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On Jan. 20, the focus was on the historic inauguration of Barack Obama as the 44th president of the United States. But with the swearing-in ceremony complete, solution providers should turn their attention to the proposed $825 billion economic stimulus package that could offer significant opportunities for VARs in these turbulent economic times.
The legislation, formally known as the "American Recovery and Reinvestment Act of 2009," is likely to undergo significant changes as it winds its way through Congress. But as written by the U.S. House Appropriations Committee last week, the bill proposes spending billions of dollars for installing health information technology, building wireless and broadband networks, rebuilding highway infrastructure and transit systems, developing renewable energy technology and upgrading school classrooms.
The IT industry hasn't been shy about offering advice for what the incoming Obama Administration should include in the stimulus package. In a Jan.13 op-ed piece in the Wall Street Journal, IBM CEO Sam Palmisano called on Obama to spend $30 billion in three key areas: smart power grids, health-care IT and broadband networking. Such a stimulus investment "could yield almost one million new jobs within one year," according to Palmisano.
The IBM chief's advice comes directly from an IBM study commissioned by Obama's transition team. Dennis Quan, director of IBM's Autonomic Computing Development group, said the computing giant's early exchanges with Obama's people have been fruitful. "I'd say it's definitely encouraging that we've had this dialog going on in the early stages of the administration," Quan said. "There's huge potential for real work to get done."
And huge potential for solution providers to get new business. VARs could benefit directly from the stimulus package through contracts to provide computers and networking gear to schools or installing electronic medical record systems in physician offices and hospitals. But VARs should also benefit from increased demand for IT products and services from state and local government, highway construction companies, alternative energy developers and other direct beneficiaries of the massive infusion of spending.
Take, for example, Boston Engineering, a solution provider that resells product development and product lifecycle management software from Parametric Technology. Vice President and Chief Operating Officer Mark Smithers said the company's business plan for this year is initially focused on robotics and medical device manufacturers. "But clean technology is in our face so much we can't ignore it," he said, referring to the explosion of growth among developers of "green" energy technology.
Boston Engineering is already supplying software and engineering services to Harvard University for a fuel cell technology research and development project and to A123 Systems, which is developing next-generation lithium ion batteries using nanotechnology. Smithers expects the stimulus plan to spur even more demand for Boston Engineer's software and services, given that it includes $4 billion for renewable energy research and advanced battery development.
Tribridge, a Microsoft gold partner, has positioned itself for growth in alternative energy technology development and other emerging markets that might get a boost from the stimulus package. The company just signed on as a reseller of Parametric Technology's software, anticipating that demand for product development tools will increase as funding for developing green energy technology and energy-efficient products ramps up, said Scott Caudle, director of Tribridge's Microsoft Dynamics ERP application business.
"We're seeing a lot of leads and opportunities there," he said. Expanding the company's software portfolio "is a way for us to accomplish growth in a downturn and focus on emerging markets." The Parametric software also gives Tribridge the opportunity to sell to companies developing advanced oil and gas exploration and drilling equipment, Caudle said.
Next: Massive spending on health-care IT offers opportunities for solution providers
