Hot, hot, hot

A looming federal workforce shortage and pressure from the White House and Congress to move government business online are creating the market that will give rise to the next hot federal contractors.

A looming federal workforce shortage and pressure from the White House and

Congress to move government business online are creating the market that

will give rise to the next hot federal contractors.

Although a handful of large manufacturing, software and service companies

still dominate the federal information technology market, the constantly

evolving nature of the field and incentives for innovation ensure that

each year new businesses will emerge as the important ones to watch. What

follows is a list of companies that promise to become significant players

in the federal market as identified by key integrators, resellers and

knowledgeable federal IT industry experts.If there is a common thread in this years list, it is that these companies

offer technology and services to help agencies move their operations online

and cope with the knowledge gap that will be created by the mass exodus

of retiring federal employees.

"E-government, after being really slow, now seems poised for some movement,"

said Olga Grkavac, executive vice president of the Information Technology

Association of Americas Enterprise Solutions Division. "With the elections

and the new administration, its just going to pop. The new administration,

whichever one it is, is going to want more online services. Theyre going

to be appalled at what isnt being done electronically."

E-government, of course, is much more than setting up a stand-alone

Web site to allow citizens to pay taxes. The ultimate objective is to create

an end-to-end electronic system to accept payments and federal forms, and

have those transactions automatically flow into back-end legacy systems

without any intervention from agency employees.

The old stovepiped agency systems are hidden from the public and even

from other government agencies. The next order of business is for computers

supporting e-government to be turned inside out so that they face constituents

and other agencies. Such systems will create more opportunities for sensitive

data to be exposed to the outside world, which will create markets for new

IT security products.

Web sites are just one component of the technology needed to support

e-government. New applications must tie together supporting databases and

offer a platform for electronic services. Like the call centers that have

cropped up to answer citizen inquiries in the paper-based world, "virtual

customer service" is going to become a big priority for government agencies,

experts say.

At this point, federal IT experts say, its too early to make predictions

about which companies will corner the burgeoning market.

"Its risky because its really still the Wild West," Grkavac said.

"Some of the agencies are looking to do it themselves. Its not clear whos

going to make money on it."

Nevertheless, e-government possibilities are luring many companies eager

to build on their commercial successes. For example, BroadVision Inc., a

company that offers an e-commerce software platform, is building a 25,000-square-foot

government sales office in McLean, Va., and beefing up its sales force there.

The company, which is tracking 40 federal opportunities, has already snagged

two high-profile projects. The U.S. Postal Service is using BroadVisions

platform for its usps.com site, and the General Services Administration

is using BroadVision to power its GSA Advantage online ordering system.

Dennis Drinkard, business development manager for BroadVisions federal

division, said federal agencies are drawn to the companys platform because

of its proven scalability for customers such as Sears, Roebuck & Co.

and The Home Depot Inc. Also, the softwares personalization capabilities

allow users to customize a site based on their preferences and potential

interests. For example, the Postal Service can present one set of options

to small businesses that are interested in buying postage and another to

USPS employees wanting to check on benefi

Joseph Kampf, president and

chief executive officer of Anteon Corp., which provides innovative technology

solutions to clients worldwide, said BroadVisions platform is unique because

it spans various data sources to collect all the information and share it

with multiple constituent groups via one portal.

BroadVision has finalized partnerships with PricewaterhouseCoopers,

KPMG International and Computer Sciences Corp. to target the federal market.

Knowledge Management

Knowledge management is quickly moving to the forefront of many agency

IT agendas. Those that have already transitioned paper documents and information

sources to the World Wide Web are finding they need knowledge management

tools to locate and link that information.

For example, the CIA and other intelligence agencies want to use knowledge

management to improve profiling and to provide agents with comprehensive

information, said French Caldwell, research director at the Gartner Group

Inc.

In addition, knowledge management will be essential to helping agencies

survive the potentially crippling effects of the dwindling federal workforce,

he said. Having computers search for and combine needed information, instead

of relying on employees for that task, will help ease the burden of a labor

shortage.

"Its pretty much on the radar screen of all the agencies," Caldwell

said. "We are really on the edge of this workforce crisis in the federal

government."

Approximately 40 percent of all agencies have a chief knowledge officer

or equivalent position in place to handle knowledge management concerns.

Arthur Andersen is poised to take advantage of this market. The company

is moving aggressively to tap both the e-government and workforce applications

of knowledge management, Caldwell said, and has finalized an agreement to

work with govWorks Inc. to provide connectivity to agencies that want to

support transactions via govWorks portals. Arthur Andersen is working

with the Health Care Financing Administration and the Department of Housing

and Urban Development to develop the knowledge base for Web applications

that will eventually be offered via the Internet.

"Were creating a Web-enabled database capability so that you will be

able to access and interact with your [Medicare] client information through

the Web," said Ira Goldstein, Arthur Andersens worldwide director for government

services. "When Im ready for Medicare, hopefully I can register and get

my information from the Arthur Andersen knowledge base."

Customer Service

Putting the technology in place along with the databases that have

the requisite supporting information is just the first step. Once a Web

site is up, agencies must be ready to handle citizen inquiries about online

applications.

Mark Struckman, director of e-government programs at the Center for

Digital Government in Folsom, Calif., said customer relationship management

(CRM) technology is going to be a big area of spending for the federal government

during the next 18 months.

"You could set up a single call center to handle all the calls that

come in because the data is right there in the CRM system," Struckman said.

"We could have one place where all questions are answered."

Siebel Systems Inc. has "made the most noise" in the government CRM

market because it has set up a dedicated government practice, Struckman

said. In January, Siebel also announced a partnership with American Management

Systems Inc. to target the government market.

Anteons Kampf predicted that Siebel will extend its successful track

record in commercial CRM to the government market.

Siebels ePublic Sector product is a call center and customer service

solution designed to integrate all critical customer service functions,

including planning, assessment and program execution. The product can detail

and track citizen and other constituent profiles and problems and automatically

assign the most qualified agent to handle requests. It also features built-in

telephone integration.

Kana Communications Inc. is also making a play for the federal CRM market.

With SRA International Inc., the company has been meeting with the Internal

Revenue Service and the Defense Department, said Michael Fox, vice president

and director of corporate development at SRA.

Because agencies are inundated with e-mail, they are searching for a

more effective response to such inquiries. Kana offers automatic routing

and automatic response to agencies e-mail messages, which saves employees

from repeatedly performing mundane tasks. For example, Fox said, if a potential

recruit visiting a Navy Web site has a routine question, he or she can send

an e-mail message to the recruiting office and the system will automatically

respond.

Essentially, Kana moves data from traditional call centers to the Web,

explained David Fowler, the companys senior vice president of worldwide

marketing. This enables organizations to learn about customers and offer

them useful information without the customers having to ask for it. For

example, a citizen could request a tax form by interacting with a "virtual

agent" on the IRS Web site. The following year, the site could automatically

send the same form to the user, along with a reminder about deadlines.

"You take something like Social Security, for example," Fowler said.

"I should be able to go online and see what my benefits will be when I retire.

[Kana technology] takes the intelligence of the agents and puts it on the

system itself."

Online Procurement

Although e-government is often viewed in terms of service to citizens,

it also has significant implications for internal agency operations. Many

agencies are eyeing online procurement technology as a way to lower the

costs of goods and services and to streamline how they conduct business.

One company that industry experts and agencies point to is FedBid.com, an

online reverse auction firm geared toward federal government buyers.

FedBid allows government credit card holders to register online to purchase

IT products. Buyers detail requirements such as price, past performance

records or other procurement details such as a desire to buy from a small

or minority-owned business. Vendors nationwide compete for the sale, bidding

their prices down to win.

"We also look for other buyers, then allow you to pool to create volume

and then send the requests to vendors," said Phillip Fuster, president and

CEO of FedBid.com. "This is instant feedback with real-time pricing, real-time

feature sets. Whoever has the best bid in the end wins."

FedBid has 15,000 federal buyers registered to use the system, which

in June closed its first auction with 34 bidders for a scanner. The system

also provides buyers with detailed records of credit card purchases that

can be automatically fed into agency accounting systems. FedBid estimates

it will have about 25,000 federal buyers and 400 vendors registered by the

end of this year.

Securing E-Government

Network security, now safely out of the shadow of the Year 2000 problem,

is likely to be high on most federal chief information officers agendas

for some time to come. Two companies that experts believe will attract a

lot of agency attention are smart-card vendor Spyrus and @stake Inc., a

newly established professional services group.

Al Jackson, senior vice president of business development at BTG Inc.,

an information systems and technical services firm, said Spyrus Rosetta

smart card earned it one of the first certifications under the governments

Federal Information Processing Standard 140-1. That certification is required

when agencies buy products that encrypt data, authenticate users identities

or manage digital signatures.

The federal government market could support as many as 1 billion smart

cards. "Now we have some requirements that are being levied from Congress

on down, saying federal employees will be issued the smart card as an identification

badge," Jackson said. "Then you use the same thing to log on to your PC

to prove you are who you say you are."

Spyrus, which has participated in a public-key infrastructure interoperability

test between the U.S. and Canadian governments, specializes in smart card-driven

PKI solutions. The company also has a product that enables government Netscape

users to secure Web transactions with software, smart card or PC card encryption

tokens.

Another security firm, @stake, is forging relationships for greater

access to the federal market. The company is composed of an assortment of

high-profile executives and "gray hat" hackers who use their expertise to

advise clients on system vulnerabilities. The firm offers network security

planning and implementation services as well as incident response help and

a security subscription service.

At the helm are former executives from Compaq Computer Corp., Digital

Equipment Corp. and Forrester Research, as well as members of L0pht, a hacker

think tank. L0pht members Mudge, Dildog and Space Rogue have testified before

the Senate on security short-comings, claiming they could cripple the Internet

in 30 minutes. Its too early to gauge federal agency response to their

comments, said SRAs Fox.

He described @stake as "the best in the business," noting that SRA

and @stake have teamed up for several civilian bids, including one for NASA.

Remote Access

Other companies are focused on providing innovative technology to meet

more traditional government needs. For example, GTSI Corp. has been eyeing

product start-ups for remote access solutions, said Joel Lipkin, the companys

senior vice president of customer sales and support.

Lipkin said Tachyon Inc. aims to tap the government market with a system

that provides "speed to go" high-performance two-way Internet access via

satellite. The system offers access to public and private IP-based networks

at speeds of up to 2 megabits/sec. For example, when a ship ties up to shore

and needs a high-speed connection, Lipkin said, "you basically put their

systems on board the ship while its docked, and you have T-1-and-above

connectivity."

John Koehler, Tachyons chairman and CEO, said that with a small two-way

satellite terminal that links to a box the size of a PC, users can get "speed

anywhere." He said users are moving their functions to local-area networks

and IP from older, less efficient protocols, adding, "The fastest Ive seen

it done [linking LAN via satellite] is an hour. For locations involving

working with a building, that typically takes one person half a day."

Tachyon has teamed with GTSI to target the federal government market

and has been meeting with several DOD agencies. The company plans to announce

contracts with civilian agencies soon, Koehler said.

Harreld is a freelance writer based in Cary, N.C.

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