FOSE Vendors: Government Business Goes To Partners Who Think Differently

Is the timing right for public-sector VAR business to really take off?

Various channel-centric vendors interviewed by Channelweb.com at this week's 2009 FOSE conference in Washington, D.C., seemed to think so. Everyone from a behemoth such as Hewlett-Packard to an upstart such as infrastructure management maven ScienceLogic is hoping to push its channel hard toward reaping the rewards of public-sector opportunities.

Over the course of several conversations during three days at FOSE, most vendors agreed the government space is ripe. They said that, from a broader level, the Obama administration's focus on technology is shining a light on what they and their partners can do.

The challenge now, they agreed, was imbuing their VARs with that same sense of urgency -- especially the ones that have been frustrated, and even burned, by government deals before.

"There is still money being spent -- people are just looking more closely at how to spend it," said Josh Stephens, director of technology at SolarWinds, a network management software vendor. "Let's say, for example, there was stimulus money in place for an IPv6 project. You'll have a handful of places that have already spent the money on IPv6 -- so partners who can help at the program level can help them be intelligent about what they've already done and need to do next."

Everything Channel's 2009 Growth Study revealed that VARs are feeling the effects of a recession economy like everyone else, especially as it related to growth plans this year. But many VARs were particularly bullish with regard to growth opportunities in public sector hot spots such as federal, state and local government, health care and education -- the traditionally recession-resistant verticals that now, thanks to federal stimulus dollars, represent at the very least a promising bet.

Tom Rigsbee, Motorola's market development manager for U.S. federal government markets, said Motorola was trying to get its channel to look at opportunities with broader solutions instead of individual Motorola technologies -- in other words, being able to serve multiple functions lines up with the types of solutions that play best in government.

"We're trying to get our partners to think about Motorola from a solutions perspective, not just an individual piece," he said. "If they do mobile components, maybe they can play in wireless LANs. We want to create an ecosystem where, as Motorola continues to scale these [products], our partners scale, too."

Many vendors also said that even things such as leasing, a rarity in many public-sector situations, was on the table.

"Desperate times call for different measures," said Joe Martin, director of business development, government, for Panasonic Computer Solutions. "More municipals are leasing. With all but three states facing budget gaps of some kind, that's not surprising, I guess."

Next: Flat Is The New Up

In the broader economy, "Flat is the new up," said Pamela Kelly Doyle, director of education for Fujitsu's imaging products group. But in government, she said, "We have a president who's extremely tech-savvy. It's clear not only that we'll see money going to things like health care, but some agencies, like the NOAA [National Oceanic and Atmospheric Administration] are telling us they're getting twice the funds they ever had before. There's a lot of uncertainty about this for VARs, but they can be certain [about] any place that needs help cutting costs. Network scanning cuts costs. Virtualization cuts costs."

"If anyone has money -- our money! -- it's the government," said Don McMahan, regional business manager and vice president of sales for the U.S. and Canada in Eastman Kodak's Document Imaging and Graphic Communications Group. "The majority of our partners, though -- 70 percent I would say -- expect to have growth this year. Anyplace where you have a lot of images, a lot of back-file conversion, like health care, like the Department of Defense, there's a flurry of activity that we're a part of. Any one of these things happening with the stimulus has a [document-imaging] play. Document imaging has black-and-white ROI."

Sometimes, suggested some vendors, it's a matter of changing their VAR education to help solution providers look at the vertical with a different mind-set. "I think a lot of VARs don't understand the federal government sales cycle," said Brian Grainger, vice president of SpectraLogic Federal. "It's not like selling to Exxon-Mobil or Krispy Kreme. What would normally be 90 days could be nine months in the federal space, and a lot of VARs get frustrated and pull the plug earlier than they should."

Health care, energy and education, specifically K-12, are the strongest vertical-specific bets for solution providers, Grainger said, and with each also comes regulatory challenges.

"We're there to help them sift through the minutiae," he suggested.

Some vendors see the government business climate as an opportunity to select better and more targeted partners.

"There are plenty of mom-and-pop type shops, but government requires a strategic relationship," said Josh Larsen, senior manager for federal accounts at Check Point.

Bernie Wu, vice president of business development for FalconStor, admitted that despite years of doing federal business, FalconStor could stand to be more organized in how it targets federal opportunities and advises its solution providers.

"We're grossly underrepresented in the federal sector, and a lot of our business has been ad hoc or accidental," Wu said. "Systems integrators and VARs are the key thing for us here because they're not interested in just one piece, they're interested in carrying our whole library -- that's an ideal vehicle from a competency standpoint. The government agencies need that: virtualization, disaster recovery, building the new, improved, next-generation data center. [VARs] are ideal because these are not commodity products needed."

"Most of the questions we get are about how is the money coming down from the top and thus into procurement," said Greig Fields, federal strategic sales director at HP. "Some of the allocations are there and we're finding out where to look. But this is the first year I can remember where we did do direct planning on which partners were needed where. Government requirements necessitate us using partners. The channel is critical."

"Current databases are absolutely mission-critical," added Stephan Schmitt, vice president of marketing for HP StorageWorks. "And this is petabytes of data we're talking about. There's a tremendous opportunity to improve service levels, and that kind of knowledge is what the administration is looking for."

Avocent is another vendor adding executive positions specifically to address its government piece of the channel because it's a vertical requiring especially targeted focus to separate good opportunities from bad leads, said David Crafton, Avocent's director of sales for government and system integrators.

"The government side is where a lot of the unique innovation takes place," offered Benjamin Grimes, Avocent's senior vice president of corporate strategy and chief technology officer. "How does the cloud play in the government? There are a lot of interesting conversations going on because in the government, you're really creating a new environment. The industry up until now has been very transactional: 'We have a device for you.' But you have to up-level the story to center around the solution, as opposed to the transaction. We need to have the right type of partners who think that way."