February 22, 2002
Tens of billions of dollars each year flow from the U.S. Treasury into the coffers of U.S. businesses that furnish goods and services to the federal government. It's as American as apple pie. But in the coming months, the slices of pie may get bigger for some IT contractors--if they can deliver the innovative services the government will demand for the war on terrorism.
The government plans to spend the bulk of its $52 billion IT budget for fiscal year 2003 on securing computer systems and networks from terrorist attacks, creating systems to share homeland-and national-security data among government agencies, and initiating other information-driven programs to assure the safety of Americans. Major IT consultants and integrators say the homeland-security practices they've recently created can help the government reach its goals, because they adapt existing products and services to new uses and partner with suppliers that offer bleeding-edge technology. When EDS decided last month to integrate and coordinate homeland-security services, it tapped one-time Pentagon CIO and retired Army Maj. Gen. Robert Nabors, who joined the consulting firm last October as VP of enterprise solutions for its U.S. government solution business. In his job, Nabors strategizes about how EDS's offerings--such as smart-card technology, biometrics, and secure and interoperable networks--can be enhanced to suit the needs of homeland security, and what outside contractors it could partner with to bring their expertise to a project. "We feel we've got important, solid offerings to help the federal government," says Nabors, who adds that the firm's flexibility in working with a wide range of partners could trigger innovative offerings for government clients. Innovation will be required, said Mark Forman, associate director of the Office of Management and Budget for IT and E-government and the executive branch's de facto CIO, at a briefing earlier this month. Addressing IT contractors, Forman said, "You may not be doing the same thing you were doing last year, because somebody else does it a little better. We'll ask you not to give up on servicing the federal government, but come back with an idea to do it better or do something else better." The government's desire to stay ahead when it comes to security is understandable, IT consulting firm CACI International Inc. says. "With the asymmetric aspect of this war, with conniving, cunning, and scheming enemies, we must take a much different approach," CACI VP Jody Brown says. "High-end IT tools are being brought up to deal with the unexpected nature of the attacks." Brown wouldn't provide details, citing national-security concerns. However, she says CACI is employing its expertise in artificial intelligence, along with data warehousing and data mining, to provide federal agencies with a homeland-security solution. Collecting diverse expertise into new services is merely good customer-relationship management in the broadest sense. "That's the whole idea of being customer centric," says marketing professor Roland Rust, director of the Center for E-Service at the University of Maryland's Robert H. Smith School of Business. "The big customer is government and what they need is homeland security. These technology companies will try to up-sell and cross-sell to existing customers." These homeland-security practices aren't designed only to procure lucrative contracts with federal agencies but to capture untold billions of dollars that state, local, and foreign governments, as well as private businesses, will spend on homeland-security projects. The money will be flowing from all directions, not just Washington. In security software alone, Dataquest projects total worldwide spending to reach $4.3 billion this calendar year, up 18% from last year as heightened security concerns brought on by the Sept. 11 attacks motivate governments and businesses to shield themselves from terrorists. International Data Corp. analysts see the entire U.S. market for managed-security services escalating to $2.2 billion by 2005, up from $720 million two years ago. That's an annual growth rate of 25%. But the services the government and others seek from IT consultants and vendors go well beyond security. The Office of Management and Budget's Forman specifically called on private companies to furnish products and services on knowledge management, process integration, supply-chain management, training, and information sharing. The IT vendor community is listening. Since Sept. 11, the Office of Homeland Security and hundreds of agencies at all levels of government have been inundated with homeland-security products from IT consultants, integrators, and vendors. "It seems that every technology vendor has a solution on homeland security," says Steve Rohleder, managing partner for Accenture's USA government practices. At times, government agencies are the ones that call on the technology consultants. Take, for instance, KPMG Consulting, which helped Pennsylvania implement its Justice Network, or JNet, which employs Internet technology to link computer systems of state and local law-enforcement and public-safety agencies and the FBI. Fourteen states have expressed an interest in JNet, including nine since Sept. 11, says Jeanette Gang, KPMG Consulting's managing director for state and local government. Pennsylvania didn't limit its outsourcers to big names. It also used Tata Consultancy Services and Cross Current Corp., a software developer. The result: a timely network that can serve as a model for post-Sept. 11 interagency collaboration. It's no coincidence that JNet is seen as a model for a network to let federal law-enforcement, defense, and intelligence agencies collaborate--a key need following the terrorist attacks. Homeland-security director Tom Ridge was Pennsylvania's governor when the idea of JNet was born.
Pennsylvania worked with KPMG Consulting to develop JNet, which links state and local law-enforcement agencies and the FBI, JNet executive director Rosenberg says. "JNet wasn't built to fight terrorism, but clearly the network can be used to help do this," because it can provide lots of agencies with timely information about suspected terrorists, says Linda Rosenberg, Pennsylvania's executive director of JNet. Of the network's 3,200 users, 1,411 joined after Sept. 12. Although the state is responsible for determining the future direction of JNet, KPMG Consulting has been an important partner in following through on Pennsylvania's plans. "KPMG Consulting is critical to managing JNet and supporting our delivery of new applications that will help us fight terrorism," she says. Rosenberg hasn't contracted for any specific homeland-security projects with KPMG Consulting since Sept. 11 but says the service provider has been flexible following cuts to JNet's budget. While President Bush's budget for fiscal 2003 holds enticing promises for IT integrators and consultants, Rosenberg says JNet's budget was cut by 2%, more than $1 million, in October for the rest of the state's fiscal year, which ends in June. The budget cut was part of the overall budget restructuring required by the lagging economy. KPMG Consulting's response was to extend the contract of four consultants--two infrastructure-support staffers, one application tester, and one public-relations person--through the end of Pennsylvania's fiscal year without asking for additional payment. Five years ago, many of the same companies that are launching homeland-security units established offerings to help companies fix the year 2000 date problem. These companies didn't create new skills but redefined and repackaged existing ones for innovative offerings to meet clients' needs. "The big difference between Y2K and homeland security is that homeland security won't stop when Jan. 1 comes," says Ed Hogan, VP at Unisys Corp.'s global public-sector business. "It will go on forever." Unisys is working on a homeland-security project with Florida's Department of Motor Vehicles. In the late 1990s, the company helped the state upgrade computer systems to issue drivers' licenses. Last month, Florida authorities instituted a program to check the validity of the residency status of foreign nationals applying for a driver's license so that the state doesn't accidentally issue licenses to foreign nationals who shouldn't be in the United States. As part of that program, Florida is implementing an IT-based system that requires foreign nationals to submit their passports, visas, and other forms of identification before they can be issued a driver's license. Using off-the-shelf workflow and imaging technology, the system will scan the documents' images and digitize them at local Department of Motor Vehicles offices and then transmit them over a state network to Tallahassee, where they'll be analyzed. "We're increasing the focus on things we already do," Unisys' Hogan says. "It's not like we're getting into a new occupation or new line of work. It's just more of an emphasis on certain capabilities. As the money shifts, priorities change."--with Larry Greenemeier and John Rendleman
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