Forrester's Government IT Predictions For 2005
Every year, Forrester's Government research team will make predictions about the next 12 months, which we will revisit at year's end to report how we did. For 2005, we foresee that:

• Vendors of hosted applications will see a 25% jump in hosted government applications.

• Government will continue to be a leading European sector for IT outsourcing, with five significant deals this year.

• The US Congress will extend federal agencies' ability to use gain-sharing contracts beyond the September 2005 deadline legislated by the eGovernment Act.

• Government RFPs will begin to include language to exclude vendors that have a significant percentage of offshore employees.

What are those lessons? Agencies must carefully analyze the funding sources for gain-sharing projects. Both parties should expect a long due diligence phase before the RFP is awarded and up to a year to finalize the contract after that. Treat the project as a business transformation, rather than just another IT project. Line up a strong project champion and address the needs of all internal and external stakeholders -- the unprecedented level of partnership applies to internal government stovepipes as well. Legislative bodies, IT, program managers, and contract officers must share a common vision if government is to benefit from this complex approach to procurement.


Government IT Services Forecast
In 2004, Forrester began including US government agencies in our market sizing forecast for IT services. Forrester forecasts that the market for IT services in US federal, state, and local governments will reach $15 billion by 2008, up from $13 billion at the end of 2004. Led primarily by packaged apps implementations, US government organizations will increase spending on systems integration by 10% compounded annually, reaching $6.8 billion by 2008. Outsourcing will grow 5% compounded annually to $7.1 billion. And in an interesting twist, we're seeing top service providers in the government space like Accenture, CSC, and Unisys parlay innovative government projects in the Departments of Defense and Homeland Security into bids for private-sector prospects to meet increased demands for innovation in that sector.


Local Law Enforcement Works Smarter With Crime Data Warehouses
Police work -- like everything else -- is becoming more information-intensive. Being able to identify crime hot spots within hours or days, instead of weeks or months, is on the critical path to allocating officers on the beat to address the problem. Advanced analytics are emerging as an area of opportunity in fighting crime. For that, police departments need a crime data warehouse with a scalable back end, data integration layers, and highly usable front-end query and reporting tools. Forrester took a look at IBM's Crime Information Warehouse, consisting of a variety of DB2 technologies, including DB2 Cube Views and DB2 Intelligent Miner, combined with Cognos ReportNet for query and ESRI IMS for geographic information display. While Forrester expects that IBM will soon face competition from SAP and Oracle in the large metropolitan market and from Microsoft in the midmarket, for now, IBM has gotten a
jump on the competition with a promising, high-impact application that addresses a fundamental need to work smarter in fighting crime.

Service-Oriented Architecture Meets Legacy Systems at Miami Dade County
In a short time, Miami-Dade County (MDC) destroyed several stereotypes -- that government is slow to adopt new technology, that legacy applications can't be exposed as multichannel services, and that CA-IDMS is dead technology that can't be modernized. MDC has exposed many of its custom-built, legacy applications to multichannel access by drawing more than 85 registered services from legacy CA-IDMS applications and exposing them as services. Public information, license renewal, police squad car information retrieval, real-estate tax payment, and building permit inspection services are just some of the applications where services not only sped up transaction delivery via new access channels but also changed the fundamental business model in the process. Just six months into the effort to draw reusable services from legacy transactions, MDC pegs its current reuse percentage at 20% and growing rapidly.

Government Transformation Case Studies
Forrester attended Federal Computer Week's CIO Summit in late 2004 and saw how a variety of drivers were catalyzing government transformations -- and how IT was a major enabler. The drive for IT value, aging IT portfolios, and the evolution of technology resulted in quantum leaps, such as Largo, Florida's move to open source for server OS and desktop software needs and the Social Security Agency's eVOIP implementation. But it was the IT-enabled business process transformations that were most fascinating. The Defense Logistics Agency used RFID to revolutionize Army logistics and provide total asset visibility "from the factory to the foxhole" to save lives in hostile environments. Baltimore, Maryland's CitiStat program integrated performance data with CRM and call center data in an overhaul of management practices that led to cost avoidance of $100 million over three years, as well as dramatic
declines in violent crime and drug-related emergency room admissions. The most impressive government transformation success stories consistently had three common elements: business process change, an integrated approach to data formerly only available via stovepiped systems, and performance management processes that quantified results and linked to recognition and reward systems.

Get In Touch
We are very interested in your feedback on our research. Do you have topics to recommend, data you would like, or technologies you want assessed? Drop me a line at geneleganza@forrester.com so we can connect.


Gene Leganza
VP, Government Research

Research Referenced In This Issue Business Process Change Should Stem From Business Goals — Not Past Practice or New Software (29253) Cascading The IT Balanced Scorecard (35172) Data Integration Embraces Services (34848) FDA Pushes RFID Agenda On Pharma (36079) Forrester's Top Government Predictions For 2005 (36325) Gain Sharing: Transformational Procurement (35732) Government Transformation Case Studies (36053) IT Services Forecast: Public Sector (36084) Law Enforcement Turns To Data Warehousing To Work Smarter (36276) Moving Federal EA To The Next Level (35734) Performance-Based Contracts Transform Government Spending (17606) Service-Based Transactions From CA-IDMS (35966) Services Market Sizing Update: 2003-2008 (34292) Texas Online Leads State Government Solutions For Spanish Speakers (36023) The Increased Use of Risk/Reward in IT Services Contracts (28152) Weighting eService TechRankings™ Functionality For Government (35768)

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