Government Initiatives Eliminate Commodity Revenues, VARs Say

"Focus on services, not product" is the current mantra aimed at VARs who attemp to sell into government. But easier said than done, according to several attendees of a panel discussion at the inaugural Xchange Government Integrator event in Washington, D.C., yesterday.

Following in the footsteps of those targeting the commercial sector, government VARs can no longer get away with peddling products. Instead, they need to offer federal agencies full solutions--from integration to customization to management.

"It's no longer about the stuff," said Alex Hart, director of public sector channel sales at Symantec. "The stuff is nice because it takes care of the paychecks, [but now] it's about solving customers' problems."

These days, the "stuff" barely even bolsters the bottom line, thanks largely to procurement vehicles and initiatives that all but eliminate the bread-and-butter revenue that comes from the base technology sale.

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"With the advent of initiatives such as SmartBuy, [government] is trying to commoditize the whole sector of IT solution providers," said one attendee. "They don't want us to do the solutions. They want to buy and commoditize everything at the lowest price."

SmartBuy is a governentwide federal software acquisition program, with contracts that consolidate federal purchasing power for optimal pricing. Similarly, the availability of reverse auctions for government procurement is another means of driving prices down.

"They look at it as efficiencies, and I look at it as price reduction," the attendee said. "How can we educate them without the OEMs' help? We can't win the battle by ourselves."

Nor should they, said both Symantec's Hart and Liz Vogel, public sector channel manager at Hewlett-Packard.

"It's not good for any of us," she said, "especially not those partners that invest in our solutions and then don't see any payback."

Part of the problem lies in how purchases are made in government; one group that is very acquainted with the business needs of a said agency may communicate the appropriate technology requirements, but another group actually does the buying.

"They lob the football across the room to the procurement folks, [who] equate value with lower price," Hart said. Important to keep in mind is that the commodity purchase is simply the first step.

"The reality is that anyone can buy the cheapest thing out there, but if it's not implemented properly it's going to do more harm than good," he added. "We have to jointly educate the customer and help them understand."