What Makes GTSI So Sexy?

His industry counterparts have taken notice: Young has won the coveted FOSE Eagle Award, akin to winning the Oscar for serving federal customers. He also has been named three times to the prestigious, peer-nominated "Fed 100" for outstanding contributions to government and industry. Pretty sexy stuff.

By pioneering the concept of segmenting his VAR sales force into special teams to serve megavendors, including Cisco, IBM, Microsoft and Sun, GTSI has remained profitable for four straight years. Sales for 2001 represented a 15 percent increase from 2000. By 2005, the federal government is projected to contract out $40.3 billion in IT products and services, a 28 percent increase from $31.6 billion last year, according to Input, a Chantilly, Va.-based market-research firm. In a recent conversation with VARBusiness, Young elaborated on the changing needs of government customers and how resellers can take advantage.

VB: What are the common pitfalls that resellers run into when they're just getting started in the federal marketplace?
Young: The biggest one is they discover, sooner or later, they're going to get audited. The government has a General Accounting Office and an Inspector General system. Many companies, by the time they get to that stage, develop some bad habits and end up losing millions of dollars in fines. But I like being audited. I like finding out that we're doing everything right.

VB: Aside from providing good products in needed areas, what's the bigger picture when it comes to what federal customers want from a reseller?
Young: They need a complete solution. They need a financially stable operation with a broad product set to draw upon. They want a trusted partner.

VB: Does all of that effort pay off in additional contracts?
Young: It sure does. They'll go three-deep with the references. They document everything and leave a paper trail for every decision they make. But once you pass the scrutiny, it results in more contracts and, of course, more sales. Which is why you make the effort.

VB: How ready was the federal government for the technology revolution in the '80s, when you started out with Falcon?
Young: Ready. When we started in 1983, personal computers were very new. It was the beginning of the PC era, and it was an exciting time. Federal government workers didn't have PCs on their desks, and the customer was ready and willing to buy. We were in the right place at the right time to ride the wave of explosive growth. Lotus had come up with a great spreadsheet program, and everyone wanted it. Apple came out with innovative products like its Lisa [computer. We sold quite a few of those. Lisa was the first product I had seen where I concluded, "This is the way computers are going to be." Apple had developed a user interface for Lisa that had everything that you have in your Microsoft-based computer today.

At the time, we at Falcon Systems also did a lot of value-added reseller work with mainframe business, Unix products and the bar-code business. It was whatever the customer wanted. We were a customer-centric company.

VB: Then procurement reform came along and even made it easier for resellers. Fill us in on how that evolved.
Young: Procurement reform, which started during the Clinton administration, changed things for the better. The federal customer was now better able to interface with industry and was able to proceed to contract faster. The use of the blanket purchase agreement, for example, improved things significantly. It reduced the time to procure from essentially 18 months on average to three or four months. It allowed an agency to set up its own contract without having to spend a lot of time building up its own terms, conditions and specs. It could simply borrow that from an already existing contract that had been drawn up by the General Services Administration (GSA). That cut down on a lot of bureaucratic legwork and, of course, time.

But the most significant change by far was the events of Sept. 11. Before that day, the government felt that times were good and it could relax and afford the luxury in anything it did. Since Sept. 11, however, the government is focused,energized, I should actually say,and is committed to the war on terrorism and is devoting everything to that mission.

Take the CIA. It knows today what its mission is. Before Sept. 11, it wasn't clear. Immigration clearly knows what its mission is. Same with the DOD. Even the civilian agencies are focused, especially if they're dealing with homeland defense.

After Sept. 11, we manned our phones 24/7. We were there on weekends to respond to our customers' needs. We needed to do this, because they were working 'round the clock as well. One customer I was dealing with was a two-star general who had worked seven straight weeks without a break.

VB: What did he buy from you?
Young: I can't tell you. [Laughs Here's a good example, though: The FBI has a contract entitled "Trilogy," which calls for distributed computer networks. Working in partnership with DynCorp, we are providing products and services to the FBI under GSA's Federal System and Integration and Management Center. Last July, we were told they'd be working on a three-year time frame to get everything in place. After the events of Sept. 11, we're going to have everything done by May. That's astonishing.

VB: What do they need the most from resellers right now?
Young: Solutions, for example, in the area of information assurance. It's a critical factor. No one is thinking PCs anymore, but the solutions involve PCs. They're thinking, "What information can I gain access to and how? What about wireless/mobile?" And whichever way you do it, there has to be a dependable computer in the headquarters that's serving up the database.

VB: We understand that government-portal demands are also on the rise.
Young: Yes, they are. The Army has a portal where the clear mission is to put every single Army person online for e-mail, calendaring and information flow. If you're a general and you want to message the troops, you can do it through this portal. We're providing the software to build the portal and the services,via a subcontract,to provide the software integration. And we're supplying a lot of the hardware they're building it on.

VB: You've had your vendor team approach in place for years. That was a pioneering effort on GTSI's part. What was the thinking behind it?
Young: We've been doing it this way for at least three years now. We consider ourselves a holding company for a number of technology teams, each functioning as a VAR focused on a vertical technical expertise. Each team member,as well as the customer,is an expert in its chosen technical area and can bring the customer exactly what the customer needs. We started with Sun and Cisco teams, then branched out. We have 13 different teams now. We have a depth of expertise, as a result, that we share with the customer. This makes both the vendor and the customer more comfortable with us. n