U.S. national security agencies and critical infrastructure companies have a new name to know for information technology, as SAP Government Support and Services and its Sybase Federal unit have completed an operational realignment and are now doing business as SAP National Security Services.
Mark Testoni is president of SAP NS2 and recently caught up with ExecutiveBiz about the new business he leads, market opportunities and trends in the field.
ExecutiveBiz: What advantages will operating under one roof provide you? What obstacles will you need to overcome to successfully merge operations?
Mark Testoni: SAP has been in the defense and intelligence business for a long time, but historically did not have a huge presence. In the mid-2000s, SAP created a separate unit called SAP Government Support and Services to serve the specialized information assurance needs of certain government customers. In 2008, SAP acquired BusinessObjects to expand our footprint in the analytics space, and in 2011, SAP acquired Sybase, a big data management player.
As we went through the vetting process for the Sybase acquisition, specifically looking at implications on defense and intelligence, we discovered that they had a significant business in intelligence in highly classified programs. So we had to change SAP Government Support and Services from a Special Security Arrangement company into a fully independent proxy company to support that business. It took us from a $15 million business in this arena to about a $130 million business overnight.
I was brought in to meld the two businesses into one software company supporting this market. Now as SAP National Security Services, we have a full complement of capabilities“”data management, business applications, business intelligence and analytics, cloud and mobility solutions“”plus a 100 percent U.S.-staffed and located team to serve our customers. We think the combination is very powerful. SAP NS2 is a fast-growing player in the marketplace, a real alternative to business as usual, with a $17 billion-annual-revenue company standing behind us.
ExecutiveBiz: Were there any challenges you had to overcome to successfully merge those operations to what they are today?
Mark Testoni: The biggest challenge is just trying to get everybody on the same page, and we're probably 90 percent of the way there. There are always some internal procedures and systems that are different, but the biggest challenge is always about change management. We've also aligned our efforts with the SAP teams who handle other defense and civilian accounts, and that has created a substantial force multiplier in the marketplace for SAP.
When I arrived last year, my first priority was to try to align our focus, and that's what we've been doing the last six to nine months, in addition to bringing on more talent. I find this extremely exciting. Given the market situation, there is not a better time to be rolling out this message and this company, because our customers are looking for new models to reduce costs and drive innovation more quickly.
ExecutiveBiz: How has SAP's data analytic strategy evolved since 2010, and how will your company continue to innovate as demand for analytics increases?
Mark Testoni: Although business process transformation is still our core strength, the management of information is becoming paramount. There are two facts driving this trend. One is that in the last two or three years, we've doubled the total amount of information ever created by man, and we know the growth will continue to be exponential. And we are just scratching the tip of the iceberg on all the data created by social media. This is the big data challenge that we hear so much about in business and government.
SAP is now a far broader transformational company, from improving business processes to helping organizations analyze and act on information. The evolution of cloud computing is also a huge focus for SAP and allows us to deliver these capabilities more rapidly to our customers.
We're also focusing heavily on data management and analytics. We rolled out a new product in the last 18 months called SAP HANA, which fuses hardware, memory and software together to increase the speed and volume of information that can be managed and turned into actionable information. Some of our largest corporate customers are taking advantage of this and getting almost real-time information on all aspects of their business.
Today, we are working with the federal government on a significant number of big data management projects. In fact, some of the largest and most complex databases in the world run on SAP.
ExecutiveBiz: Is the goal of organic versus acquired growth changing in the lean budget environment, and where are growth opportunities?
Mark Testoni: If we look at the overall government piece of pie, it's going to continue to get smaller. The US has nearly doubled our debt and deficits over the last five years. We're going to see that reflected in budgets in years to come. There are only two ways to grow in that environment: one is to acquire other businesses, and the other is to take more market share. Either way, those who bring innovation to market rapidly, at low cost, will be the ones who succeed. Beyond our own initiatives, a major component of our growth will come from other great companies extending new innovations on our platform.
When it comes to NS2, we think that there are new ways to offer capabilities to the government. We see our opportunity in offering high-end data management and business transformational capabilities in different ways, perhaps through alternative acquisition models that make it easier for the government to innovate and cost them less money. There's going to be a big market for that. The convergence of the volumes of information, the demands for faster analysis of it, and the budget cuts will put pressure on companies to do business with the government in ways we haven't ever done before.
ExecutiveBiz: What next-generation technologies do you see that will deliver significant cost savings to the U.S. public and enable more productivity in the public sector?
Mark Testoni: The biggest challenge for government today, similar to the private sector, is the dollars. Investing in long-term projects that cost a lot of money for less-defined outcomes is no longer the norm. Managing and analyzing information as it happens with fewer hardware resources“”that's going to be huge. The ability to assimilate that information from many places and sources is critical as well.
If you go back 10 years, companies would say, “Come on to our platform and get all the information into one place, and then you can get all this great analytics.“ This is not so feasible anymore, when new data sources are being created all the time. Those who can integrate, pull together and access and manage data rapidly and turn it into actionable information at lower cost are going to be the successful players, and I'm excited about where we are in that space.
ExecutiveBiz: How do you think the IT needs of the military will change with the drawdown of combat forces and with changes in global military policy?
Mark Testoni: I was in the military in the “˜70s, and we worried about having enough tanks to stop our adversary from rolling across Europe. Today, we worry about networks and our ability to sustain command-and-control as we face threats we couldn’t conceive of 35 years ago. We have to be able to move our troops in the field rapidly, and that depends on information and communications.
We're also going to have to provide great protection for our networks and leverage equipment to do things that humans used to do. Controlling and securing the information network is going to be the driving factor in a much smaller, much more agile military. Against this backdrop, the military must rapidly leverage commercially available solutions to support this environment. This creates many opportunities for our company and others moving forward.
ExecutiveBiz: How does the company decide which technologies to adapt for the public sector?
Mark Testoni: Business problems in the private and public sectors are often the same. The US government has as large an information-management problem as any company in the world. The way they acquire technology often isn't as nimble, but that's going to change. I believe we're at an inflection point inside government, and we're actually going to see some dramatic changes over the next decade. I guarantee you that SAP NS2 will be an organization that actually helps alter the way the government acquires and pays for the management of information and business processes.