Demand For Legacy System Modernization Sustains 5-Year Federal IT Outlook, According to Deltek Report
New Deltek GovWin IQ report predicts flat IT spending as agencies balance budget restraints against emerging technology needs
HERNDON, Va. – August 17, 2016 – According to a recent report from Deltek, federal IT spending will decline from $99.8 billion in FY 2016 to $98.3 billion in FY 2021, as agencies pursue initiatives to reduce redundant technology and streamline costs. Demand for IT will be largely influenced by the need to consolidate and modernize the aging legacy systems that hinder adoption of innovative solutions such as cloud computing, big data and advanced cybersecurity. Deltek’s report, “Federal Information Technology Market, 2016-2021” forecasts contractor-addressable federal IT budgets for hardware, software, IT Services, and communications and network services.
- Priority Areas Unchanged – Although IT spending will remain relatively flat over the forecast period, growth opportunities remain in key strategic areas such as: cloud computing, data center optimization, cybersecurity, big data and infrastructure modernization.
- Legacy System Modernization – The IT Modernization Fund could bring significant opportunities to contractors, provided that agencies can drive the tangible cost savings required to reimburse the fund. In the absence of this fund, agencies will move forward with modernization, albeit at a much slower pace.
- Contract Streamlining – Policy to streamline commodity IT (software licenses, laptops, desktops and mobile devices) will impact opportunities for vendors not positioned on mandated or preferred contracts. The concentration of contracting for these products onto fewer contracts will heighten competition, so pricing will be critical.
- Election Impact – Presidential elections may change high level priorities during the forecast period, but IT typically remains relatively stable during administration transitions. The new administration may reset some IT policy, but policies will likely carry the same themes under different branding. Contractors should support customers as they prepare program justifications for the incoming administration.
DELTEK ANALYST QUOTES
“Legislation postponing sequestration – twice – set in motion somewhat of a recovery period for agencies. However, budget austerity is now the norm so regardless of budget increases agencies continue to focus on finding cost efficiencies wherever they can. The result is a relatively flat IT market with pockets of opportunity in emerging areas such as cybersecurity, big data and mobility.”
– Angie Petty, Senior Principal Research Analyst, Deltek
“We see a mix of growth and contraction across civilian agencies’ IT budgets, but the common element across them all is the increasing proportion of budgets devoted to cybersecurity. Not surprisingly, eighty-four percent of IT government executives we interviewed noted cybersecurity as a major priority over the next three years.”
– John Slye, Advisory Research Analyst, Deltek
“If history is any indication, contractors and agencies can expect fairly stable budgets until FY 2019, which is the first opportunity for a new administration to fully influence a budget. However, if Congress fails to postpone sequestration for FY 2018, or our new President institutes new IT policy much earlier than previous Presidents, we could see budget uncertainty arise again.”
– Deniece Peterson, Director of Research, Deltek
#Deltek predicts modest growth in fed IT market from $99.8B in FY 2016 to $98.3B by FY 2021 http://ow.ly/Jm2o303izf8
#Deltek expects cloud, cyber, data center, big data & mobility to remain federal IT priorities over next 5 years http://ow.ly/Jm2o303izf8
#Deltek forecast shows that new admin may reset some fed IT policy but themes will remain the same. http://ow.ly/Jm2o303izf8
#Deltek forecasts decline in DOD IT spending: budget gaps, consolidation + targeted IT services & hardware cutbacks http://ow.ly/Jm2o303izf8
For more information on GovWin IQ and this report, visit the “Federal Information Technology Market, 2016-2021” page on Deltek.com/GovWin or download the free summary here. The report is free to subscribers of GovWin’s Federal Industry Analysis program. Press interviews can be arranged by contacting Lauran Cacciatori.
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