For both new and veteran VARs, selling public sector IT solutions can be profitable, but partners will have to invest time in learning the intricacies of buying practices and technical need at varying levels of government. They'll also need to be ready for longer sales cycles and other complications that don't always exist in the private sector.
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Industry experts report that there are billions of dollars in opportunity for VARs. “It’s massive,” says Mike Atlee, national director of government and education at Avnet. For IT spending in the public sector this year, there is an estimated $78 billion in the federal budget, $100 billion at the state level, and about $20 billion plus in the K-12 and higher education markets, according to the company.
Want to sell public sector IT solutions? You'll have to invest time
Partnering in the public sector is as much about understanding unique practices of the vertical as it is about technical know-how.
“If a VAR wants to move into the public sector, what they need to know is that it takes a commitment of at least four to five years and investment to build a team,” says Adam Robinson, CEO of Govplace, a VAR that delivers enterprise IT solutions primarily to federal agencies. The company spent about a decade building its practice.
That's partially because public agencies have very long RFP processes and must take into account a large array of vendors with many options in technology and pricing. Many agencies must prove out the cost of their long-term investments before signing on. Some also have requirements in hiring regional providers or ensuring diversity in their partners.
Network growth drives need for public sector IT solutions
From a technical perspective, the drivers and projects fueling network spending in the public sector include virtualization, the adoption of cloud strategies, a proliferation of mobile devices, and robust data applications, such as video and voice.
“We’re seeing government agencies move from 1GB architectures to 10GB architectures, [and moving to] expand the WLAN. They also need to manage their networks better,” says Dominic Gianfrancesca, director of network solutions at Avnet.
At the federal level, think data center consolidation and interconnectivity
What sells can change depending on which segment of the government is buying. Spending at the federal government level, for example, is driven by data center consolidation/virtualization, cloud, mobility and security. This is partially because video teleconferencing and other real-time applications are driving up data utilization rates. As a result, more resources are moving to the network and cloud with interconnectivity being a critical issue.
Lower budgets at the state level could mean cloud investment
At the state and local level, there’s less large-scale consolidation and VARs are seeing more willingness to outsource to the cloud. “There’s also more willingness to look at alternative networking vendors to reduce cost per port,” says Robinson.
Michael Humke, senior director of vertical markets at Ingram Micro, agrees that there’s less spending at the state and city level compared to the federal, and notes that network support and security and information access are driving network spending.
“In 2012 we expect to see mobility drive more spending at the federal and state level for secure device and network access,” Humke adds.
Humke notes that there is less competition for VARs willing to sell into agencies outside of major cities and towns.
In education, more bandwidth needed
The digital classroom, distance learning and e-learning are big drivers in the education sector. E-Rate, and FCC program that aims to assist networking projects for schools and libraries in low income areas , still provides opportunity for the channel.
There’s also a lot of device awareness in higher education prompting the need for more bandwidth. This is driven by social networking, file sharing, WLANs, and student apps across the WLAN.
Public sector IT solutions in action
Premier Systems, Ltd., a woman-owned small business technology provider, which was founded in 1992, got its federal practice going about four years ago with the help of HP and Avnet GovPath. Avnet's partner program provides resources that help partners navigate and capture opportunities within every level of government and the education market.
Premier set out four years ago to build its government practice armed with a GSA letter of supply from HP and a history of strong technical solution providing skills.
“Currently, 50 percent of our business is public sector. By the end of next year we expect that figure to jump to 70 to 80 percent,” says Stephen Reese, vice president solutions at Premier.
Premier’s focus is hardware, storage, networking and services. “What we learned about the public sector is that a VAR needs to have a two to four year plan before it can become profitable in the public sector,” he says.
The good news is that some distributors offer partners considerable support when navigating the public sector vertical. However, even with a good amount of support and a bucketful of networking certifications, VARs need to know that getting a foot in the public sector vertical isn’t for dabblers.