CTA looks beyond Y2K
- By Margret Johnston
- Apr 18, 1999
It is no secret that there is a looming business problem for federal systems integrators, whose business grew considerably thanks to Year 2000 remediation projects. The question they face is what to do for an encore, assuming they have done a good enough job to seek repeat business.
Officials at Computer Technology Associates Inc., a 20-year-old Bethesda, Md., systems integrator that attributed about 42 percent of its $117 million in revenue last year to Year 2000 projects, say the company expects at least a few curtain calls.
CTA's strategy going into the new millennium is driven by the need to find new business to replace Year 2000 remediation work, said Mark Phillips, executive vice president of CTA. But the company is "not at all concerned about falling off the cliff this coming Jan. 1," he said. Year 2000 work gave CTA "an eagle's-eye view of the architecture the clients have," he said.
The company hopes that this intimate familiarity, coupled with its reputation as a test-driven systems integrator, can be parlayed into contracts for post-Year 2000 technology investment. Phillips said CTA is looking at two specific opportunities: World Wide Web-enabling legacy systems and enterprise resource planning systems.
Web enabling—providing a Web-based interface to existing applications—could benefit agencies by allowing them to provide customers and suppliers with access to information on an internal agency system through a secure Web site. ERP applications—which automate financial management, human resources management and other core business functions—would enable agencies to coordinate and efficiently move information throughout their organizations, especially in widely dispersed organizations.
CTA cannot claim that its move into Year 2000 remediation was part of a grand plan, Phillips said. He might wish it were true, but as he recalls, it all started at the Department of Veterans Affairs' Austin Automation Center, in Texas.
VA engineers realized early in the 1990s that every line of code running their mainframes would have to be reviewed, said Paul Hansen, chief of resources management at the AAC. But nobody knew how many date occurrences there were, and therefore, contractors did not have an effective means to bid.
CTA engineers, in cooperation with VA engineers, developed methodologies to do sampling that helped determine the scope of the problem, Hansen said.
"This gave us a better estimate of how many work hours would be required," Hansen said. Though VA engineers were responsible for converting the majority of the AAC's applications, Hansen credits the sampling method for saving time and effort.
This effort also gave CTA a base on which to build its Year 2000 offering. In particular, the company saw an opportunity to combine that experience with work on embedded systems, an area of expertise CTA gained while working for the Navy's China Lake, Calif., research facility, Phillips said.
CTA recognized that fixing embedded systems presented another opportunity for Year 2000 work, especially given the surprisingly small number of vendors specializing in that area, he added. "That was an insight," he said. "But I don't know if we would have gotten into Y2K if not for the VA."
Last year, about half of CTA's revenue came from federal contracts, including a high-profile engagement at the General Services Administration's Federal Supply Service. GSA is working with CTA to overhaul FSS' 5-year-old online purchasing site, GSA Advantage. CTA held the original contract to design the site.
The FBI, the Federal Aviation Administration, the Air Force and the Army are other federal organizations that have contracted with CTA.
William Loomis, an industry analyst at Legg Mason Inc., said Web enablement projects like GSA Advantage are a hot area among IT services companies. He also said repeat business from customers that needed help fixing their Year 2000 problems is high—as much as 80 percent in the government market—if the vendor did a good job.
The key for CTA will be whether it booked business with agencies that have needs beyond Year 2000 that fit CTA's capabilities, Loomis said.
Some companies have done it, he said, adding that those hurt the worst tend to be firms founded only to tackle Year 2000 projects, which is not the case with CTA.
John Allen, vice president of Quarterdeck Investment Partners Inc., noted that CTA's attempt to reposition itself coincides with concern on Wall Street about the ability of companies to convert their Year 2000 business to other sustainable business.
"Past performance is kind of the government buzzword in the new contracting environment," Allen said. "But past performance is only one element. The company has to have the ability to cross-sell aggressively. They actually have to demonstrate the ability to convert those relationships" with government agencies.
At a Glance
Computer Technology Associates Inc.Headquarters: Bethesda, Md.CEO: Tom VelezFounded: 1979Number of U.S. offices: 15Number of employees: 750 full-time IT professionals (excluding support staff)1998 revenue: $117 million1998 net income: $0.9 millionCurrent federal customers: GSA, the FBI, the FAA, the Air Force, the Army Materiel Command, the VA