How we got here
Headcount, FTEs, butts-in-seats, whatever you choose to call it, the business model for government system integrators has been the same for as long as I have been involved with contracting (14 years). How we got here is a study of free market capitalism in action. Despite popular myths, defense and federal contracting is not a high profit business. Typically service contractors only have profit margins in the 5-8% range. This is a byproduct of the government’s attempts to control outrageous profits companies were making from Firm Fixed Price contracting and similar vehicles. The plan was to put downward pressure on profit by moving to models like cost plus fixed fee (CPFF) contracts. The market, predictable adjusted.
Rather then focusing on delivering a product or service with fewer people to maximize profit in a FFP environment the focus has shifted to staffing as many personnel as possible at a lower fixed fee. If I can’t go tall then I’ll go wide. This model has served both large and small business well, teaming discussions center on the number of Full Time Equivalents (FTE)s each company will receive as work share. We don’t talk about teams in terms of who delivers which module or part, rather what bodies are thrown at a problem. One of the many problems with this approach is that it’s the antithesis of what technology advances provide, more automation with less human involvement.
Technology Changes
Enter the Cloud, that magical place in the sky where all our business problems will be solved. (not really). Cloud creates a paradox, the entire idea of IaaS, PaaS, and SaaS is to reduce your IT overhead in terms of administrators and support structures. IT infrastructure is now a commodity, like power; no one really knows or cares how the electricity gets to the outlet, only that their toaster works when its plugged in. Contractors are resisting this change like the last horse salesman at the birth of the automobile era. They do it by raising the specter of security.. boogied boogied
Cloud Security
Integrators want to help you move to the cloud, but they don’t want you to use the automation of the cloud, rather then want to slide you to the left and keep their large team apparatus in place. What’s worse is they claim you have to do this because..security. This is either:
- Laziness
- Incompetence
- A deliberate way to charge more for a commodity
Where do we go
I would argue moving to cloud automation or a serveless environment where you interact with the platform and service only though controlled API access actually shrinks you attack surface and if done right is more secure then our current architectures. Security policies are written in MS Word, they can be changed, we just have to accept it may take effort, imagination and persistence. In the end its worth it because the only path to cost reduction via cloud is through the reduction in manpower.
Companies can still be successful (profitable) but both industry and government have to embrace smaller, better compensated teams delivering product as opposed to staff augmentation or level of effort support (LOE). Incentives should be based on under budget deliveries of tangible work products. Bonus points for exceeding performance and quality expectations.