Despite Challenges, Government Integrators Focus More On State and Local IT Spending

Growth in state and local government IT spending promises to outpace all public-sector opportunities for some time, according to a panel of vendors and solution providers at this week's XChange Government Integrator conference in Washington, D.C.

"When we look at the federal, state, local and education markets, we see the state and locals the fastest-growing segment we focus on at this point," said Michael Coleman, vice president of Hewlett-Packard's public-sector channel business.

IT expenditures for state and local governments will top $50 billion, according to market researcher Input, a figure that is forecast to jump to $72 billion per year by 2011.

Even solution providers focused primarily on the federal sector are putting more effort into state and local. Rick Marcotte, president and CEO of DLT Solutions, said while 80 percent of his business is federal and 20 percent is state, the latter is growing at a faster pace.

"We are seeing good growth on the state and local level," Marcotte said. "Some of the funding [from the federal government for local initiatives] has been pushed down [and is making] its way through the procurement cycle."

Still, dealing with 50 states or 88,000 agencies is much more complex than working with the federal government, which has a more streamlined set of procedures for IT procurement through the General Services Administration (GSA). States have more varied purchasing and logistics mechanisms.

"I'd like to say we've solved that one, but we haven't," Marcotte said.

Indeed, one of the biggest opportunities is to bridge the disparate silos that exist at the state- and local-agency levels, said Bill Anand Julka, president of Cleveland-based Smart Solutions.

"What we need to do as solution providers is to find a mechanism where all these different silos can come together so we can provide them with a solution that, across the board, brings money to the state," Julka said. "We do so by implementing a pilot in one of the agencies and getting everyone on board across state and local agencies."

And the key to profitability is building applications that are reusable across agencies, he added.

Of course, that's easier said than done. Agencies don't like to cede control of an application or function. That's where lobbying or taking it to higher levels of government comes into play.

Marcotte said his company has lobbying efforts in some states, but prefers to go the route of using internal intelligence.

"We don't have deep pockets to have good lobbyists in every state," he said. "We have on the federal side, but when we must do it, it's almost a ticket to play."

For areas where lobbying is not practical, he added, the secret to success is to create the demand and sell based on that.

"You don't need lobbyists," he said. "You need good salespeople."

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