A View of the Government SOA Marketplace

1. A View of the Government SOA Marketplace Shawn P. McCarthy, Director of Research, Government Infrastructure Optimization and Vendor Programs May 1, 2008

2. Today’s Talking Points: Drilldown to Federal SOA Total Government IT budgets Federal IT Spending Patterns Current Priorities Lines of Business and the SOA Connection SOA Decision Drivers Predictions

3. U.S. Information Technology Spending By Industry

4. Breakout of U.S. Government IT Spending for 2008 (Projected) Includes hardware, software, and IT services spending only Source: Government Insights, 2007 Numbers = $ Millions DoD leads the way for all spending, especially for IT services. Local governments lag in software spending because they purchase fewer large enterprise applications

5. Numbers = Millions $ Total Federal IT Budget: 2007-2009 Civilian Agencies 2009 should show significant growth after two lean years 3.8% Increased proposed for 2009 Source = OMB, 2008 (for FY2009 Budget)

6. Defense Department IT BudgetBy Service – FY 2008 Total 2008 IT Budget = $31,502.1M Source: Office of Management & Budget, 2007

7. Federal IT Market Trends • After a dip in FY 2007 IT spending, FY 2008 IT spending is projected to increase 2.6% to FY 2006 level • The distribution of the FY 2008 federal IT spending portfolio will remain identical to FY 2007 • Another year of continuing resolutions (CRs) will keep spending down for the first six months of the fiscal year • Systems consolidation continues, causing downward pressure on future IT spending as efficiencies spread • OMB-managed Lines of Business are starting to get real traction • Shared Service Centers (SSCs) created under Financial Management (FM) Human Resources (HR) and Information Systems Security (ISS) Lines of Business will limit opportunities for vendors • DoD is just beginning use of capability portfolio management, which should eventually have long-term impact on IT spending trends

8. DoD – 2008 HW, SW & IT Services $3.2 Billion $4.8 Billion Civilian Agencies 2008 HW, SW & IT Services $4.5 Billion $3.8 Billion $14.2 Billion $12.5 Billion Federal IT Services SpendingFY 2008 - External Source = Government Insights, 2008 SOA = programming, system design work and configuration management Why Services?

9. Top Lines of Business: FY 2008 IT budget All Lines of Business Source: IDC, Government Insights: US Federal Line of Business Budget Guide, 2007 Total = $66.4 Billion

10. Federal IT Spending by Investment Target Number = $ Millions Source: IDC, Government Insights: US Federal Line of Business Budget Guide, 2007

11. U.S. Federal Budget Analysis Numbers = $ Millions System consolidation may slowly reduce new project spending Source: IDC, Government Insights: US Federal Line of Business Budget Guide, 2007

12. A Few SOA Project Examples • VA • VistA-Application Development for HealthVet($129.5 million) • DHS • Citizenship and Immigration Services - USCIS – Biometrics projects($6.2 million) • NOAA • Global Earth Observation Integrated Data Environment($2.6 million) Most SOA projects fall into the sub- $5 million range SOA tends to be an iterative improvement, not an enterprise-wide single project

13. What’s Driving SOA Interest? All industries, not just government

14. Top Sub-functions for IT Infrastructure Spending Total = $23,131,1M Source: IDC, Government Insights: US Federal Line of Business Budget Guide, (FY2008 Budget) Maintenance and info management lead, security is next

15. Enough to fund Government-wide Migration to SOA? The SOA Reality Check: Migration Funding Isn’t There (Interagency Funding Isn’t There Either) Most steady state funding for FY 2008 is aimed at non-major IT investments or supporting technologies Source = OMB, 2008 (for FY2009 Budget)

16. Quotes from the Gov SOA Front Lines • “The enterprise architecture program or framework provides a context to understand the implementation of such a thing as SOA or business process management.” - Jan Popkin, Business Process Modeling Expert • “Empowering users with Web 2.0 technologies forces you to ask the right data questions: What data should we expose? Is our data ready to be exposed? Is our data trustworthy?” - Michael Daconta, Former Metadata Program Manager at DHS • “Now we have an SOA environment where you can build and run net-centric capabilities. So we’re getting to the point where I’ll say, ‘If you really have a good solution, we can use SOA to hang your application on our network. You develop this solution on your own dime, but I’ll pay you for the use of it.” - Gen. Charles Croom, Director, DISA

17. Virtualization Can Aid SOAAnd Visa-versa • Virtualization in General: • Make a single resource (server, application, storage device) function as multiple virtual resources • Make multiple resources (network connections, processors, storage) function as a single resource • SOA-specific: • Resource virtualization • Simulation of combined resources • Building multiple components into a virtual application • Centralized data tagging and sharing

18. The Buzz on Cloud Computing • Leverages SOA and virtualization technologies • Cloud computing lets you worry about services, and not the technologies used to connect to those services • Separates application code from physical resources • Allows placement of infrastructure in lower cost areas (property, electricity) • Delivered services include application components and full applications, storage, processing power, and access to specific resources But.. You have to trust the cloud

19. Application Development and Deployment – Top 7 Predictions • SOA will become more critical in forming the foundation for provisioning and consuming services in the cloud • BPM will be increasingly viewed as a must-have despite the gloomy economy – this will help drive SOA penetration • Event-driven architecture will not be just for tickers and tags – it will trickle down to multiple gov apps • SOA will stimulate on-demand application development, vendors will attempt to disrupt the status quo by pitching new services-based offerings

20. Application Development and Deployment – Top 7 Predictions (cont.) • Most leading software vendors will provide data-focused support for both virtualization and SOA • IT portfolio management will provide the missing application life-cycle management link — as SOA evolves IT governance will emerge out of necessity • Open source software will impact business decisions more and will lead to a mix of open and proprietary services across an SOA environment

21. Conclusion • SOA migration will happen slowly, but accelerate as savings become concrete • The tough stuff • SOA means trusting the partners within your architecture, and getting service level agreements from them • Component reuse is often overestimated • The good stuff • Provides a quick way to offer new services, including vendor services • No more platform migration? • Current budgets may favor SOA for internal projects, but not necessarily cross-agency • The government computing cloud will continue to grow

22. Questions? Comments? Shawn McCarthy smccarthy@government-insights.com