Stimulus Package Not 'Piece Of Gold' VARs Expect: Forrester

"Money is available, but it may be smaller than you expected, and it's going to be hard to get at. You're going to have to do some real digging," said Andrew Bartels, vice president and principal analyst at Forrester Research, during a general session presentation at the XChange Government Integrator conference Wednesday in National Harbor, Md. The conference is run by Everything Channel, the parent company of Channelweb.com.

At first glance, the $787 billion stimulus package might seem like a windfall for IT vendors and solution providers. But after funds get filtered out for tax cuts and other non-IT related designations such as Medicaid or programs to support hard-hit individuals, what remains is roughly $28 billion available for IT spending over the next two years, Bartels said.

"That's not peanuts, but it's not the big piece of gold you might think it is," he said.

Some solution providers said stimulus-fueled sales have yet to materialize.

Jeffrey Goldberg, president of Washington Computer Services, a Brooklyn, N.Y., solution provider that serves both New York City and New York State agencies, said his annual run rate has plummeted from $10 million to $5 million. He said many government projects are being delayed as a result of the economic downturn. "We see a lot of work being deferred until after June 30," he said. "Right now, we have roughly $4 million in contracts that should have been completed. They haven't been canceled, but it has shifted."

Nevertheless, the government sector represents a strong opportunity for IT solution providers going forward. "Over the next eight years, there's a great opportunity in the government sector to help them deal with all of the challenges they're facing," Bartels said.

Federal agencies are spending money on IT now, but that will shift in the next year or two as state and local governments start to loosen the purse strings, he said.

To position themselves for future growth, VARs should focus on specific verticals within the government space where they have expertise. For example, selling security solutions to the Department of Defense requires a completely different skill set than selling to a state police department.

VARs also should add "smart computing" technologies, which Bartels described as next-generation technologies that add flexibility and are adaptive and responsive, to their portfolios.

"All of the focus will be on changing business results, optimizing business results," he said.

Steve Burke contributed to this article.