10 hot companies to watch

Although it might be a stretch to say that the Sept. 11 terrorist attacks changed everything, they certainly directed and focused many of the programs and management reforms that were already happening in government information technology. Security, information sharing, systems integration and first-responder solutions that use wireless technologies are now high-order items.

At the same time, the dollars that were shaken loose from the federal budget to pay for homeland security have attracted a flood of technology companies stung by the dismal state of the commercial market. Federal contractors and integrators have been handling an unprecedented number of pitches from companies wanting to fit their technology to government needs.

GTSI Corp., for example, has had close to 600 such requests in the year since the attacks and formed a new emerging growth technologies unit in January just to handle them. Officials have since whittled that number down to about 50 that they think could be "incubated" and used in the federal marketplace.

Meanwhile, agencies are finally reacting to pressure and speeding up procurements to take advantage of rapidly developing technologies in the commercial sector and to provide the best solutions for homeland security. Although that has opened the door to more innovative technologies, it has also emphasized the importance of tried and true technologies because agencies have a lot less time for evaluation.

Companies that don't have a background in government IT will probably need the support of a company such as GTSI to succeed in the current market.

"A lot of the commercial companies that have come into the government market expecting to make hay will be disappointed," said Paul Brubaker, chief executive officer of Aquilent Inc. "You definitely need that domain expertise and knowledge of the culture and players at the agencies."

The New and the Familiar
This year's list of the 10 hottest companies to watch is an intriguing mix of familiar names and ones that are new to the government marketplace.

In the security arena, for example, Symantec Corp. is a recognized player for its antivirus products. But observers see the company making an energetic play for the enterprisewide focus on security that is becoming the norm in government circles. Symantec recently purchased three smaller companies — Riptech Inc., Recourse Technologies Inc. and SecurityFocus — that officials believe will give the company an edge on that score.

"Since the [Sept. 11] attacks, there's been a much greater interest in protecting much further down into the network, even down to putting firewalls on desktops," said Brian Finan, director of Symantec's strategic programs and homeland security group. "The challenge we have now is how to scale our solutions. We've never had to support a 400,000-seat environment before, even in the commercial sector."

Within this enterprise approach to security, there's no more interesting subject than wireless security, even though agencies are just beginning to address data wireless technologies. Certicom Corp. is a leading vendor with its elliptic curve cryptography (ECC) technology. The company already had a presence in the government market through its contracts with the Defense Department, Army and Navy.

The company hadn't dealt directly with the government, however, preferring to go through device suppliers such as Research in Motion Ltd. and Aether Systems Inc. until it recently opened a Washington, D.C., office. Certicom has since drawn a lot more interest, particularly given its first direct federal licensing deal with the Federal Aviation Administration in March in which ECC will be the core encryption technology for the FAA's next-generation Aeronautical Telecommunications Network.

In biometrics, which represents the physical side of the security equation, the question is no longer how viable the core technologies are, said Ben Gianni, vice president for homeland security at Computer Sciences Corp., but how to integrate them to provide solutions for particular environments and applications.

That has typically been the job of solutions providers such as CSC, but when a vendor can provide much of that combination upfront, it is bound to get attention in the market. That's the case with Identix Inc., the leading supplier of fingerprint-scanning equipment, since it announced a merger in February with facial-recognition systems specialist Visionics Corp.

The combined company has annual revenues of about $100 million, which makes it a giant in a field composed mainly of small companies. Joseph Atick, Identix's president and chief executive officer, believes the company's "total solution" approach, financial security and support services will drive its future.

It's About Integration
The integration of stovepiped agency IT systems is considered one of the needed reforms for successful e-government. But the Sept. 11 attacks highlighted the need for cross-agency communication throughout all levels of government.

"Both government and industry see that the need for sharing information across boundaries has become critical," said Kevin Durkin, senior vice president of sales and marketing for EDS U.S. Government Solutions.

Durkin pointed out that the Office of Management and Budget has been asking agencies for more specifics on how IT can promote better communications across agency boundaries. "It's even becoming a rallying cry" for integration, he said.

That request brought the solutions that SeeBeyond Technology Corp. and webMethods Inc. provide to the forefront of agencies' attention. The companies' solutions use standards-based techniques to tie together agency applications, cutting what they claim can be as much as 90 percent of the cost of the old approach.

SeeBeyond began its federal push in early 2000 and has already scored some success with sales to DOD, the Social Security Administration and the Department of Veterans Affairs. WebMethods has also posted some early wins with military agencies, as well as the Transportation Department, the Environmental Protection Agency and the General Services Administration. And company officials announced the formation of a new government sales unit earlier this year.

The interest in integration has also raised the profile of Informatica Corp. The company's Web-based data integration platform, which uses Java 2 Enterprise Edition, extracts data from a number of different sources in response to queries and delivers a precise answer to users anywhere on the network.

The company's federal business has increased by more than 150 percent since it opened an office in McLean, Va., early last year, said Sanjay Poonen, Informatica's vice president of worldwide marketing.

"The urgency to find a solution [to data integration] has increased tremendously over the past year," he said. "Many people are saying that now, so there are a lot more people who recognize the problem."

Enterprise Answers
Approaches that consider the whole enterprise have become more popular since Sept. 11, according to Robert Reeve, a lead partner for e-government services at PwC Consulting. The enterprise view "is extremely important when you are trying to build something around homeland security," which requires compatible IT architectures and components. An answer to that is using an emerging set of software tools called Web services in a secure environment.

Many providers such as IBM Corp. and Sun Microsystems Inc. have recognized that need and have developed enterprise Web portals based on particular application server technology. But independent portal developers are led by Plumtree Software, which uses Web services to Web-enable disparate applications running on different platforms and networks and then integrates content, applications and security through a single portal.

The company has "doubled, maybe even tripled," its government business during the past year, said Bob Carter, director of Plumtree's public-sector group. The company has worked with nearly 50 public-sector organizations, including DOD, the Navy, the National Institutes of Health, the Energy Department and the Missile Defense Agency, which uses the Plumtree portal to enable collaboration among various agencies during missile-tracking exercises.

Even wireless technologies can be included under the rubric of integration, though it could take a little longer for that picture to fully develop.

Five-year-old AvantGo Inc. only started to look at the government market 18 months ago, said Richard Owen, the company's CEO. Nevertheless, it has made impressive inroads. AvantGo's standards-based software platform enables customers to build applications and create content that can then be delivered to people in the field using handheld devices.

The U.S. Army Medical Information Systems and Services Agency uses the AvantGo product to provide information and e-mail to its personnel via handheld devices, including Palm Inc.'s Palm and Research in Motion's BlackBerry. Members of the Senate Republican Conference also use the AvantGo software on handheld devices to stay updated on issues.

The government now ranks third, behind only pharmaceuticals and life sciences, on the company's list of top "vertical markets," Owen said.

Mobile Airwaves Inc. is another leader in the developing mobile integration market. Its Aqivo server software connects mobile devices to various application servers, including those that handle groupware such as Microsoft Corp.'s Exchange and IBM's Lotus Notes. Aqivo takes the data produced by those applications and formats it so that different devices can use the information.

Procurement Consulting Now Hot
One company that wouldn't usually make it onto a technology list but that definitely warrants an appearance on this year's list is Acquisition Solutions Inc., a small, 6-year-old company that provides support for procurement and resource management operations at federal agencies. It also supports performance-based contracting, a trend that could revolutionize the way IT is bought and used by agencies.

As a support contractor, Acquisition Solutions heavily influenced the $1 billion IT Managed Services (ITMS) contract that the Transportation Security Administration awarded to Unisys Corp. in August. It took just three months from the program's inception for TSA to make an award. And the contract entrusts Unisys officials with deciding what technologies to use, a radical departure from the usual requirements-heavy approach to large procurements.

The requirements document for ITMS, which Acquisition Solutions helped write, was only 25 pages. It's an example of what Chip Mather, co-founder of the company, hopes may eventually be the norm in government contracting.

"We still have work to do to overcome the old ways of doing things," he said. "But with the President's Management Agenda pushing for acquisition reform and with the agencies facing a human capital crisis, we think the planets are finally aligned in a way that will allow change to happen."

*** Last year's list: Access360, Appriss Inc., Autonomy Corp., FreeBalance Inc., Development InfoStructure, Marasco Newton Group Ltd., Research in Motion Ltd., Sigaba Corp., SSB Technologies Inc., Tacit Knowledge Systems Inc.

Robinson is a freelance journalist based in Portland, Ore. He can be reached at [email protected].


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