Coming Together

"Almost all federal policies are creating some local opportunities as well," says Bob Laclede, distributor Ingram Micro's vice president and general manager of sales, public sector. Homeland security, he says, is just one example: "While the Feds are focusing on the air-traffic-control system and the like, state and local officials are also employing the same technologies to close gaps in building security, water supplies, electrical grids, etc.," he says.

Distributors have a positive view of the government arena today, and they are eager to help VARs succeed in the marketplace.

"The growth this year is firmly going to come from the government sector," notes Mike Thomson, senior vice president of East Coast sales for Synnex Information Technologies, a Fremont, Calif., distributor. "After 9/11, the commercial side has been flat, but the government side,because it hasn't had the systems in place it needed,is struggling to keep up."

Because they recognize the growth potential of the government sector, a number of distributors have instituted special programs to help their resellers sort through the often confusing maze of regulations and procurement policies. Besides Synnex, Arrow Electronics, D&H Distributing, Ingram Micro and Tech Data all devote special resources to help their resellers overcome the special challenges of selling to the government sector.

"In the past four or five years, government...has gotten much easier to do business with, but the contract process is still somewhat difficult to understand," says Erich Ohngemach, director of field sales for the government at Clearwater, Fla.-based Tech Data. "By having a strong business partner to assist with certain types of services, getting into that market is somewhat easier." Some 16 percent of Tech Data's business comes from government sales.

One of the value-added services distributors provide is a road map for integrators to help them navigate through what sometimes seems like bureaucratic red tape. "There are a lot of rules and regulations our bread-and-butter VARs don't know of," says Bob Stegner, vice president of channel development for Ingram Micro, Santa Ana, Calif. "VARs are very good at understanding what needs to be done, but we help them get started in the government market."

More Than Security

Beyond security issues, other federal policies create a continuous demand for IT services on the state and local levels, Ingram's Laclede says. The Health Insurance Portability and Accountability Act (HIPAA), for example, requires and sets standards for transmission of patient-care information and information privacy, creating potential sales of IT services to local health-care agencies. The Child Internet Protection Act (CIPA), which requires filters so pornography doesn't reach children, means someone has to implement the technology in schools and libraries. But many VARs just don't know how to respond to government RFPs. That's where distributors can help. For example, Ingram has a group devoted solely to developing proposals, and Tech Data's Government Services team acts as the government contracting support arm for all of Tech Data's government customers. "They provide bid-and-proposal, technical-refresh, product-information and pricing, pre- and post-contract administration and GSA Vendor Pass-Through and Letter of Supply support," Ohngemach says.

Arrow, too, has a technical department and bid desk that can help resellers complete bids in a timely fashion, says Steve Ramsland, vice president of sales for the Gates/Arrow division of Arrow Electronics' North American Computer Products group.

Distributors also manage hundreds of different vendor-rebate programs. "Some 70 percent of our vendors have government programs with some form of discount," Synnex's Thomson says. "But the rebates vary from one entity to the next."

In addition to rebate programs, many vendors have special government pricing. Distributors help resellers track government pricing from hundreds of different vendors, usually with Web sites that offer price lists. Synnex, which promises special pricing on any quantity of items, lists some 30 different vendors that have special pricing programs on its government Web site. Arrow says it has special pricing programs from more than 50 vendors on state, local education and federal orders. Ingram has more than 300 vendors signed up to pass government pricing along to its resellers.

The Check Is In the Mail,Really

One of the few drawbacks to government sales is that the payment cycle is slower than with private business, notes Daniel Schwab, D&H's vice president of marketing. He suggests VARs look for credit programs with longer terms. That way, solution providers don't tie up their own money while waiting to get paid.

"Government sales are fairly easy to do, but from the time you invoice to the time you get your check, it may be 45 to 60 days, whereas on the commercial side, it's more like 25 to 30 days," Thomson says. But as Ingram's Stegner points out, the good news is that the credit risks are low. "One of the positive things about government is that we know we're going to get paid some time, though it may take a little longer [than in the private sector," he says.

To help bridge the gap between invoice and payment, Ingram, Synnex and other distributors offer special financing on government sales to help resellers with their receivables.

Stimulating State And Local Business

Local, state and educational sales are often dependent on neighborhood relationships. Distributors can help resellers focus on solidifying personal relationships by untangling the complicated web of different vendors' government programs.

"We spend 90 percent of our time developing end-user relationships and opportunities, but a lot of our future relationships depend on having a good partnership with the manufacturer," says Tom White, vice president of marketing and Internet services for iGov.com, McLean, Va., a reseller specializing in technology solutions for government customers worldwide. "If the vendors aren't government-savvy, you run into all kinds of problems concerning terms and conditions and even payments. Government program distributors like Ingram and Tech Data provide...a pool of manufacturers already exposed to those requirements, so you sidestep having to go through the review process for new vendors that have no experience in the government space."

And even though pricing may not be the most important issue for some government customers, the bottom line is always a significant factor in the negotiations, White says. "Manufacturers always put forth 'quantity one' prices, and distributors are very helpful in negotiating discounts, including additional discounts from the manufacturer for specific opportunities," he says.

"Personal relationships don't count so much on the federal level, because the deals are national in scope with a lot of different companies bidding," Tech Data's Ohngemach says. "But on the state and local levels, more opportunities for hometown relationships exist."

Smaller VARs that can differentiate themselves from larger competitors have a leg up, Schwab says. For example, one of

the products D&H distributes is a wireless transmitter, ideal for police squad cars. That's a perfect product for the neighborhood

VAR to sell to nearby precincts, as they can offer them not only the product, but the installation and support. It's demonstrating that type of expertise that will land the local solution provider

the deal.

"When you get down to the local and education markets, it's based a lot on the relationships between VARs and end users," Ingram's Stegner agrees. "You're not selling PCs; you're selling networking and services, and they've got to have someone who's going to take care of them. The school system may save a few dollars by buying direct, but they want a local VAR to turn to, especially if that VAR has children in one of their classrooms." n

Jennifer D'Alessandro contributed to this article.