Chasing government gold

It is becoming increasingly difficult to survive as a horizontal reseller, providing everything to everyone. Sometimes it is a good idea to have, and be known to have, a specific area of expertise. Conversely, backing a regressing sector or sticking to one which is on the wane, is an equally perilous strategy.

However, there is no point chasing a rainbow unless you are sure there is a pot of gold at the end. That is why resellers are well advised to assess the opportunities in the government space. They definitely have money in their pot, you only need to look at your pay slip to confirm that fact.

With a new government in place, there is no better time to be a government-savvy channel player. One of Kevin Rudd’s recent education pledges was around providing a computer for each senior secondary student. This is coming at a projected cost of $1 billion, however, many believe costs could outstrip this figure.

IDC-owned research and advisory firm, Government Insights, recently announced the release of its annual Top 10 Predictions report for the government sector in 2008 in the Asia-Pacific region, excluding Japan (APEJ). The report stated that infrastructure optimisation and IT resource repurposing will become the top IT trend in the government sector in 2008.

Raphael Phang, research director of Government Insights in Asia-Pacific, said: “The undeniable economic benefits from technology are driving governments to further optimise the value of IT investments. In 2008, upcoming next-generation technologies, such as Web 2.0, virtualisation, mobile technologies, and biometrics, will take centre stage.”

Other predictions in the study included infrastructure optimisation and IT resource repurposing picking up steam with virtualisation and consolidation strategies; next-generation applications taking e-government in a new direction; governments extending ICTs to safeguard the nation, and boost citizenry protection, while striving to address privacy concerns. Gartner also believes that strategic IT sourcing will emerge as a key procurement method, with more governments deploying strategic sourcing strategies to evaluate less clear decisions and manage multi-jurisdictional or multi-stakeholder engagements.

However, before resellers scramble to become a government business-focused outfit overnight, it does not prove as simple as resellers might have hoped.

Paul Budde, managing director of independent telecommunications analyst BuddeCom, said resellers wishing to succeed in the government space need a good understanding of the bureaucratic procedures and be on the relevant lists of preferred and accredited suppliers.

“Resellers should take a whole-of-government approach, in other words, who are the other decision makers and/or influencers in the projects and/or can some of the people be lobbied for the cause?” said Budde. “[Resellers should] try and keep as many as relevant people within their contact network – there are often many people changes even throughout the duration of the project.”

Budde said larger companies have more resources to successfully land government business, but there is nothing to stop smaller companies investing their time in these processes and also win business.

“Alternatively [resellers should] try and link up with the bigger players as a possible participant in the project that will be run by them. The government changes but the bureaucracy changes. There might be different projects but the way to win these projects will not change,” added Budde.

Martin Milthorpe, government sales director at vendor NetApp, said: “[The government sector] is a big part of our business and we have been generating some great business in Canberra and the other states.

“We have a direct approach to the marketplace and our sales people will go out and meet government clients direct. We ask the customer who they use as a channel partner and if they would prefer to use someone else based on our certified partners.”

Milthorpe said although NetApp has no partners based solely on government business, its reseller base does consist of a number of partners who have a strong government focus.

“With the new government it is a case of wait and see,” added Milthorpe. “We are waiting for the May budget and there are also a lot of initiatives coming out, too. Resellers need to spend time with the customer as the customer chooses who they wish to work with in the future. Resellers also need to engage with vendors early so when a panel contract comes up they have shown they are committed to working with that vendor.”

Case in point
To highlight just how lucrative and potentially accessible government business can be, it is worth noting previous wins. White-box maker Pioneer Computers works with a range of resellers and has landed a glut of recent government contracts.

In August last year Pioneer secured a procurement deal worth $100 million over three years. The firm successfully signed the Local Government Procurement contract for the supply of PCs, notebooks, servers and associated services and equipment. Under the contract, 152 New South Wales councils are able to buy from Pioneer Computers directly.

At the time of the deal, Jeff Li, manager at Pioneer Computers, said: “We are thrilled to sign on as Local Government Procurement contractor. We offer the flexibility of build to order and local support. Our range of ruggedised laptops and industrial computers appeals to councils. It fits into their requirements. We offer customised solutions and work together with clients on projects.”

Pioneer also said it is open to working with other vendors to provide councils with special government pricing. “There are 152 councils in NSW, each with a budget to spend. Opportunities are tremendous.”

Besides the Local Government Procurement contract, Pioneer is also a Commonwealth Government Endorsed Supplier, a Queensland Government Approved Supplier and in November it signed up the $500 million ITS2007 NSW whole of government panel contract. The panel contract includes the supply of rugged computers and notebook, tablet PCs and UMPCs. The firm has been a NSW government supplier under ITS 2000 since the year 2000.

“Under the new ITS2007 contract, the government has narrowed down to only a handful of vendors. We are glad that we made it,” said Li. “Ruggedised computers and notebooks, tablet PCs, UMPCs and industrial computers are not your everyday computers. They are for particular market segments with precise requirements for specific purposes. We are working with government, corporate and consultants on projects to roll out these machines as part of a solution.”

Pioneer has been supplying its own brand of build to order computers (DreamVision), notebooks (DreamBook) and servers (DreamMicro) since 1996. In recent years, rugged computers and notebooks, tablet PCs, UMPCs and industrial computers have been added to the product line. Now there are more than 20 models of PCs and notebooks ready for the ITS2007 contract.

Pioneer is a great example of what can be achieved in the government space if you approach the sector in the right manner. However Pioneer does not always look to win such money-spinning business on its own.

The firm has publically stated that it is working alongside vendor Konica Minolta Printing Solutions to go after government and corporate contracts.

Li said many of the customers who purchase personal computers, notebooks and servers are also looking for printers. “The Konica Minolta printers fit into our product portfolio perfectly. The alliance also follows Pioneer’s approach to focus on the government markets,” he said.

Leading with a vendor by their side is common move from the reseller community, too. Channel players have more chance of landing that government deal when they are openly backed by a brand-heavy vendor partner. Vendor backing makes end-users, the government included, more confident and likely to deal with a reseller.

Education goldmine
Always at the top of the government agenda is the importance of education and ensuring the country has a well facilitated and efficient education system. Rudd spent much of his successful election campaign courting his “education revolution” and now he is in power the IT industry can expect Rudd to invest in IT infrastructures as part of the revolution.

With this in mind, resellers would be well advised to ensure they have a ‘education story’ to help get the nod from the government on education contracts.

In a recent IDC report titled Australia Education Information and Communication Technology 2007-2011 Forecast and Analysis, research manager Phillip Allen commented: “The most important business drivers for ICT investments within the Australian education sector include solutions that can improve employee productivity, provide better customer service, and help organisations respond faster to business needs.”

Telephony vendor Nortel has been alive to the opportunities in the education space and that has directly benefited its channel partners, including 3D Networks. Nortel recently landed a $7 million contract win with RMIT University, plus two further multi-million dollar networks at major Australian universities, Macquarie University in Sydney and Edith Cowan University in Perth.

At the time Nortel claimed the vendor and its channel partners are “enjoying significant momentum in the higher education market with its suite of Unified Communications, voice and data networks”.

Peter Hole, infrastructure services manager at Macquarie University, said: “Our network is very different because the number of connections and users is much higher, the spread of the network much greater, and we don’t have as much control over the types of connected devices.” Hole said that Nortel was chosen: “because [they] gave us a ‘tailor-made suit’ compared to other vendors’ ‘generic suit with the pants taken up to fit’.”

This is a relevant point as it drives home the notion of ensuring vendors and resellers have a tailored solution to win government-funded business. Australian managed security services provider, earthwave, followed this ethos when it launched ISONet earlier this year. ISONet is a secure carrier neutral network, Internet gateway and portal for schools. It was launched in response to the sharp increase in school IT security issues as the Rudd Labor government’s ‘digital education revolution’ kicks off.

The Independent Schools Online Network is a secure Wide Area Network initiative developed by earthwave in conjunction with the Association of Independent Schools NSW (AIS). The project has been designed to provide independent schools with access to secure high-quality broadband data services, Internet resources and managed security.

The project, which has been deployed to more than 50 schools since its inception, has witnessed the average student usage rise from 15Mb per month to more than 200Mb and with the promised $1 billion in extra funding and ‘one computer per child’ the rate is set to skyrocket over the next four years.

Carlo Minassian, founder and CEO of earthwave, said: “The rise in computer usage and increase in classroom activity performed on the web can be directly correlated with the increase in risk of exposure to malware and other harmful material.”

Ian Scott, director of IT for St Andrews Cathedral School has been using ISONet since 2004 and said; “ISONet is great as it provides access to a managed network, reduced connectivity and data costs, centrally located content and web filtering, virus protection, network firewalls, network intrusion prevention, distributed denial of service protection and importantly a high level of network security.”

Frank Brooks, director of ICT for the Association of Independent Schools NSW, said: “With the new education policy, security must become a top priority for school ICT managers, particularly as Gen Y use lots of Web 2.0 websites such as Facebook, MySpace and Youtube, which are rich with content, features, AJAX-enabled applications and embedded JavaScripts, delivering PC processing that leaves the user vulnerable to exploitation.”

PC vendor NComputing has spent this year on the hunt for IT resellers who support Australian schools. The firm’s plans again preempt the allocation of huge funds for desktops in Rudd’s so-called Digital Education Revolution. NComputing has made a concerted effort to get a piece of the government-funded pie by directing its focus to resellers in the education sector.

Michael Pamphilon, vice president and country general manager for A/NZ and South Pacific at NComputing told CRN the vendor offers a unique value proposition to resellers by offering a suite of virtual desktop products available solely through the channel. He claimed that other PC vendors may be considering offering ‘direct deals’ and cutting out IT resellers when government contracts are handed out.
“We are a 100 percent channel organisation, so would much prefer to see the [government’s] $900 million allocated to a whole lot of resellers around Australia, rather than just the big four PC vendors,” he said.

Pamphilon commented that the government won’t be employing a system of central procurement. Rather, the Department of Education Workforce Relations (DEWR) with a digital education taskforce in Canberra will be facilitating the distribution of the funds.

“It’s a competitive situation, even now schools are competing against each other as to who has the greater need, but the government won’t be making any direction about technology. It will be up to the Department of Education, the Catholic Education Office and the Australian Independent Schools Association who will be talking to schools about what is appropriate and looking at issues like sustainability and impact on infrastructure,” he said. “Kevin Rudd and Julia Gillard are up to speed on our technology, naming virtual desktop as a valid option for schools to leverage. This opens up this valuable new technology to all schools in Australia.

“I guess the key is if someone is going to use a virtual environment or thin client they’re going to need to make sure it can handle multimedia appropriately. It’s key to secondary and even primary education these days and it’s pretty well known that 90 percent of thin clients can’t handle anything more than web streaming,” added Pamphilon.

How to DIY
It is great to see the IT industry and the channel doing so well in the government space, but how do resellers go about winning some or more of this government-funded business.

Each year The South Australian Government spends approximately $3 billion on a variety of goods and services, and to ensure they tender to the right supplier they have drawn up a guide to winning government business.

The first stage to winning government is finding out what opportunities are available. The SA government recommend visiting the SA Tenders and Contracts website to find out details of all government public tender opportunities, as those with a value greater than $50,000 are advertised online. According to the SA government, business for small or low value purchases may not be advertised.

Many of the high value government contracts are let to suppliers who perform the role of head contractor. Small to medium sized enterprises can play a part in these contracts as subcontractors or by forming a consortium to become the head contractor. This may be the biggest opportunity for channel players, who could be well advised to build relationships with larger players and gain access to government business through those means.

The SA government also recommends suppliers attend courses run by The Department of Trade and Economic Development (DTED) who run ‘Better Business’ training courses for suppliers wishing to enter the government marketplace or to expand their involvement in supplying goods and services to government. These seminars and workshops are focused on training suppliers about tendering for government business.

There is also the bid strategy to consider where resellers should follow the instructions in the tender rules and templates for responses. Government contracts may take negotiating after the tendering process where resellers should clarify what they intend to negotiate about and raise any additional issues to include. Even once the deal is won there are contract management issues, by which the supplier and the government meet the respective contractual obligations. This is an ongoing process which encompasses managing contract risks, monitoring the contract and managing payments.

Guidelines such as those laid down by the SV government are a good starting point for what resellers should be doing to win government business. Smaller resellers are also well advised to find out more about what their vendor partners do in the government space. Many vendors will have specific vertical programs which will cover government and education business. Resellers should have knowledge of the opportunities in the government space and ensure they have the tailored offering to land the profitable and sustainable government deal.