GTSI's Secret Government Weapon

With so many opportunities on the horizon, don't be surprised to see a wave of IT services companies expanding or opening up government-focused practices to take advantage of them. When they do, those companies will be treading in GTSI's home turf. The $670 million solution provider, based in Washington, D.C., has made a name for itself during the past two decades by focusing exclusively on government clients. The company, which dubs itself a business-to-government IT services company, earns its keep selling solutions to help federal, state and local agencies operate more efficiently and better interact with constituents.

When it comes to selling technology solutions to those government clients, GTSI president and COO John T. Spotila has an edge over most of his peers. That edge comes from the fact that Spotila spent a good portion of his career on the other side of the fence. He worked as administrator of the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs in the White House under President Bill Clinton, and served as chairman of the federal CIO Council.

Prior to his government appointment, the graduate of both Georgetown University and Yale Law School headed a number of small law firms for nearly two decades. He also served as general counsel at the U.S. Small Business Administration before being tapped by Clinton to join OMB in 1992.

Spotila believes his hands-on experience has given him keen insight into governmental issues and how they can be addressed using IT solutions. Apparently, GTSI's board of directors agrees, naming him president last month, just more than a year after he joined the company as COO in late 2000, recruited as part of CEO Dendy Young's strategy to return the business to profitability. In his new role, Spotila will oversee the day-to-day operations at GTSI, ultimately freeing up Young so he can concentrate on longer-term strategic issues, not to mention raising Wall Street's interest in GTSI.

VARBusiness industry editor Rich Cirillo caught up with Spotila just after he was named to the position to discuss his strategies for success.

VB: Now that you've stepped into the role of president, what are your initial priorities?
Spotila: We spent the past year trying to align our organization to take advantage of the terrific opportunity we see in the government market. That involved bringing on new leadership in the sales and marketing area, looking internally at how we can streamline our processes and making sure we exceed customer expectations. So, when I look at my responsibilities in terms of running day-to-day operations, a big part of what I'm focused on is trying to make sure our organization works together to make all of that a reality.

VB: How has your background in government shaped your perspective?
Spotila: I was convinced when I worked at the White House that a very important part of what government customers needed was the ability to have strong public-private partnerships. The idea was that private-sector companies have to play an important role in helping government customers find the solutions they need so they can serve the American people better. Coming out of the White House and now working on the GTSI side, I'm more convinced of that than ever. I see the tremendous potential IT can offer government, especially considering the fast pace of change in the IT area. I feel even more enthusiastic about what can flow from a strong public-private partnership than ever. It's part of what makes my job fun.

VB: When you talk about government work, what are the most productive solution areas for GTSI? Obviously, security is making a lot of news lately.
Spotila: In particular, since Sept. 11 we're seeing a clear increase in financial budget support for defense- and homeland security-related needs. We're seeing that with both our Department of Defense customers and other [government customers who are wrestling with how to reshape their approach to solving these problems. And that really applies in lots of different ways. To some degree, it involves equipping law-enforcement agents from the FBI with information technology so they are able to do a better job. We're also working with people in government who are struggling with crisis response, dealing with bioterrorism threats, and exchanging and sharing information more efficiently and effectively. So we have storage needs, knowledge-management needs and network needs. We have been there for our customers in all those areas, so that has been a powerful opportunity for our vendor partners.

VB: Who are some of the vendors on your short list?
Spotila: We have very strong partnerships with a long list of vendors. Among the leaders are Hewlett-Packard, Panasonic, Sun Microsystems, Cisco, Compaq, IBM, Microsoft, EMC...I can keep going. We're always looking for new best-of-breed partners as well,providers we think have good technology that government customers can really benefit from.

VB: You mention both HP and Compaq. The obvious question is, how do you see the proposed merger affecting GTSI?
Spotila: We have very strong relationships with both companies. If the merger goes through, we would certainly work very closely with the combined company. If for any reason it doesn't go through, we will continue to work with each individually. In that regard, it doesn't affect us. But, on the other hand, we clearly care about what happens. These are both good partners that we think add a lot of value in the marketplace.

VB: Let's shift to the COO aspect of your role. What's on your radar from an operational standpoint?
Spotila: I think we've been very focused on how decisions get made within the organization,streamlining those processes. That has helped us in the whole budget process. We've actually improved appreciably internally in terms of how we have allocated resources and how we go about making decisions about that. Further, we have been very focused on what it means to create enthusiastic customers. Internally, we focus on corporate quality, how it is we can make fewer errors. We focus on how we can deliver reliably and swiftly to our customers and how we can communicate with them and our vendor partners so that everyone has the right expectations. I think any organization has to wrestle with communication, coordination and good decision-making.

VB: How has the competitive landscape changed for government work? We've heard so much lately about how there's money to be made there, so are you seeing more competitors entering the space?
Spotila: Because the government market has been strong and we can see growth there, major companies on the IT side want to participate. If they're not selling to government now, they're thinking about selling to government in the future. But I think one of the things a lot of them are finding is that working with GTSI is a good way to do that. We understand the market so well, and we have been here for 19 years. That's all we do. We have good, strong relationships with government customers. What that means is [vendors can get their products to the right people quickly and more effectively. So, yes, there are a lot of companies that are exploring it, as well as companies that have been selling to government in the past and would like to expand their reach now.

VB: So, where's your biggest competition coming from right now?
Spotila: I don't mean to sound like I'm bragging, but, honestly, I don't think there is anyone that provides a multivendor solution with the capability that GTSI has,particularly its solutions capability and its ability to work with a government customer and bring to bear a multivendor solution. [Our combination of talent, experience and focus is unique. Now, there are bigger players, larger commercial players in the private sector that also have government arms. We also have companies like Dell, which are substantial players in the market but are more narrowly focused. There are lots of companies out there. But I think GTSI is in a unique position.

VB: Where's your best government-focused talent coming from these days?
Spotila: The best single source of our talent,at least in identifying it,is coming from employees within the company. People who are enthusiastic about working here know other people, and they persuade them to consider coming to work for us. We've had some former employees who left to go to dot coms and have come back because they liked GTSI. We've also had some talent that we've been able to get candidly from companies that didn't make it.

VB: What's your working relationship with Dendy Young? Do you bounce off each other in day-to-day operations?
Spotila: It has been a terrific working relationship. I've learned a great deal from Dendy. He has a wealth of knowledge, experience and insight into this market. He spent a lot of time mentoring me, but at the same time, I think I've been able to add perspective from my own experience on how we can work together to get GTSI to the next level. To some degree, the board's decision to promote me to president reflects its confidence that we have worked well together this past year and have shown tangible improvement, particularly internally, and that we have a sound plan going forward. They'd like to be able to free Dendy up so he can get out there and speak to people on Wall Street and shareholders.

VB: One last question. As a public company, has the Enron situation had any kind of impact on GTSI's operations?
Spotila: I don't feel any extra scrutiny. We have been real careful to go right down the straight and narrow. GTSI has a conservative approach,a clean balance sheet, conservative approach to economic issues, and a professional and fair approach in dealing with shareholders and people outside. As Enron demonstrates, when you get too far out on the fringes and too extreme, you end up doing a disservice to everyone. We're very focused on the substantive part of our business,creating shareholder value through sound economic performance. We've always viewed that as the real challenge, and at the end of the day, that's how you measure success.