IT Crash Course: How To Win Education Business

Education has long been a challenging market to crack for solution providers. Budgets are incredibly tight, resources are strained, and focus remains on test scores more than IT--particularly in K-12, where No Child Left Behind links funds to student achievement. Results from GovernmentVAR's State of the Government Market Survey reflect those challenges. On the average, K-12 and higher education account for only 8 percent of revenue each for the more than 200 solution providers surveyed. When asked which segment of the public sector offers the greatest growth potential, less than 20 percent chose K-12 or higher ed.

Those results reflect the conservative growth in both segments. According to Reston, Va.-based research firm Input, IT spending in education will increase slowly over the next few years, growing from less than $7 billion in 2007 to about $9 billion by 2011. Additional innovation will happen through widespread state initiatives that increasingly incorporate education, such as the Illinois Century Network, which provides communication links through a high-speed telecommunications network to and among schools, higher education institutions and other state and local agencies and entities that provide services to citizens.

Within the two segments of education, universities will increasingly focus on consolidating operations, enhancing networks and reducing inefficiencies in IT applications, according to Input, driving an increase in higher ed spending on professional services for system analysis and design, and network integration and support. K-12 will continue to invest in IT to support online teaching applications and enhance education programs, but remains very decentralized across jurisdictions and constrained by federal mandates and inadequate funding.

"Aggressive pricing makes it harder for the smaller guys to compete," says Justin Smith, president and COO of Victor, N.Y.-based Brite Computers. "It keeps smaller organizations and local or regional systems builders from being able to play. We're focusing elsewhere, including private [universities]."

The Challenge: Bigger Contracts, Fewer Opportunities
Often, the local and regional players get bumped out of the running for education opportunities because of state contracts that either drive out margin or stack the odds against smaller integrators.

New York, for one, put an aggregation strategy in place for all agencies--including public school districts--that offers prenegotiated discounts when purchases are made through named contractors. And in Pennsylvania, California, Illinois and Ohio, a technology bidding and purchasing program drives purchasing of education-focused technology products to specific vendors. Contrast that with Ohio, where schools have "favored vendors" that they can choose over an alternative, even if the associated cost is slightly higher. Those are only two examples of the challenges associated with education contracting.

"Really, the opportunities change state by state," says Tim Malone, director of business technology sales at Cleveland-based MCPc. "In Ohio, funding is screwed up, so trying to get a deal finalized can take forever. But in Georgia, it's very straightforward. What can be more frustrating for us is that not all resellers understand what's involved, so our competitors can make the process of bidding opportunities more [complicated]."

NEXT: Companies that education customers favor.