Thanks to budget cuts, war drawdowns and sequestration, saving money is now a new business opportunity! Okay, that might sound like a contradiction, but it’s true! Clever S&T investments and well-thought “hedging” strategies will enable DoD to continue to thrive, despite the cuts.
We have seen many big-ticket items cut or delayed. There is a frantic focus to get rid of expensive infrastructure that chews up precious DoD dollars. Unfortunately, we all know that DoD doesn’t have a blank sheet to work from. Congressional pressures will continue to force some expensive (unneeded) systems into the budget. Many of these considerations have more to do with jobs and local political support than with defense of our Nation. Base realignment and closures (BRAC) loom on the horizon.
Since “services” is such a nebulous term, it’s always been hard to pin down. When you buy “stuff”, there are clean and precise metrics affiliated with the purchases that can keep everyone on their toes. Not so with “services”. Even just defining “services” is hard, since a lot of “stuff” comes with “services” attached to it. DoD spends over $130 Billion/year on “services”. As DoD has frozen and shrunk the workforce, extra labor to get the work done sneaks in through “service” contracts. Many DoD companies are actually seeing an increase in this area – despite the reductions.
Meanwhile, DoD has done a fairly good job of focusing their S&T dollars on investments that will pay off in the future. Because all of S&T is focused on future capabilities, cutting off the wrong S&T dollars has a significant impact – in the out-years. This is an impact that cannot be made up by throwing more money at it later.
One new skill-set that didn’t really exist a few years ago is the industry affiliated with taking our existing “stuff” and modernizing it. Every company that works with DoD needs to define how their products or services can do that. Taking the existing infrastructure and incrementally making it better is going to be far more common than brand new systems.
In the IT world, this means consolidating the existing infrastructure through enterprise platforms and cloud solutions, while standardizing whenever possible. It’s not always possible, especially with today’s budget constraints. Emerging technologies can be inserted here through Agile IT best practices. Streamlining burdensome governance constraints will go a long way towards improving these old systems as they are improved. Of course, at every step, cyber security improvements need to be built in and/or improved. Finally, training the existing workforce to be more agile, secure, efficient and effective is an on-going effort that will pay off in future returns.
There are certainly some DoD segments that are frozen in budget-cutting paralysis. But the ones worth following are those that are hedging their bets by investing in S&T carefully and modernizing where possible.
