SAIC Competition
Now Viewing SAIC's competition in: Information Technology (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Is the company's work concentrated in a few customers? - Customer concentration is common with IT firms.
How long does a typical contract last? - Contracts may last anywhere from one month to 10 years; three-year contracts are common. Outsourcing contracts typically last 10 years because of the large upfront costs.
Are contracts typically bid fixed-cost or time-and-materials? - Fixed-cost contracts have great profit potential, but also greater risk.
How many projects does the company usually work on at a time? - Companies often use project management systems to handle multiple projects at once.
Does the company usually have a backlog of projects? - IT companies anticipate product demand by attending conferences and trade shows, or through their consultants and personal contacts.
Does the company do business with the government? How profitable is this work? - More states are outsourcing IT functions, although government contracts are traditionally less profitable than private-sector work.
Does the company participate in trade shows? - Many IT companies use trade shows to display their newest products and services.
What types of competition does the company face? - IT services firms are aware of intense competitors, such as large systems integrators, big consulting firms, and hardware vendors; but often underestimate software and offshore IT firms as emerging competitors.
Has the company rewritten the pricing terms in any of its contracts? - In previous years, IT firms charged by the hour, which put the risk of cost overruns mainly on the customer. Now, more contracts are being quoted fixed-price, with the risk of cost overruns shouldered by the provider.
What types of security products or services does the firm market? - The market for security-related hardware, software, and services is expected to grow substantially as corporations and government agencies increase IT security spending.
Competitive Landscape
Demand for IT services is driven by rapid technological advances, but spending for these expensive products depends on the health of the US economy. The profitability of companies depends on offering technical expertise, innovative services, and effective marketing. Large companies have advantages in broad service offerings and global reach, which give them the ability to provide outsourcing services to big corporate customers. Small companies can compete effectively by specializing in market niches or by partnering with larger companies that want to broaden their mix of services. Average annual revenue per employee is close to $160,000.
Business Challenges
CRITICAL ISSUES
Revenue Depends on Corporate Technology Spending - Because spending for IT services comes mainly from corporation upgrades, much of it can be postponed during economic downturns. About half of all US capital investment in recent years has been computer-related, exposing IT spending to economic cycles. For example, corporate profits, an indicator of technology spending, fell nearly 10 percent during the late 2000s recession.
Competition from Hardware, Software Suppliers - As computer and communication hardware and software become commodity-type products with lower margins, their manufacturers are providing more integration and maintenance services, in competition with traditional IT companies. Often manufacturers, particularly computer makers, have deeper financial resources and greater capacity to perform IT functions than their traditional IT counterparts. Other competitors that are not necessarily traditional IT firms nonetheless can offer services that overlap with an IT rival's own offerings.
Industries Where SAIC Competes
- Computer Services
- Information Technology Services(primary)
- Aerospace & Defense
- Aerospace & Defense Maintenance & Service
- Business Services
- Consulting
