Information Technology Trends Revealed in 2018 Clarity Government Contracting Industry Study

Posted by Marc Holliday on September 13, 2018

Clarity GovCon Information Technology Trends

By Marc Holliday, Director of Product Marketing, Deltek

Strategic information technology (IT) projects are finally coming off the back burner! As reviewed in the previous five installments of the 9th Annual Clarity Industry Study webinar series, growth rates reported by government contracting have more than doubled – up from 6% in 2016 to 14% in 2017 – a historic five-year high. Profits have edged up to pre-sequestration levels, and the industry as a whole is seeing the highest level of appropriations in a decade. For IT leaders who have seen their budgets stagnate or decrease in previous years, all of this positivity is a relief. Finally, IT can move beyond primarily playing defense, and instead go on the offensive to address both current and future challenges.

During Information Technology Trends, the final webinar reviewing results from the 9th Annual Deltek Clarity GovCon Industry Study, I touched on the types of strategic projects IT leaders are now considering, current/future spending levels and anticipated investments by system type. Read on for a few other top IT takeaways.


 

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Policy, Processes & the War for Talent

Unchanged from last year’s study are the top three challenges IT leaders report facing. The two most indicated challenges – IT and data security and satisfying government system security and regulatory requirements – are tightly aligned. Thwarting cyber-attacks and satisfying new government regulations, like the federal requirements for NIST 800-171, are some of the major factors driving the need for internal policy and procedure revisions and the new strategic constructs that go with the changes.

Almost as headache inducing for IT leadership, is the war for talent. Hiring more staff and encountering stiff competition for the highest quality candidates is a pervasive need in every corner of the government contracting industry. However, because IT departments have been running lean for so long, talent retention has surfaced as a key consideration, as well as the new hires needed to help build out next-generation systems.

Budget pressure dropping out of the top five named challenges is yet one more indication of the overall health of the government contracting industry. For IT leaders specifically, a loosening of the purse strings means a shift of focus on purely practical decisions about infrastructure and upgrades, to decision making that is more strategic.

Adoption of Cloud Solutions Continues to Grow

A little over half of Clarity respondents (54%) have a least a quarter of their business systems in the cloud today while 37% reported having over 50% of their applications in the cloud. Small businesses are leading the way in cloud adoption—42% noted 50% or more of their systems are in the cloud. Choosing cloud-based systems and solutions are winning both the minds of the financial executive and the IT executive because they provide more predictable IT spending, less capital outlay for expensive hardware and allows IT resources to focus on more important areas like network security.

Looking to the future, 43% of Clarity respondents noted they intend to move more business systems to the cloud, with 19% stating they are unsure whether they will seek out more cloud-based solutions. Medium and large businesses aren’t moving at the same speed as smaller businesses to make the cloud the new home for internal systems, with a majority of respondents (65% and 60% respectively) claiming 0%-25% of systems in the cloud. The slower adoption rate likely has to do with business processes system integrations being more complicated and complex.

IT Spending Changes & Trends

Overall, IT leaders reported that a majority of their spending stayed the same (36%) or increased (49%). Small businesses saw the most increase in spending (52% of Survey respondents), with exactly half of medium businesses and 45% of large businesses claiming a spending increase as well. Primarily, budget boosts were used for modernizing and bolstering security for business systems, as well as moving to cloud-based options to lower costs and increase information predictability.

In terms of future IT spending, 39% of respondents anticipate levels to stay the same, and 48% feel confident levels will increase from this year to the next. Small and medium businesses are the most optimistic about IT spending levels; 39% and 33% (respectively) claim it will stay the same, while 55% and 56% expect an increase. Forty percent of large businesses project IT spending will stay the same, and 30% see it increasing.

Top Six IT Investment Areas

The types of business application systems where the most investments are taking place are:

  • Security and authentication
  • Customer Relationship Management (CRM)
  • Accounting and finance
  • Business intelligence
  • Project and portfolio management
  • Human capital management.

Customer Relationship Management has made a steady climb to the top of priority list for many IT leaders due to the more frequent use of indefinite delivery indefinite quantity (IDIQ) contract vehicle. Response times are critical with these types of contracts and knowing who to call first can make the difference between winning or losing the contract.

Top of Mind Technology Trends

Of most importance to Clarity respondents in the months and years to come… data science. Having a three dimensional view into a firm’s data helps all business units to perform better. Artificial intelligence (AI) is second on the priority list for industry leaders, followed in equal measure by the Internet of Things (IoT) and machine learning. Rounding out the top seven: Geo location, natural language processing and wearable technology.

More Clarity Results

Take some time to watch the on demand webinar Information Technology Trends for additional results from the IT section of the 9th Annual Deltek Clarity GovCon Industry Study, as well as expert commentary on what specific trends could mean for the future of IT within the industry.

For complete results from the Deltek Clarity GovCon Industry Study, download the full report.

About the Study

The 9th Annual Deltek Clarity GovCon Industry Study provides critical benchmarks and insight for information technology leaders, as well as decision makers in business development, finance, operations and compliance, human capital management, and project and risk management, to help each assess the health of their firm and identify steps to drive future success.

For the 2018 Study, more than 600 survey respondents answered a series of benchmarking questions to provide a comprehensive overview of the federal contracting environment. Businesses of every size were represented, with most identifying themselves as IT services, professional services, or defense, weapons, aerospace, transportation or manufacturing providers. Healthcare or medical, management consulting, and engineering services were also included in the results. Forty-three percent of companies are headquartered in the Washington, D.C. metro area and the surrounding states of Maryland and Virginia, while 57% call other U.S. regions home.