Why The Government Just Might Save You
No, this is not a column about who you should vote for in the upcoming presidential election—I will keep my political views to myself. But it is a column about how Barack Obama, Hillary Clinton or John McCain can help you hit your sales growth numbers over the next few years.
Let's face it, with oil prices rising and the economy facing some challenges, there is no doubt that your commercial accounts will either slow down IT spending or put some projects on the back burner over the course of this year and probably in 2009. Whether you buy into that reasoning or not, the specter of a slowdown exists and the only responsible thing to do right now is map out a contingency plan—one that absolutely includes an effort to focus on selling IT to the public sector at the federal, state, local or education levels. HP's public sector leader Michael Humke estimates overall spending at $180 billion with the largest chunk, some $94.4 billion, coming from the state and local markets. He had a checklist of major growth in IT spending around such areas as green computing, disaster recovery and electronic medical records. The wise Bob Samson, general manager of IBM's global public sector business and HP's main rival, puts it this way: "Government is the greatest place to be. It's still growing at 4 to 5 percent and guess what the [commercial] market is growing at—2 to 3 percent."
Be forewarned: Selling to any government sector is an acquired taste. You cannot do it on a whim and you cannot dabble. Many of the VARs who fled to the public sector after the 2000 dot-com bubble burst took solace in Samson's words, but found the red tape, competitive bidding process and complexity of selling to government overwhelming, so they gave up. The VARs who stuck with it and spent time securing contracts or serving as subs to the large prime contractors built a steady, profitable business that, in many cases, is growing faster than their commercial side while guaranteeing a predictable rate of return.
Vendors tell me interest in public sector is heightened but nowhere near the level of eight years ago. Yet, it does indicate that many solution providers sense the need to hedge their bets if demand from the commercial sector softens. Unlike in 2000, today's vendors have mature and deep public sector channel programs; just look at how far EMC, HP, IBM, Oracle, Panasonic and Symantec have come, to name but a few.
Today, Samson says, former scoffers all want to be a part of it, considering nearly 70 percent of IBM's government transactions involve partners and its growth is outpacing the commercial sector. It is anyone's guess just what will happen to the overall U.S. economy in the next year or two, but you definitely do not have to guess about the growth of public sector or the key IT initiatives already under way or coming.
Are you ready to embrace the public sector? Let me know at [email protected].