10 hot companies to watch

Firms push forward with technical advances, business acumen

The market is thick with pronouncements from tech companies that promise to raise the bar, push the envelope and span the last mile — you supply the cliche.

Indeed, the constant churn of technologies and business models makes it difficult to distinguish helpful innovation from hype. Federal Computer Week, in this sixth installment of the hot companies list, has once again scanned the information technology horizon to identify companies positioned to have a significant impact on the government market. The list covers four key categories in the IT spectrum: planning, infrastructure, security and integration/operations.

We won't claim that the businesses cited below will deliver the next quantum leap in technology. But the companies do have the capacity to advance the market, whether through technical developments, pursuit of important government requirements or the ability to harness major distribution channels.

Another common theme: Although vision, knowledge and the ability to carry out its plans are valuable qualities, a certain amount of luck doesn't hurt.

IT planning

Companies in the IT planning category demonstrate the latter point. Officials at SecureInfo Corp., launched in 1992, have focused on developing tools to automate the process of certifying and accrediting information systems. The company was an early entrant in that nascent market, said Steve Kiser, SecureInfo's president and chief executive officer.

Today, that investment appears to be paying off because compliance has emerged as an issue for federal agencies. "The Federal Information Security Management Act [FISMA] of 2002 and certification and accreditation work has become much more serious in terms of the government's treatment of it," Kiser said.

SecureInfo offers a certification and accreditation product, RMS for Government, in addition to security services. Kiser said he's seen a spike in customer interest since March. "We've clearly had rapid growth in revenue in both our services ...and our product business," he said.

SecureInfo's products are offered across the Defense Department via the Pentagon's Enterprise Software Initiative. And Homeland Security Department officials have tapped SecureInfo for compliance products and services.

Kiser said there is greater interest in standardizing tools that provide "a consistent way of doing certification and accreditation across an organization." That's a departure, he said, from purchasing a tool focused on an individual project.

Product capability and market timing also came together for ProSight Inc.

The company once offered its portfolio management system exclusively in the commercial space, but it has found a growing constituency among government agencies pressured to make the most of their IT investments.

"What we do is extremely relevant to our federal IT customers," said John Cimral, ProSight's president and CEO. Their problems, in some sense, are no different from those of their commercial counterparts, he said, noting that managers in both sectors have to do more with less.

Despite the common bond, ProSight officials have delivered government-specific functionality beyond the capabilities of their cornerstone product, ProSight Portfolios.

For example, ProSight offers Fast Track for Capital Planning and Investment Control, which helps agencies prepare Exhibit 300 submissions for the Office of Management and Budget. A Fast Track for Federal Enterprise Architecture module debuted earlier this year. And company officials will soon introduce a Fast Track product targeting FISMA compliance.

The philosophy, Cimral said, is to develop software "specific to the way [agencies] do business around portfolio management." The approach has attracted customers including the Food and Drug Administration, DHS, the Treasury Department and the Department of Veterans Affairs.

The federal enterprise architecture mandate, meanwhile, has energized another aspect of IT planning: enterprise modeling. Tools that generate visual models of an organization's business processes have become central to a number of enterprise architecture efforts.

Popkin Software and Systems Inc. has capitalized on the trend and has landed key customers such as DHS. Officials at the department's Resource Management Transformation Office use Popkin's System Architect tool for architectural development. That office is steering the department's Electronically Managed Enterprise Resources for Government Efficiency and Effectiveness procurement, a massive enterprise resource management project.

Popkin does business with the military, too. Officials at the Air Force's Enterprise Architecture Integration Council have designated System Architect as their preferred enterprise architecture tool. In addition, Popkin collaborated with DOD, Lockheed Martin Corp. and Mitre Corp. on the Activity Based Methodology, said Jan Popkin, the company's CEO.

The Activity Based Methodology automates projects that employ the DOD Architecture Framework, which is designed to ensure that the military's architectural descriptions transcend organizational and mission boundaries. The methodology, Popkin said, will allow the Pentagon to use the architecture framework in a "more streamlined fashion and get more productivity out of it."

Amid this activity, Popkin has adopted emerging business process languages. System Architect supports Business Process Modeling Notation, which DHS officials use, and most recently, Business Process Execution Language.

Infrastructure

In infrastructure, innovation sometimes stems from the integration of existing technologies rather than the creation of new ones. That's the case with Segovia Inc., which has taken advantage of the expertise of numerous partners to rapidly build its core business of providing IP networks and services.

Segovia officials tap such allies as Cisco Systems Inc., for the company's routers, switches and voice-over-IP phones, and iDirect Technologies Inc., for its broadband very small-aperture terminal hubs. Other partners include Eyak Technology LLC, GTSI Corp. and Sprint. "We work through partners, and we'll keep it that way," said Kirby Farrell, Segovia's executive vice president of sales and marketing.

As a result, Segovia officials have created a global IP satellite network. The military is the primary customer of the company's services. Among other defense projects, the company provides high-speed connectivity to Internet caf€s set up for soldiers in Iraq.

But some defense customers aren't content with subscribing to a service: Officials at the Army's logistics arm wanted their own IP satellite network and hired Segovia to build it.

The Combat Service Support-Satellite Communications system represents the 2-year-old company's most strategic win, Farrell said. The system has found a home in Iraq, where it is used to order and deliver supplies. Segovia officials have created two levels of customer service to support such remote customers.

Other firms are pushing core products into new areas to address federal needs. American Power Conversion Corp., best known for uninterruptible power supplies, has expanded into cooling systems and, most recently, power generators.

Cooling systems are particularly important for agencies pursuing high-density rack environments, said Bill Bockoven, regional manager for the government enterprise segment at APC. He cited the case of the Agency for Healthcare Research and Quality, which recently expanded its existing APC power management system to include cooling. The agency's new blade server environment could potentially draw 7 to 10 kilowatts per rack vs. 1 to 1.5 kilowatts before the upgrade.

The government's creation of continuity of operations (COOP) sites is propelling the company's federal sales, said Chris Hanley, APC's director of government and education sales. COOP sites are using uninterruptible power supplies to shield against natural and man-made disasters.

"That's our largest growth prospect going forward," Hanley said. APC's direct sales force, which manages relations with customers, has grown 100 percent annually. The company's channel organization is growing rapidly as well.

However, just achieving name recognition has been a challenge for some companies.

Planar Systems Inc. was barely known in the mainstream federal IT market a year ago. But the company's manufacturing, product distribution and warranty strategies have quickly put the company on the map.

The flat-panel display maker's first step was to cultivate a new manufacturing partner in South Korea to comply with the Trade Agreements Act. That move paved the way for Planar's federal channel push, in which it has signed deals with resellers CDW Government Inc. and Insight, among others. The company offered another point of differentiation: a three-year warranty on all flat-panel desktop monitors and the shipment of replacement units via two-day air freight.

But desktop displays aren't the company's only presence in the federal market. The company has long sold custom displays to the military. Planar officials also have found a role among government medical facilities, which purchase displays for medical imaging and other applications.

Planar's federal pursuit has placed the company in a top growth niche for displays, said Erick Petersen, vice president and general manager of Planar's Commercial Business Unit. He expects the government market for flat-panel displays to grow in the 20 percent to 25 percent range per year.

Security

Not surprisingly, the government market remains a strong sector for security-related products.

Officials at Lumeta Corp., which markets a network intelligence tool, said their federal business has surged in 2004. For the first half of the year, the company grew its federal business by 130 percent compared to the same period last year.

David Arbeitel, Lumeta's senior vice president of strategic development, said the company's IPsonar product suite is popular governmentwide. The company's customers include the Federal Aviation Administration, NASA, the VA and DOD.

IPsonar lets organizations assess network vulnerability by discovering what devices are on an enterprise network and how that network connects to other networks. Company officials said the product can unearth unauthorized connections and identify perimeter leaks. The goal is to "illuminate what you don't know about," Arbeitel said.

IPsonar's network sweep also helps customers place and configure their security systems, such as intrusion prevention, more effectively, he said. "They can gather the intelligence they need to reconfigure their defense strategies," he added.

Roving Planet Inc., meanwhile, seeks to rein in rapidly expanding wireless local-area networks. The company's WLAN management platform provides authentication, virus protection and monitoring. Centralized management assists resource-constrained IT departments that must handle wireless responsibilities, company officials said.

Federal IT managers, like their commercial counterparts, are responsible for solving wireless management issues "in a way that is cost-effective and scales well," said Harry Simpson, Roving Planet's senior vice president of marketing and business development.

In addition to controlling wireless access, Roving Planet's products also block vulnerable machines from entering the network until they are deemed virus-free. A Quarantine Zone feature restricts users with inadequate virus protection until they install necessary patches.

Roving Planet is only months old in the federal market but already has pilot projects under way. The company teams with Apptis Inc., GTSI and Northrop Grumman IT. An alliance with Fortress Technologies Inc. adds wireless encryption for compliance with Federal Information Processing Standard 140-2. Beyond the federal market, Roving Planet officials have their WLAN security management products installed at a dozen airports.

Transportation is also a target market for Cross Match Technologies Inc., founded in 1996 as a classic three-engineers-in-a-garage start-up. Today, the company is a working on large-scale deployments of biometric security in airports and at ship ports.

Cross Match officials have supplied more than 3,000 of their digital fingerprint scanners for DHS' U.S. Visitor and Immigrant Status Indicator System (US-VISIT) program. Scanners used for the entry portion of US-VISIT went live earlier this year. Cross Match officials are also involved in the system's exit component.

Tim Murray, Cross Match executive vice president and chief operations officer, said the US-VISIT installation is "the largest application of biometric technology in the world."

Other Cross Match customers include the Army, which uses the company's scanners in Iraq, and the FBI, which has deployed scanners in Afghanistan.

Cross Match officials aim to develop a small scanner that can maintain the forensic quality of larger systems. The company's proof-of-concept ceramic sensor is designed to capture images at the FBI's 500 dots per inch standard and also collect information on blood flow and bone mass, said Paul Kayatta, Cross Match's executive vice president of worldwide sales and marketing. The sensor can be embedded in credit cards or cell phones.

Integration/Operational support

DigitalNet Inc.'s focus on government IT trends has helped place the company on a high-growth track.

Ken Bajaj, DigitalNet's CEO, founded the company in 2001. He expects annual top-line growth in the 20 percent to 25 percent range, through ongoing growth and acquisitions.

DigitalNet's strategic consulting services business pursues federal hot topics such as enterprise architecture, IT capital planning, and, most recently, project management. Debra Stouffer, vice president of strategic consulting, said the company has snared 45 consulting contracts this year.

Information assurance is another specialty in demand. DigitalNet officials have enlarged their practice to 300 employees and 33 service-related contracts, said Dennis Lamm, the company's director of information assurance services. DigitalNet's managed network services business, meanwhile, capitalizes on the outsourcing trend. Bajaj, citing Input figures, said network outsourcing is growing at a rate of 8.4 percent.

As this issue went to press, BAE Systems officials decided to acquire DigitalNet. The deal is expected to be completed later this year.

Bajaj helped launch integrator I-Net Inc. in the late 1980s. "There's tougher competition this time around in the government space," he said, adding that differentiation is critical.

The companies on this year's list would hardly disagree.

Moore is a freelance writer based in Syracuse, N.Y.

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