Government Funding

Geopolitical developments are giving strategic IT a shot in the arm

Cold War government spending supported a thriving electronics industry that indirectly benefited the private sector. Now it appears the War on Terrorism is bestowing similar fortunes on the strategic IT industry.

Right now, it's hard to quantify the effects government spending is having on business intelligence, data mining, knowledge management, and other types of strategic IT software, but there's plenty of anecdotal evidence that the influence is significant. Jesus Mena, author of Investigative Data Mining for Security and Criminal Detection (Butterworth Heinemann, 2003), says, "The congressional hearings last summer into the FBI's failure to prevent the [Sept. 11th] attacks is forcing law enforcement communities to be more IT savvy; this means more technology and technologists will be leveraged to improve security of systems, individuals, property, and the nation."

The Bush administration requested more than $722 million in its fiscal 2003 budget for information technology homeland security programs to fill immediate needs. But the Brookings Institution subsequently reported that a much greater investment would be needed to meet homeland security goals.

And Greg Lorden, vice president of government for Business Objects, is confident that investment is forthcoming. "I think we're going to see phenomenal growth," he says. Such a development will be a boon to business intelligence (BI) vendors: As it is, government sources of business at Business Objects have essentially offset private-sector income loss associated with the recession.

Lorden also says the strategic IT that government wants isn't much different from what the private sector demands, except that government customers are forcing security standards higher. That jibes with what Charles Hudson, a senior associate with the U.S. Central Intelligence Agency's (CIA) venture capital arm, In-Q-Tel, says. "When we look at the kinds of technologies that apply for The Agency ... they're basically a big information-processing shop," Hudson says. The CIA therefore needs technologies that collect, analyze, and distribute information.

In-Q-Tel's technology acquisition model is a benefit to private-sector customers of this software. Traditionally, when the CIA fosters a technology, it classifies it as secret and hoards it for several years before private endeavors can use it. Hudson says, "At In-Q-Tel, we are not in the business of trying to address and solve every single information technology need that The Agency has. There are plenty that are usable as they are, and whose mere existence and use by The Agency is not deemed to require ownership." The CIA benefits from lower total cost of ownership. And both the CIA and the private sector benefit from In-Q-Tel's product-development assistance and equity financing — which help vendors with otherwise limited resources create and improve products and survive to support them.

Unfortunately for the strategic IT sector, Sept. 11th, 2001 shocked an already-hurting economy into spending less on all software. But this sector may suffer the least from Sept. 11th because the terrible events that day sparked commitment from the U.S. government to use this technology for the protection of its citizens.

— Jeanette Burriesci

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