprise services, cloud technology also will be a key area of defense spending, including virtualization, data center consolidation, network management, and application rationalization. Agencies also are addressing improved tactical communication, cost cutting, and a younger work force that expects more work from home privileges, so defense IT spending will emphasize mobile device security, information sharing, collaboration, C4/ISR, and mobility solutions,” Larkins said.

Programs supporting these trends include the Army’s Warfighter Information Network-Tactical (WIN-T), with requirements for tactical communication, mobility, and network modernization. The Air Force will be investing in improving Tactical Data Links, with an emphasis on interoperability, mobility and cloud solutions, and big data. The Navy’s Next Generation Enterprise Network (NGEN), with its emphasis on secure, net-centric data and services to the Navy and Marine Corps personnel, will demand greater investment in infrastructure consolidation and cloud solutions. The Defense Information Systems Agency is putting particular emphasis on the Global Command & Control System – Joint (GCCS-J) to plan, execute, and manage military operations for both joint and multinational operations. C4/ISR, application rationalization, interoperability, and common operating pictures are all budget areas for DISA.

Big data, cloud, and mobility technologies will likewise be focus areas in civilian agency spending. “As with defense agencies, civilian agencies are generating increasing amounts of structured and unstructured data in the course of day-to-day operations. Business intelligence, analytics, and knowledge management tools will all find use in improving business operations,” said Tomas O’Keefe, immixGroup Market Intelligence Senior Analyst.

“To meet budget targets through cost savings, agencies are reducing their data center and IT infrastructure footprint and turning toward the cloud to ensure the execution of their mission. Virtualization, IT functionality offered as a service, and network management tools are likewise important for civilian agencies.”

“While agencies realize that mobility is the future of the federal workforce, they struggle with effective implementation of mobility tools and the larger overall governance questions that surround bring-your-own-device (BYOD) policies. Many agencies have embraced telework to one degree or another, but the next generation of mobile collaboration tools are waiting for federal policy to catch up to technology,” O’Keefe concluded.

According to immixGroup, the State Department intends to develop its current IT backbone to act as a cloud broker for other federal agencies with personnel deployed overseas. At the Treasury Department, The IRS’ Return Review Program aims to utilize advanced analytics to identify fraud, waste, and abuse to increase tax collections, which will require greater investment in big data solutions. The Department of Veterans Affairs will emphasize big data in its efforts to improve information-sharing with the DOD and private care providers through development of an Electronic Health Record system. VA also will invest in mobility technology as it expands its outreach to veterans with enhanced mobile and Web-based applications, so veterans can more easily manage their own healthcare decisions.

“Despite the clear theme of reduced spending, these emerging technologies will see greater investment across both defense and civilian agencies,” said Larkins, immixGroup Market Intelligence Manager. “For product vendors and solution providers, the goal is to demonstrate how technology can support existing programs, reduce costs, and improve operational efficiencies. With the very real prospect of multiple short term Continuing Resolutions in FY14, vendors will serve the government best by understanding program-level needs and offering the right technological mix to meet those needs.”