2012 is fast approaching, and with it comes big changes in the Federal IT industry. WashingtonExec is giving local executives the opportunity to share their thoughts on where they see the government contracting industry headed. Leaders of the industry were asked a series of predictions questions focused on challenging issues such as cloud computing, healthcare IT, defense and so forth.
B. Chatterjee, co-founder and CEO of CNSI gave WashingtonExec what he believes will be the most probable outcomes regarding healthcare, defense spending, M&A deals and mobility in the coming year.
1. Cut in Defense budget will have large integrators look for even smaller opportunities in IT to make their budget numbers and hence these few will be hotly contested.
2. Disposition from Supreme Court on Obama Healthcare plan will settle part of the confusion –
a. If approved – it will accelerate pace of implementation of PPACA requirements i.e. ACOs, exchanges Federal and State mandates and managed care outsourcing
b. If rejected – it will throw Healthcare industry in a tail spin to modify the current plans and try to fill the void – dollar shortfall, care of service and coverage and nations ability to deal with rising cost of healthcare to keep us competitive in global competition. The HIX (Heath Information Exchange(s)) opportunities and other Health IT initiatives will stay. HIX will be spun towards competitively procuring insurance. But there will be turmoil and the dust would need to settle before that happens.
c. Either way companies likes CNSI in healthcare will continue to build on their successes in 2011.
3. Upcoming Presidential elections –
a. Will keep the Federal lending rate (Prime rate) artificially low – to keep economy growing (or the lack thereof or more like away from recession). This will continue institutional investors interested in Private Equity investments. A fair amount of M&A deals will take place.
b. More social mandates to “fuel economy” will have nervous effect on large companies hiring and it will burden the current national debt further lessening positive outlook on economy.
4. Financial turmoil in Europe – will bring more investment dollars in US and no more talking of replacing dollar with Euro as global currency in short to medium term. This should stable dollar in world markets.
5. In sourcing trends with federal government is expected to continue creating less opportunities for “bread and butter” IT service contracts (and overall bad idea). Vendors will have to sell at higher levels of government and focus on providing value.
6. Current focus on open source software will continue to drive industry and government due to “perceived” value and savings.
7. Government contracting will have to become more agile to support the drive to place solutions the hands of customers faster and on a more limited scope basis. Meaning, the age of large, multi-year systems implementation is near the end.
8. Last but not least, more and more focus is going to shift towards mobile applications/systems and utilization. US companies will benefit from this trend.