The Big Reveal: 10th Annual Clarity Study Exposes GovCon IT Trends

Posted by Deltek on October 24, 2019

2019 Clarity GovCon Industry Study Information Technology

In January and February 2019, Deltek conducted the 10th Annual Deltek Clarity Government Contracting Industry Study. Deltek conducts this study to help companies learn about trends and measure their performance against others in the industry.

In a recent webinar, data about information technology (IT) trends was presented, including challenges that contractors face, solutions to those challenges, and trends that affect the business space.

Information technology professionals are expected to distribute—and protect—information in real time. In many ways, IT has become more challenging—and more essential—than ever. Here’s why: The human race produces a mind-boggling 2.5 quintillion bytes of data every day. With the Internet of Things (IoT) becoming more mainstream, the thinking is that machines will eventually create as much data as humans.

Adding to the complexity is the need to focus on upgrading security and supporting companies with 24/7 operations. The bottom line? Companies that gather, analyze and leverage the best, most relevant information are typically the most competitive, grow fastest and retain top talent.


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Government Contracting IT Headlines

Here are the major takeaways from this year’s survey:

  • By far and away (and unsurprisingly), the top challenge is IT and data security, reported by 48% of respondents.
  • Big data, data science and artificial intelligence (AI) are the top three tech trends.
  • 48% of government contractors (and 64% of large contractors) plan to move on-premise solutions to the cloud in the next year.
  • 54% said that IT spending will continue to increase.
  • Government contractors are bullish about the prospects for growth over the next couple of years—representing more optimism than in recent years.

Reading Between the Headlines

Other challenges include government requirements, which 24% reported as a top-three challenge, and National Institute of Standards and Technology (NIST) compliance, which 19% reported as a top-three challenge. These are big jumps, from eighth and ninth place, respectively, in 2017.

NIST compliance became a reality for our industry in January 2018; the public track review of another revision closed in August 2019, so we’ll see that revision in coming months. This and other requirements will continue to evolve and put pressure on government contractors to meet security and cybersecurity requirements.

On the other hand, finding top IT talent dropped off in 2018, with only 10% reporting it as a top-three challenge. In every other area of the survey, human capital management challenges were very apparent. Project managers can’t hire resources fast enough; project managers themselves are in high demand, as are business development reps and finance professionals. Only IT shops seem to be fully staffed.

Additional identified challenges include:

  • Implementing new software systems
  • Managing legacy systems
  • Migrating to cloud
  • Operating with a smaller budget
  • Maintaining physical infrastructure
  • Setting up new facilities
  • Mergers or acquisitions
  • ITAR compliance.

Solutions: Better Living Through Technology

A great quote from the survey sums up how companies solve some of these challenges, “Get a lot smarter on security and cyber-reporting requirements."

That seemed to be the sentiment across the board when we talked to IT leaders. Solutions include creating new security policies and procedures, re-engineering business processes, building new IT infrastructure, and outsourcing IT administration and infrastructure.

One approach merits further comment, consolidating vendors or systems. That’s directly related to security requirements. Small and medium businesses may use a handful of systems to run the business and distribute information, but larger companies can use upwards of 50 systems. Consolidation and standardizing on a couple of vendors eliminates the need to understand the nuances of multiple systems, saving time, money and resources.

Change in IT Spending

Most companies (small, medium and large based on employee size) reported an increase in IT spending from 2017 to 2018. For 2018 to 2019, this trend is expected to continue.

Responses tell us that IT departments are fully staffed and fully funded, so spending increases are squarely focused on cybersecurity requirements and reporting.

Operating expenses increased for most companies, while hardware spending increased in terms of security-related cameras and/or biometric devices, it also decreased, which is likely explained by moves to the cloud.

Most Common Expenditures

The two most common expenditures are security and authentication and replacement/updates of accounting and finance systems. Because more companies seek real-time analytics, more are investing in business intelligence. The same percentage is investing in project and portfolio management, as more government contractors see the direct relationship between effectively managing projects with information systems and financial performance.

Other expenditures include:

  • Customer relationship management
  • Email and collaboration
  • Human capital management
  • Voice and communications
  • Procurement
  • Manufacturing.

Financial Goals for Digital Transformation

In a new question this year, we asked finance leaders about their financial goals for digital transformation. Controlling costs tops the list, followed by project performance management. It’s interesting that CFOs and other finance people are getting more involved in project management and partnering with IT to leverage technology to understand, measure and report project performance management.

Optimizing human capital is also a goal. Finance leaders understand that to transform digitally, they have to do better at optimizing human capital. As previously noted, this was a big challenge in every area except IT.

Process optimization is a goal for about a fourth of respondents. Speed and accuracy are essential, especially if indefinite delivery, indefinite quantity (IDIQ) contracts become more the norm for government contractors, and we don’t see any slowdown for the future. The same goes for other transaction authority (OTA) contracts, as some non-traditional defense contractors are getting into these opportunities.

There never seems to be an end to the need for integrating systems. Additional financial considerations identified include:

  • Managing growth and leveraging new technologies
  • Cash management
  • Managing risk and compliance
  • More successful mergers and acquisitions (M&A).

Human Capital Management Trends

When we asked human capital management (HCM) leaders what trends they’re seeing in their area, 43% mentioned continuous performance management. We found that a bit surprising, since so many people view performance appraisals as passé and favor other methods.

With so many kinds of workers—temporary workers, seasonal workers, contingent workers, subcontractors—it’s no surprise that a third talk about total workforce planning as a trend. Some companies in our community have a good view of their workforce, but others don’t. When we win a contract, do we know whether we have the right bench to work on for the project, or if we need to hire resources or sub out the project? Technology that helps us make those decisions, and make them faster, is invaluable.

Also called out in Clarity is the recruiting process, specifically candidate relationship solutions. As hiring managers know, it never seems that you can fill positions fast enough. With unemployment at only 3%, it’s an employees’ market, so companies need to improve the candidate experience to attract more and better talent.

Technology enables the growing trend toward virtual workplaces and collaboration, as well as well-being solutions and HCM analytics. Finally, two forward-thinking trends to keep an eye on: Virtual reality training content becoming more important to HCM, and AI coaching.

Overall IT Trends

These trends were viewed as either very important or moderately important by respondents:

  • Big data
  • Data science
  • AI
  • Machine learning
  • Internet of Things
  • Blockchain
  • Geolocation
  • Natural language processing
  • Wearable tech.

And the Survey Says… How New Technologies Apply in the Business World

The survey says that more than a third of government contractors report using big data, data science and geolocation technologies to facilitate project management, especially to harness timesheet and expense data, and improve forecasting and risk management.

To enhance business development, and because it can be challenging to distinguish between real and fake pipeline, a good number of government contractors use AI and machine learning to identify and pursue the right contracts, predict how quickly opportunities will move through the pipeline, and determine how much pipeline they need to hit their targets.

Other technologies being employed to enhance these areas:

  • Accounting and finance
  • Business planning
  • HCM management
  • Resource management
  • Procurement
  • Manufacturing.

Growth Cybersecurity Incidents

It’s no surprise that IT departments keep security of facilities and information top of mind, and small, medium and large companies all reported an increase in cybersecurity incidents. At a conference earlier this year, a Department of Defense (DoD) rep stated that in their latest study, 61% of reported cyberattacks were at companies with fewer than 1,000 employees, so everyone in our community is vulnerable, not just larger companies.

Clarity survey respondents broke down the type of cybersecurity attacks they experienced:

  • Virus
  • Data breach
  • Denial of service/network shutdown
  • Physical breach
  • Other.

In line with the number of incidents, companies plan to increase spending on security and compliance. As you might expect, the most expensive and disruptive problems are data breaches and network shutdowns.

In answer to new questions this year, 32% reported that they don’t have a formal disaster recovery plan. Of those who do, the average post-disaster time to continuity was eight hours for companies. We’ll continue to monitor this in future surveys.

The Cloud(y) Forecast

When asked if their company has more than 50% of their apps in the cloud, 55% of small companies, 44% of medium companies and 32% of large companies replied in the affirmative. These results align with past surveys.

Companies look to the cloud to save money, have more predictable IT costs, and meet security requirements. Small businesses stand to gain the most with the cloud. Software as a service (SaaS) subscription-based pricing is very affordable, and since small companies don’t have as much capital or resources to staff IT departments, going to a cloud solution, such as Deltek's cloud options, can be achieved quickly without a large investment or cash outlay makes sense. Larger companies have more sophisticated systems and more integration needs, so it’s no surprise that only 32% have more than 50% of business applications in the cloud.

Having said all that, 48% of all companies said they will move to the cloud next year. Again, this aligns with past results.

More Survey Results

Take an in-depth look at key challenges, bright spots and future trends in relation to IT in the 10th Annual Deltek Clarity Government Contracting Industry Study Deep Dive: Information Technology webinar.

Want to explore more specific results from the Deltek Clarity Government Contracting Study? Watch the complete, in-depth webinar series available now on demand. All registrants receive a free copy of the report.