Stars, Stripes and Solutions

"The first day [Tuesday, it took time to get any idea what was happening," he says. "On day two, we got back into the building and could assess the IT damage."

Ironically, the portion of the building that suffered the most damage was the same area where SMS had worked previously. "We had very good documentation of what was in place," Ladd says. "We knew the IT infrastructure and the networks, the agencies they served and their missions."

SMS engineers came up with a network-infrastructure design for a new facility based on Cisco products and presented it to the government's newly created Emergency Network Team, which approved it, polished the details, drew up the equipment list and developed an implementation strategy. Cisco pulled hardware directly off the assembly line in California to fill the order, then chartered a plane that carried the equipment cross-country for Sunday-night delivery.

Putting in 30-hour shifts, Ladd and his team of 30 SMS engineers,aided by volunteers, vendors, integrators and whoever else could be pressed into service,accomplished the task faster than employees could figure out where they were assigned to go. Office space and an operational network for more than 1,500 Pentagon workers was ready for the start of business Monday morning, Sept. 17. "These buildings were bare when we started," Ladd says. "Seeing this come together from scratch was a remarkable feat to witness."

Hot Vertical

Remarkable indeed: SMS' prior project for the Pentagon took a year-and-a-half to complete, though it did involve another 3,000-plus government employees. Hopefully, no one will have to engage in such a massive disaster-response mode again. But even in the absence of catastrophe, business for solution providers working in the government vertical market is anything but business as usual. Not long ago, the notion that government work could outshine private industry in IT opportunities was unimaginable. But the dot-com bust, recession and terrorist attacks have ignited the marketplace.

Projections for government IT spending show a 10 to 15 percent growth for the foreseeable future, according to Rishi Sood, principal analyst, government, for Gartner. "There's an incredible shift taking place," he says. "Traditionally, state and local governments grow anywhere from 5 to 7 percent in IT spending. Federal spending is usually in the 3 to 5 percent range."

Total spending for state and local government is estimated to reach $56.7 billion by 2005. At the same time, federal spending is expected to hit $52.1 billion. Most of that overall growth is centered on defense spending,particularly homeland defense,with disaster recovery, enhanced security and decentralization of data resources as the top priorities. That spending will eventually spread across all government sectors.

"We see Department of Defense spending spilling over into the civilian federal agencies and then spreading downward into certain state and local government segments, like public safety and health," Sood says.

Solution providers established in the federal marketplace are eagerly reaching out for new solutions to fill urgent demands for homeland security, as well as other allied initiatives. The race is on to present proposals by April, according to Terri Allen, senior vice president of sales at GTSI, a $677 million Chantilly, Va.-based VAR that often acts as a general contractor, providing entree to companies with innovative solutions.

For example, GTSI recently announced a strategic partnership with mFormation Technologies, an Edison, N.J.-based start-up that provides wireless infrastructure-management software. The public sector was not part of the vendor's original business plan, according to mFormation CEO Ron Pettengill, but reports of how text-messaging devices weathered the catastrophe in New York changed that.

"As cell phones became useless in the metro New York area, RIM Blackberry devices could still communicate," he says. "That wasn't lost on the government, or us. We've seen a fast spin-up of procurement contracts for devices and applications for mobile information."

Government officials, too, are busy connecting technology providers to federal agencies and departments. Boyd Rutherford, administrator in the Office of Enterprise Development at the General Services Administration (GSA), is eager to demystify the process of doing business with the government. "I'm trying to make us more of a resource to our acquisition community," he says. "Small businesses know that we're here. We're ready to do business, and we're ready to help. Now we can also help connect [government departments with quality small businesses."

Waiting In the Wings

On the state and local levels, it will take some time before homeland defense funds wash through the system, Gartner's Sood predicts. "There hasn't been a lot of IT spending allocated in matching grants down to state and local government. But we expect that to occur during the next 18 months," he says.

In the meantime, Sood sees ample opportunity for solution providers to become established in those markets by providing traditional IT offerings or going

after fast-growing segments, including e-government and videoconferencing in various courtroom applications.

With the slowdown in corporate spending, some solution providers are even transforming their business models to take advantage of the new opportunities. For example, Logical Choice Technologies, a Duluth, Ga.-based solution provider, closed down its corporate efforts to focus entirely on government contracts; two years ago, private-sector revenue accounted for 40 percent of its billing. "Our vision is to be one of the top public-sector companies on the East Coast," says Cynthia Kaye, president and CEO of Logical Choice.

That, in large part, means going after federal dollars. "Right now, we sell off existing Compaq GSA contracts," she says. "We're in the process of getting our own, but that takes months." In the meantime, in-state prospects are bright. Logical Choice's most recent deal was a million-dollar implementation of a pair of SunFire 4800 midframe computers dedicated to running the judicial and tax system in Cobb County, Ga.

Paul Sylvester, president and CEO of Manatron, a Portage, Mich.-based software and service provider, has seen his business double in size during the past five years. Revenue topped $43 million last year, in large part due to Manatron's core business of real-estate appraisal and taxation systems for county governments. One of those relationships led to a contract to develop the county auditor's Web site in Hamilton County, Ohio. The project involved taking reams of real-estate information stashed in filing cabinets and making it available online.

"We wanted to make the information available at the taxpayer's convenience," says Hamilton County auditor Dusty Rhoads. "If we could reduce staff and save taxpayers money, that was a bonus." In fact, the project proved so successful,with more than 4,000 daily visits taking place online instead of in-person,office staff was reduced by more than 34 percent, savings that outweigh Manatron's $24,000 annual fee to host the service.

ROI Factor

For all the talk of government flooding the market with money, state governments still have to contend with tight budgets. In this environment, IT has to demonstrate speedy return on investment. John Cook, manager of information systems for the Florida Court System, has been pioneering a videoconferencing system to deliver enormous savings in time and transportation costs.

The project began in the mid-'90s in an effort to find better ways to manage workers' compensation cases. Plaintiffs would have to appear in person in Tallahassee, Florida's capital, to deliver brief statements. From Miami, that's an eight-hour drive north.

Cook turned to two companies for a voice-over-IP system. One, Tallahassee-based Hays Computer Systems, had provided networking hardware and services with the state government since the mid-'80s. But as videoconferencing was added to the mix, Polycom distributor GBH Distributing won a contract to provide endpoints and additional services. For Cook, it was a win-win scenario.

"Hays resells Polycom, too. We put this through a competitive process and felt it was best to leverage both companies," he says. "Hays knows networking, but is still fairly new to the videoconferencing application. GBH knows that very well. The two together make a good team for us, though they compete with each other. It's the best of both worlds for us."

Cook is now promoting how videoconferencing can cut costs elsewhere. For example, the state of Florida pays $6.7 million annually to transport inmates round-trip from jail to court to make their pleas. According to Cook, a $1 million investment in IP-based videoconferencing can end the need for costly teams of law-enforcement officers to serve as chauffeurs.

"Spending money to save money,everyone hears about that," says Stephen Price, East Coast vice president of sales at GBH. "But to actually see it imple-

mented and achieved through technology is impressive. That's what Cook and his team have been able to do."

While it is still too early to tell the full extent of the shift in the IT marketplace, those looking to feed the government's increased appetite for IT are likely to see a long stretch of prosperity. The call to protect the IT homefront is a monumental task,a wholistic integration that cuts across federal, state and local boundaries. It is at least as significant as the space program in the 1960s. Solution providers that join in the effort will now have their own opportunities to fly high.