Governments and taxpayers are often seen as a safe refuge when tough times force companies to delay projects and shutter spending. And for some resellers watching their corporate customers put orders on hold, a government contract can be the lifeline that pulls them through the recession.
But right now a ticket to Parliament House is far from guaranteed; some areas of government are tightening their belts and long-standing Canberra resellers are feeling the pinch.
Witness Oakton Limited, an IT consultancy that works closely with government, which announced on
17 February a half-yearly net profit after tax of $6.4 million, down 48.7 percent. Oakton managing director and CEO Neil Wilson blamed the company's performance on reduced levels of Federal Government demand and the global financial crisis.
The key to government contracts is knowing what to go for and how to get it. As the stimulus package shows, there is plenty of money around and a good amount is destined to be spent on IT this year.
IDC said the biggest of the top five technologies for the year is the outsourcing of services. This is closely followed by mobile voice, the consulting and integration of services, fixed voice and then IP data. The top ICT buyers will be the biggest spenders in these areas and they are banking and government. Education is also high on the list.
Melissa Martin, senior market analyst at research company IDC, said the stimulus package is a
great opportunity. "As we have observed in past economic situations, such as the Asian financial crisis in 1997, governments are often seen as a lender of last resort in order to stimulate the economic recovery of their countries," Martin said.
"While it is expected that commercial organisations look towards cost-cutting measures to survive, governments are expected to boost spending in order to stimulate demand.
"In this financial crisis, we see this again taking place on a global level, as well as at a national level, with
a government stimulus package coming from the Australian Government worth $10.4 billion. While not all the measures announced include specific ICT expenditure-related items, their net effect is likely to have
a positive impact on the ICT industry within Australia."
And that's definitely good news for the channel. Mark Deere Jones, business systems group director at Panasonic, points out that one of the best aspects of working with the government is you know it can pay its bills.
"While capital expenditure through the corporate or private business world is being reduced, I don't see that in government," Deere Jones said.
But what will sell? Boaz Fischer, managing director at CommsNet Group, said he thinks there are opportunities in government for organisations that create value through their solutions and services. He said that although budget constraints are in place at government departments, there are opportunities in consolidation, efficiencies and cost savings.
"In these times of market turmoil, businesses will survive and prosper if they can offer value- driven benefits."
For many government departments, that equals providing better services at cheaper prices.
Efficiency, the easy sell
Jack Glazenburg's company is called Nu Teck Communications and his reseller organisation specialises in phone systems. Nu Teck and Cooma-based RJS Communications recently deployed ShoreTel at Cooma Council in NSW. Glazenburg's customers include the NSW Parliamentary Counsel's Office. He said that the proposed Government stimulus will create a bounce in buyer confidence.
"It will release monies into the system that will flow down, for sure, and there may well be supporting tax incentives and lower interest rates that will further promote sales of technology," Glazenburg said.
"Government access to capital and its ability to invest in new technology during tough times creates opportunities for companies like us."
He said local government is a "key market" for upgrading telephony to Unified Communications systems.
"Local government is particularly interested in pure (Unified Communications) systems that provide access to all features and functions whether an employee is at the office, home or on the road."
Glazenburg said that for resellers, growing pressure on government employees to be more productive has created opportunities for technology resellers.
"The business case for (Unified Communications) with mobility integration is a strong one," he said. "Government at all levels is interested in the total cost of ownership as well as the traditional issues of reliability, scalability and ease of use. Being able to demonstrate the highest levels of customer satisfaction in the market is another hot button for government."
Storage vendor EMC also sees government striving for efficiencies. EMC's Australian general manager, David Henderson, said the stimulus impacts all sectors of government. "The investment in federal, state and local government will present opportunities across Australia for resellers," Henderson said. "This means all partners will have an opportunity to work with branches of government, with education being a standout. Infrastructure investment will create a demand for better storage, content management, archiving and file sharing," he said.
Martin Milthorpe, government sales director atNetApp, sees shared services as one of the largest opportunities in government. "The shared services groups, such as ZenITex in Victoria and the South Australian Government's shared services centre, are looking at saving the government a lot of money on their IT spend by consolidating a range of different types of IT services, applications, hardware and people. This creates a lot of opportunity and provides a high degree of supportive architecture and a simpler way of providing an IT environment," he said.
Milthorpe said NetApp is working on a couple of these shared opportunities. He said opportunities for partners come from defining their role in the consolidation environment around managed services, architecture, strategy and the operational processes.
"Process improvement is a major part of making the shared services offer for the whole of government come to life," he said.
Zoe Nicholson, Sophos channel sales manager, said the security vendor's lab identifies about 1000 new items of malware a day and government is frequently targeted. "Privacy and data leakage scares dominated the security news in 2008; the UK military copped some real flak throughout last year, for example," Nicholson said.
"Governments and their public service departments are under the greatest legal pressure and the keenest media scrutiny. So data leakage and encryption requirements will be key within the government agencies. This represents a strong growth area for revenue since there is likely to be investment in new technologies such as centrally managed, full-disk encryption and data leakage prevention."
A key to working with the public sector is identifying what they want to achieve. Pip Marlow is the public sector director at Microsoft and it's her role to help partners win and fulfil government contracts. She sees areas for Microsoft partners aligned to the priorities of the government.
"Think education, think health and think a more efficient and effective government. And then I would say think outreach to citizens because unlike commercial businesses, the government thinks not about making money but about delivering citizen services and our citizens aren't all in the CBD either," Marlow said.
"They are out in remote areas and now more than ever our partners can enable technology to help the government extend services to citizens who don't get those things today without having to drive miles. I think you are going to see technology playing a role in the outreach of additional services and making the lives of average Australians better."
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