Procurement process know-how serves the government vertical well

Government vertical VAR ePartnersGC combines IT expertise with procurement process know-how to gain revenue in tough economic times.

With all the recent market and economic turmoil, uncertainty about the future is permeating the value-added reseller (VAR) community. But one segment seems a safer bet than others: the government vertical.

"It may get bigger or smaller, but the government never goes away," said Barr Snyderwine, the service director for ePartnersGC, based in Washington, D.C. Recent events only seem to shore up this assertion, with the massive government intervention into financial markets as well as statements from both presidential candidates that they would make changes to the government's role in healthcare programs and other entitlements.

Founded in 1992, ePartners is a large Microsoft channel partner focusing on enterprise resource management (ERP), customer relationship management (CRM), SharePoint and business intelligence (BI) solutions. Headquartered in Irving, Texas, ePartners serves vertical markets including healthcare, construction, high-tech, retail and energy. Over the past decade however, it has seen a healthy share of its revenue flow from the government vertical -- specifically, from serving government contractors, who sell goods and services to the federal government. ePartnersGC is the government contracting arm of ePartners' global business, and currently accounts for 15% of ePartners' overall revenue.

An expert in government contracting regulations, processes and practices, ePartnersGC is in a sweet spot now,

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as government contractors move away from legacy financial, accounting and CRM applications to Windows-based desktop applications. Snyderwine has seen revenue at his branch of the ePartnersGC practice leap 25% in the past year, and a number of large contracts are pending for 2008 and 2009. "Awareness of how desktop applications could replace legacy systems [began] about five years ago, but has really snowballed in the last 12 months," he said.

Government vertical success depends on industry-specific know-how

The opportunity for solution providers lies in taking basic PC-based CRM and BI products and building functionality on top of them that plays specifically to government procurement processes. This is what ePartnersGC has done.

"We've made a substantial investment in IP [intellectual property] based on the Microsoft Dynamics applications that have been very successful," Snyderwine said. The ePartnersGC software takes the firm's in-depth understanding of federal procurement processes to automate what are currently manual practices based on basic spreadsheets and paper forms. "Our software guides government contractors through the very stringent procurement processes that contractors have to follow to win, and fulfill, contracts with federal agencies," Snyderwine said. The software can be customized based on the specific government agency involved, the security rating of the project and the size of the award.

To date, ePartnersGC has snagged five of the top 10 federal contractors as customers, including Raytheon and General Dynamics, and recently completed a project for a $200 million division of a large telecommunications contractor for the federal government's space program.

"With our software, we were able to replace the existing legacy system that encompassed all accounting and financial operations -- from revenue recognition to billing to accounting reporting and purchasing -- into a single, PC-based integrated system," he said. The ability for the ePartnerGC software to integrate with legacy systems was key to the success of the project, which was considered mission-critical by the firm.

"We managed to integrate everything from basic CRM all the way up to top-level financial reporting using our version of the Microsoft Dynamics and Office suites," Snyderwine said. ePartnersGC derives approximately 35% of contract revenue from the resale of the underlying Microsoft software, 15% from its own proprietary software and 50% from related consulting and implementation services.

Government vertical VARs must master intricacies of procurement process

Indeed, critical to succeeding in the government contractor market is understanding the federal government's very particular procurement processes and accounting rules, according to Snyderwine. "You have to understand the accounting regulations, the rate pools, the contracting methods and the cost-plus accounting rules," he said.

This includes following directives from the Defense Contract Audit Agency (DCAA) and the Defense Finance and Accounting Service (DFAS) as well as Federal Acquisition Regulations (FARs). Then, each individual government agency has its own unique ways of doing business, which contractors must conform to. Thus working with Department of Defense (DOD) procurement officers is different from working with those from the Environmental Protection Agency (EPA) or the Department of Health and Human Services (HHS).

Advice for firms wanting to break into the government vertical? "Don't try and sell a generic system like MAS 90 or some other broad solution. This is a vertical that requires significant customization," Snyderwine said. He admitted that another challenge is finding qualified people that have both the necessary technology know-how and the industry expertise -- "although it's possible to train them if they have a strong accounting or CRM background," he added.

It's certainly possible for a company that participates in a number of other verticals to leverage their expertise to penetrate the government market, Snyderwine said. He pointed to ePartners' business model as an example.

"We serve a broad range of markets by taking standard desktop software and applying industry expertise delivered by local consultants," he said, adding that, after all, the main goal is the same regardless of vertical niche. "You are trying to align technology and business goals of your customers to make significant process improvements to the way they operate," he said. "That's a constant, no matter what market niche you're serving."

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