2014 realities force companies to change tactics

Government contractors face a 2014 that will be marked by budget delays, cuts and fewer procurements. The result will be stiffer competition. Companies that stick to old ways of doing business will give way to smarter, more agile competitors, writes business development expert Bob Lohfeld.

There is no doubt that going into fiscal 2014, the market will be different. Sequestration and continuing resolutions will take their toll on the federal budget, resulting in fewer procurements. The net result is that competition for the remaining government dollars will be stiffer as companies battle for market share.

Companies that don’t change their tactics to compete in the new budget-constrained government market will give way to others who are adapting to these new challenges.

As part of our webinar series on Winning Business in the Government Market, we polled over 300 companies to see what they were doing to raise their competitiveness in the coming year and found some interesting results. Here’s what we learned.

How good is your capture process?

The centerpiece of a company’s business acquisition campaign is its capture management process. As federal markets shrink, those firms with a defined, repeatable, and well-managed capture process will generally compete better than those who don’t have this process in place.

In surveying companies, we found that 22 percent of the companies have a defined, repeatable, and well-managed capture and proposal process that consistently produces wins. The vast majority of companies surveyed (72 percent) said they understood capture, but were performing ad hoc without gaining the benefits of a well-defined, repeatable capture process, and 6 percent of the companies said they had no capture process.

Of the companies we surveyed, 33 percent said they were managing capture and proposal activities at the enterprise level where they collected information on all company pursuits. Most companies (59 percent) said they shared some capture and proposal data using shared directories on a server, but without the benefit of a formal enterprise management system for business acquisition.

A few companies (8 percent) still archive their capture and proposal information on individual PCs and are operating without sharing data.

How good is your competitive pricing?

I was surprised to learn that 28 percent of the companies surveyed said they had a mature competitive assessment (CA) and price to win (PTW) practice that consistently produced good results. I thought it would have been less.

Sixty-one percent of the companies said that sometimes they did a CA and PTW analysis, but would not characterize the work as having been done consistently or done well.

Finally, 11 percent of the firms do pricing the old way—they start the night before the proposal is due and work all night to finish just in time to make the delivery.

What’s your plan for 2014?

In our final survey question, we postulated that everyone would enter 2014 with a plan to raise their competitiveness given the more challenging market. Assuming this was the case, we asked where firms were placing their emphasis to raise their competitiveness. Almost half (49 percent) said they would put their emphasis on establishing a capture and proposal process and would include capture analytics as part of that undertaking.

The rest of the companies split the emphasis between improving pricing (24 percent) and improving the quality of their proposals (22 percent). As always, some companies just don’t have a plan, and in our survey 5 percent of the firms fell into that category.

An assessment of the competitive landscape

As companies enter a fiercely competitive market, you can sum up the statistics this way.

About 20 percent of the companies really have their act together and have established an integrated capture and proposal process, are managing business acquisition as an enterprise rather than a federation of independent business units, have an established analytics program to measure the effectiveness of their capture and proposal processes, and have a well developed CA and PTW process.

These are the companies that will continue to prosper in the new government market.

Two thirds of the companies are in the middle ground where they have a capture and proposal process and they occasionally do CA and PTW, but all of these companies admit that their processes aren’t that good and they need to be improved.

This is really an interesting comment because we know from past experience that many of these companies will argue that they are far too busy doing things poorly to stop and fix their broken processes. Clearly, many of these companies will be in the same situation next year.

Then there is the final 10 percent. These are the ones that just don’t get it. They will always finish at the back of the pack.

In this new level of competitiveness, they will be the first casualties of battle.