Column: High-Value Model

If you look at the proposed federal IT budget for fiscal year 2007, you'd think the government is flush with cash. After all, $64 billion is a lot of money. Add the billions that states, municipalities and education systems are spending on IT and you almost double that figure.

The truth is that government--with a lowercase "g"--is broad, not deep. There's a lot of money, but it comes in small packages, and much of the allocation is earmarked for overhead and operating expenses. When it comes right down to it, the money available to public-sector VARs is a fraction of the legislated amounts.

Government IT managers as purchasers are looking for ways to stretch their precious dollars. They want more services, more turnkey solutions, more value. This is forcing an evolution among public-sector solution providers, who must change to deliver "value-add" services. Gone are the days of piecemeal, transactional buys. Simple fulfillment, while still available, is no longer a sustainable channel-business model. Those who fail to adapt will ultimately fail--end of story.

That means public-sector solution providers must act more like trusted advisers and IT partners than sources of technology goods. Just look at the top priorities for federal CIOs: security and privacy, enterprise standardization and consolidation, shared and managed services, and data sharing. Many of those priorities stem from legacy issues of multiple IT platforms within an agency, "islands" of heterogeneous database applications and increased focus on compliance initiatives. None of them can be solved with a product purchase; each requires integrated, holistic solutions. And, more important, they require expert guidance when it comes to assessing needs, planning deployments, implementing solutions and maintaining reliable operations.

For solution providers, this presents an opportunity to solve complex public-sector IT problems. More often than not, agency managers understand the problems and have some knowledge of the product functionality they require, but they need help from their supply chain to identify the right solution and get it implemented and operational across a broad agency environment.

Meeting these new demands from customers may appear daunting to many VARs, but it doesn't have to be. The transition to this high-value model doesn't require solution providers to throw the baby out with the bathwater. A strong solution-provider business and vendor focus--with the requisite subject-matter expertise, vendor relationships and deep technical knowledge--form the foundation of an engineered services offering.

First, expertise in core disciplines is key to success. More customers expect their resellers and integration partners to understand their IT environments. In the public-sector channel, solution providers should know how to integrate new products with older legacy systems, and they should understand security, data migration and regulatory-compliance issues as well. In addition, being successful means extending their level of expertise beyond technology to the end user's other pain points--budget constraints, recruiting and hiring challenges, and constant pressure to provide better service to the public.

Second, strong vendor relationships are essential to all solution providers. That's particularly true as solution providers expand into engineering services. Technical competencies, relationships with a vendor's engineering staff and service-centered escalation are important ingredients from the solution provider's perspective. Focusing on a few critical vendor partners for depth of expertise and service processes is a key decision point. Trying to be all things to all customers won't cut it.

Finally, there's technical knowledge. More and more customers expect resellers to have deep product knowledge and provide technical services at the same level of expertise as vendors. Reseller commitment to training, engineering and certification isn't a luxury in this market--it's a necessity.

According to research firm Input, federal IT spending will skyrocket to $64 billion by 2010. Only those solution providers who are willing to dive in and provide their customers with long-term support and services will capture greater shares of the public-sector spending pie.

RICK MARCOTTE is the CEO of DLT Solutions and a member of the GovernmentVAR editorial advisory board.