News & Events

Big Data Spending and M&A Activity on the Rise

By Jon Yim

On May 6 at the C4ISR & Networks Conference in Arlington, VA, Deltek’s principal research analyst, Alex Rossino, discussed an improving spending environment for Big Data services and technologies in 2016 and beyond, despite broader sequestration effects across all areas of the Federal budget.  “We think that sequestration is going to continue to weigh heavily on all areas of spending.  However, this is one of the areas where we see there will be a rise in spending within an overall declining budget,” Rossino discussed.  Deltek’s forecast shows relatively flat spending on big data solutions in 2014 and 2015 as a result of sequestration effects; however, Rossino expects downward pressures to subside and growth to be realized from 2016 through 2018, at which point Deltek projects Big Data spending across the Federal government to reach $5.8 billion, as compared to the ~$5 billion expected in 2014.

Anticipated growth is expected to be largely driven by agencies and departments that are reliant on Big Data technologies to execute their respective missions at the highest levels – namely, the DoD, NASA, DoE, and NOAA.  For example, the proliferation of network nodes and interconnections (e.g., the DoD’s Joint Information Environment initiative) and the increasing sophistication and use of sensors and robotic systems (manned and unmanned) are driving the explosion of data creation and consumption across the global defense environment.  Rossino also commented on additional upside, adding, “the world of Big Data is so amorphous that it’s hard to determine whether or not you’ve got the whole picture.”

The M&A market in recent years has also reflected the growing demand for Big Data technologies and footprints.  Of the Government Technology Solutions deals that KippsDeSanto tracks, 6 in both 2012 and 2013 involved sellers providing Big Data technologies and / or services – a particularly interesting statistic considering 2013 M&A activity was down almost 50% from the prior year.  Further, of the ~20 deals in YTD 2014, 4 were directly related to Big Data companies.  Big Data has certainly become a focal point of many buyers’ M&A strategies, and we expect this trend to continue in the long-term.

From a government contracting standpoint, Big Data opportunities abound for companies in the Federal IT space, with particular emphasis on advanced technologies within analytics and visualization, machine learning, high performance computing, storage, and R&D.  Companies with a long-term view should be focusing their investments on developing talent and qualifications within these priority Big Data funding areas in order to lay the foundation for future growth.