THE LAST WORD, 15 June 2012. A government contractor delivering software and services continues its aggressive growth despite a challenging economy, rampant downsizing, and reduced budgets. Read on as Carl Houghton, vice president of strategic initiatives at Intelligent Software Solutions (ISS) in Colorado Springs, Colo., reveals the company’s competitive advantage and offers advice.
NAME: Carl Houghton
TITLE: Vice president, strategic initiatives
CO.: Intelligent Software Solutions (ISS)
Intelligent Software Solutions (ISS) executive in charge of advanced technology research and development programs, as well as marketing, business development, and strategy development, discusses
ISS started 14 years ago with four employees. Today, the company is approaching 750 employees and is hiring. The company operates its headquarters in Colorado Springs, Colo., as well as offices in Washington D.C./Crystal City; Hampton, Va.; Tampa, Fla.; Rome, N.Y.; Boston. Another office is being opened in Denver.
While many businesses are struggling in light of a sluggish economy and reducing staff sizes as a result of defense budget cuts, your firm has nearly doubled in size and grown its revenue in the past few years. To what do you attribute the success/growth?
A couple factors. One is the fact that we’re relatively small; at 750 people, we’re still a nimble company and so we can respond. As the government downsizes and downsizes its acquisitions, it’s difficult for larger defense contractors to scale down to things that aren’t hundreds of millions of dollars. Their process doesn’t scale down very well. We bid jobs from $10 thousand to tens of millions of dollars. We have a contract with the Air Force Research Laboratory right now for $583 million that we manage. We are able to scale both up and down very easily; that agility is really key to being able to bid these smaller jobs.
Part of our business model that’s really different is that all the software we produce is delivered with unrestricted rights,; it’s off-the-shelf software. Nothing we produce is proprietary. Customers like that because they can deploy one thousand or ten thousand seats at no greater cost. So our business model is around integrating and extending that software and then building new applications on top of that government-owned framework that we’ve developed for them.
What’s been key to our growth is not getting mired by process. When it comes to software, we are agile and have a just-enough/just-in-time process. Some companies want to go to the extreme and invoke more process than is necessary for some projects and they aren’t able to scale. It’s just like scaling to the acquisition size; you need to be able to scale your software development processes as well. That’s a huge challenge and as companies get larger, they tend to move toward the very heavy process oriented side. What that does is it causes more cost. If the government is trying to downsize, they’re looking for well documented and well produced software and just enough process to make sure that it meets their requirements but not overkill that costs so much that it’s out of the cost range the government can afford.
How can you avoid similar challenges as ISS grows?
We don’t have blinders and we’re really trying to maintain our agility, our just in time/just enough process, and our government off-the-shelf (GOTS) model we really think that as the government space becomes more tight budget wise and averse to large contracts, we’re going to be able to capture these efforts, be responsive, and deliver just in time for a decent cost for the government. That’s really our model going forward.
How can smaller government contractors compete with the “big guys”? What is your competitive advantage?
We hired a lot of very experienced people; when we started the company, we tried to have very experienced people; as we scale, we can’t continue to hire just these folks with 15 to 20 years experience, but if you can balance the hiring such that you start to have a lot of very experienced folks to mentor those underneath them and retain the corporate culture that way. If we lose our identity and we just become another large company, we’ve failed; that’s really a focus, to try to decide what your focus is and make a go of it; try to retain that culture and part of that is the people – we really focus on retaining really good people; our retention rate is very good. That’s key to success. Our capital really is intellectual property and that was all developed by people.
Is the use of cloud computing growing in the government, prime contractor, and subcontractor arenas?
The bottom of line is the volume of data that humans produce is growing astronomically every year; the government is no different. As a matter of fact, the government probably produces more than your common individual. As you do that you need tools that allow you to look at massive volumes of data, provide analytics on top, visualize so you can derive knowledge from massive volumes of data--that’s really where we focus. In the past, we were looking at maybe 1, 2, 5, to 10 databases we would connect to; now, you’re looking at clouds of data that are so large that it’s hugely challenging to find the nuggets of useful information out of those massive volumes of data – you need those kinds of tools to get you there.
You’ve got the security model issue: When you start looking at unclassified initiatives do you outsource that and use a commercial vendor? I think that’s going to be a space where the government is going to make a judgment call based on what they think the security implications are, but it’s more than just data in the cloud, it’s also software as a service hosted in the cloud. Increasingly, we’re seeing in the commercial and the government space that companies are essentially offloading the processing into the cloud. What that allows you to do is scale infinitely without having to have data centers that are localized and servers on a constant basis. As long as you can have a fast enough bus to get to these things, you can get these machines that are not local to you and scale just by adding nodes. That’s going to be a growth area as we go forward in the Department of Defense (DOD).
The total cost of ownership is dramatically lower with GOTS vs. buying commercial licenses and recurring maintenance costs year after year. That’s a key advantage on the GOTS side. We use a lot of open source, it allows flexibility you just can’t get any other way and it’s not proprietary. Everybody can take that open source code and take a huge leap in terms of where they are starting from developing code. You’re not starting from ground zero every time you develop something, so you’re saving the government money.
The flexibility it provides you is a differentiator. If you look at the mobile space today, the government is still finding their way with what they are going to do in the mobile space; the DOD in particular. They are trying to decide between the iOS from Apple and Android OS devices from various vendors. The Android OS is open source and so when some government agency wants to make a change, they can either do it themselves or pay a contractor to change that open source code and deploy it to the enterprise. If they wanted to that on the iOS, they have to go to Apple and convince them that it’s in their financial interest to change the iOS and at least anecdotally what I’ve heard is that Apple has said it’s just not a big enough market space, we’re not interested in making changes to our operating system to accommodate the government. That’s where open source really shines.