By Belle Lin

For smaller government IT contractors like Appian and Pegasystems, the cost-cutting agenda of the Trump administration offers an opportunity to generate more business -- provided they, too, don't end up on the chopping block.

Executives of the software companies have talked publicly about how they share the goals of the Department of Government Efficiency, an initiative associated with Elon Musk that champions a streamlined government fueled by technology.

"Some firms find this terrifying, and some like Appian find it a great opportunity and a relief," Appian Chief Executive Matt Calkins said in an interview. Appian is now working directly with DOGE in several federal agencies, he added.

Pegasystems CEO Alan Trefler takes a similar tack. DOGE's underlying principles "are extremely aligned with what we do by structuring and automating workflows, eliminating paper and rethinking and replacing legacy systems," he said.

DOGE has cut jobs, canceled contracts and taken control of computer systems that run the government. In doing so, it has used information technology -- namely automation and artificial intelligence -- in support of its efforts at nearly every federal agency.

As a result of DOGE's shake-up in Washington, big firms with billions of dollars in contracts have been forced to justify the value of their business to the federal government. But smaller vendors like Appian say DOGE's incursion is a chance to break through the stranglehold that larger vendors have had on federal dollars.

"We've often done business in the government and found that we were at a disadvantage because we didn't have the size or the connections," Calkins said. "There are so many built-in institutional advantages that big firms have."

Appian's platform helps customers automate repetitive digital processes, an IT service typically called process mining. Some of the company's largest contracts include supplying technology that helps the Air Force, Army and Navy with procurement, it said.

The Appian pitch might sound similar to the DOGE agenda, but there is still a concern among investors that the company's product could be considered unnecessary as DOGE combs through the federal government's software purchases, said TD Cowen analyst Derrick Wood.

While Calkins said he isn't concerned by potential uncertainty caused by DOGE, he sounded a more cautious note in the company's earnings call this month. "We have a large presence in the federal space and are thus exposed to whatever disruption DOGE may create," he said on the call.

Roughly 24% of Appian's revenue is from the federal government, Wood said.

At least one contract for distribution of Appian software to the Education Department was named on a DOGE termination list this year, according to analysis of DOGE data from contracting website HigherGov.

Pegasystems, whose software helps businesses and federal agencies automate digital processes, is also affected by potential shifts in government spending, according to analysts at Citi Bank.

Larger tech vendors have responded to the cost-cutting by giving the government discounts.

The General Services Administration this week said federal agencies would get a temporary deep discount on Salesforce's Slack messaging app. The deal follows similar agreements with Adobe and Google.

As external contracting dollars potentially get slashed, "that should free up a lot more budget for platforms and software," said Matt Zeiler, founder and CEO of AI firm Clarifai, which does business with the federal government.

DOGE has said it terminated about $30 million in contracts for digital modernization projects. Though it remains to be seen how many actual dollars have been saved as federal spending is actually higher since President Trump took office, The Wall Street Journal has reported.

Now, as DOGE forges ahead without Musk at the helm, Appian's Calkins is hopeful that the "brash" mentality instilled by the tech mogul remains.

"In most areas of technology, government lags," Calkins said. "This could be a major shift for the government to turn around and say, 'Now we actually want to be pioneers.'"

Write to Belle Lin at belle.lin@wsj.com

(END) Dow Jones Newswires

May 22, 2025 07:00 ET (11:00 GMT)

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