Changing business environment Both threat and opportunity Gone are - PDF document

The Aerospace & Defense Forum San Diego Chapter June 24, 2014 Eric Basu, CEO Sentek Global ebasu@sentekglobal.com www.sentekglobal.com � Changing business environment ◦ Both threat and opportunity � Gone are the “boom’ days of defense contracting. � Significantly increasing competition for contracts � Companies downsizing and closing their doors 2 1

The Aerospace & Defense Forum San Diego Chapter June 24, 2014 Most forward looking companies realized they needed to diversify their revenue streams but most defense companies are unsuccessful at this. Why is this so difficult? 3 � Founded 2001 � 130 employees, ~$30M in revenues � Engineering Services to DoD � Approx. 2004 we took a strategic repositioning to focus on Cybersecurity – anticipation of the increasing need � Approx. 2010 we started developing B2B services focused upon Cyber security 4 2

The Aerospace & Defense Forum San Diego Chapter June 24, 2014 Government Commercial Compliance Compliance � � PCI, HIPAA, Sarbanes Oxley ◦ DoD RMF, ◦ Computer Defense � Computer Defense � Firewalls, Intrusion Detection Systems, ◦ Firewalls, Intrusion Detection Managed Security Services, Forensics ◦ Systems, Managed Security Services, Purchased separately ◦ Forensics Computer Attack � Purchased through large IT contracts ◦ Penetration testing, Vulnerability ◦ assessments Computer Attack � Actual attacking not common on ◦ Penetration testing, Vulnerability ◦ commercial side – “dark gray” assessments Security Processes and Management � Security Processes and Cost/benefit based as well as � ◦ Management requirements Cyber insurance is common ◦ ◦ Requirements based Tend to respond more quickly to a ◦ No cyber insurance ◦ changing environment Not agile at all ◦ Government Commercial � Product offerings � Sales force restructuring � Marketing � Accounting issues � Investment � Culture Change 6 3

The Aerospace & Defense Forum San Diego Chapter June 24, 2014 � What the military will buy is not what companies or consumers will buy, generally � DoD/Government B2G– custom build for everything, purchase “by the body” � Commercial B2B – COTS, expect you to invest in development � Consumer B2C – Will buy small to medium sized purchases in large quantities 7 � DoD � B2B ◦ 18-24 month sales cycle ◦ 1-5 month sales cycle ◦ Complex solution sale ◦ Solution sale but much simpler ◦ Presale is key and can take >12 months ◦ Local preference not as strong ◦ Local preferences ◦ No set aside preferences ◦ SB and set aside preferences ◦ Presale is everything, proposal is generally ◦ Teaming is critical secondary ◦ Capture management is ◦ Capture management non- key existent or greatly ◦ Proposal as important as compressed the pre-sale 4

The Aerospace & Defense Forum San Diego Chapter June 24, 2014 � SPAWAR mantra – “marketing is walking around SPAWAR” ◦ This is true of other industries where there is one large customer, but is not good business � B2B marketing requires being known to a large number of potential client companies ◦ Much larger market requires different marketing � B2C marketing requires being known as a brand name to consumers, marketing to large audiences to get many smaller sales 9 � Need to understand how commercial sales will fit into your overall accounting ◦ Separate division ◦ Separate cost center ◦ Separate corporate structure ◦ Which costs can be put into government overhead ◦ Don’t want to endanger government cost structure and pay penalties 10 5

The Aerospace & Defense Forum San Diego Chapter June 24, 2014 � Sentek reinvested its profits into the commercial practice ◦ Talent, hardware, software, lab, training, management, accounting, contracts support, sales, marketing � This required a determined approach from management and the owners to put cash flow back into the business 11 � Resistance to change � Fighting against success of DoD only contracting - like young investors in the late 90’s � Wrong management and talent sets (DIACAP vs Technical) � Lack of Project management skills � Dealing with perception of threat to existing personnel and work � Dealing with customers – moving talent from butts in seats to commercial project work � Understanding the existential requirement for change – CEO’s job 12 6

The Aerospace & Defense Forum San Diego Chapter June 24, 2014 � Commercial practice has grown every year since 2011 � Recognized and growing brand name in B2B space for cybersecurity � Internal management and sales structure refined and smooth � Internal understanding of what and why of commercial practice 13 � Eric Basu � ebasu@sentekglobal.com � 619-543-9550 14 7