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JAMES KANE CEO Federal Sources, Inc. Partnering for Solutions A Market Perspective. James Kane [email protected] April 10, 2002. Executive Summary. The federal market has changed dramatically in recent years Government IT buying is shifting from “Systems” to “Solutions”

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JAMES KANE CEO Federal Sources, Inc.

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James kane ceo federal sources inc

JAMES KANE

CEO

Federal Sources, Inc.


Partnering for solutions a market perspective

Partnering for Solutions

A Market Perspective

James Kane

[email protected]

April 10, 2002


Executive summary

Executive Summary

The federal market has changed dramatically in recent years

Government IT buying is shifting from “Systems” to “Solutions”

Successful solutions providers leverage the knowledge and expertise of their partners

Solutions are in season


James kane ceo federal sources inc

Shattered Misconceptions

The proposal process is way too long

  • You can’t make any money from the government

Chasing one RFP can drain your marketing budget for the year

Government only buys from vendors in the DC Metro area

I sell to a specific vertical market, not to the government

I wouldn’t even know where to begin my Federal strategy

  • The government requires a separate set of accounting books for contractors

Only local DC companies know about RFP release dates

As a small business, we can’t afford to stretch into new markets

Contractors are subject to intense audits

Now more than ever before, the Federal government is buying in a commercial-like manner


Policy and legislation historical it market drivers

Policy and Legislation - Historical IT Market Drivers

1966

1974

1990

1993

1994

1994

Freedom of Information Act (FOIA)

Privacy Act (PA)

Chief Financial Officers (CFO) Act

Government Performance and Results Act (GPRA)

Federal Acquisition Streamlining Act (FASA)

Government Management Reform Act

1995

1996

1996

1996

1998

1998

Paperwork Reduction Act

Federal Financial Management Improvement Act (FMFIA)

Government Paperwork Elimination Act (GPEA)

Federal Activities Inventory Reform Act (FAIR)

Federal Acquisition Reform Act (FARA)

Information Technology Mgmt Reform Act (ITMRA)

Legislation created the environment for GWAC contracts, the expansion of GSA Schedules, and the shift from technology selling to solutions buying.


New drivers within the federal it market

New Drivers within the Federal IT Market

President’s agenda is driving a solutions approach

  • More centralized approach to IT management

  • Corporate approach to the business of government

    Guided by the President’s Management Agenda, OMB is demanding that:

  • Enterprise architecture solutions and solid business cases be demonstrated prior to project funding

  • Any proposed IT solution must match and meet agencies‘ business case

    Shift in leadership from the CIO Council to OMB

  • Agency leaders are business people first

The combination of the Administration’s policy, and projected IT spending will drive demand for IT-based business solutions.


Gsa schedule 70 sales

GSA Schedule 70 Sales

  • Schedule 70 sales currently account for over 60% of sales using federal IDIQ/GWAC vehicles

  • Professional services projected to account for 2/3 of IT Schedule sales

Sources: FSI analysis; GFY 2001 FPDC data;

GSA data sales projections as of early 2002


Traditional systems model

Traditional Consulting

Traditional Systems Development

Develop

Strategy

Identify

Needs

Assess

Processes

Define Requirements

Determine Architecture

Develop and Implement

Manage and Operate

  • Government had the answer

  • Many discrete buys

  • Islands of stove-piped information

Traditional Systems Model

The traditional approach…


Solutions model

Continuous

Enhancement

Solutions Model

  • Government states the problem and the desired result

  • Industry creates the solution

  • Continuous buying and enhancements

  • Enterprise and integrated focus

This model is facilitated by new procurement methods and contracting vehicles; success requires flexibility and strong partnerships


Anticipated changes in it buying

Anticipated Changes in IT Buying

FSI analysis shows that customers will shift from stand-alone consulting and systems development contracts to procurements that integrate both sets of skills

Source: FSI analysis of GFY2000 and GF2001 empirical procurement data and market trends.


A new approach to the customer

How many FTEs will this project take?

How much $$ will this project bring us?

What will it take to build the right solution for the business of the customer?

A New Approach to the Customer

  • Think of an opportunity or project and answer in your mind the question: “How big is the project?”

Successful companies will be the ones who answer in terms of customer functions rather than merely dollars or person years


A contemporary approach to business

A Contemporary Approach to Business

Success in this new market environment requires a shift from a focus that was marked by…

  • Prime contractor account control

  • Selling technology and systems

  • Prime-sub vendors relationships

    … to a focus that is marked by

  • Account team that can cover and anticipate customer needs

  • Selling solutions leverages partners’ domain knowledge and functional expertise

  • Trusted partner business relationships

Strong customer relationships and industry partnerships are key ingredients for successful solutions selling


Partnership model

Partnership Model

Illustrative Partnership Positioning Matrix

High

  • Strong partnerships are the key to success

  • Where is your company positioned?

  • Where are your key partners?

  • How does your solutions strategy leverage your partnerships?

Battelle

Total

Solutions

Booz

Allen

MITRE

Accen-

ture

KPMG

IBM

Strength in Consulting

EDS

Oracle

Lockheed

Unisys

Micro-

Soft

Source: FSI analysis

Low

High

Strength in Systems Development


The bottom line

The Bottom Line

In-depth knowledge of customer processes

Technology solutions to problems

Key discriminators

Proven past performance in solutions

Credentials

Novice solutions provider

Disjointed solutions marketing

Brand Equity

Coherent, consistent solutions marketing

Synergistic solutions offerings

Solutions Capabilities

“One-off” solutions

Partnerships---the key to successful solutions selling


James kane ceo federal sources inc

Thank You

James A. Kane, Ph.D.

President & CEO

8400 Westpark Drive

McLean, Virginia 22102

(703) 610-8700

[email protected]


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