The Feds Warm To White Boxes

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When government agency buyers head to the office cafeteria, they typically make a choice--turkey sandwich or Cobb salad? Chips on the side or carrot sticks? These kinds of options have always existed at lunch. So why not apply the same thinking to federal IT purchases?

That's exactly what's happening with the growing adoption of what the IT world calls "white-box" solutions, albeit at a very gradual pace, many VARs say. The white-box solution brings an "a la carte" mentality to the IT purchasing table. They're solutions that are customized to the individual needs of the buyer, picking and choosing the various parts in personalized, nonhomogenous fashion. Thanks to white-box solutions, many VARs and vendors are finding new sales opportunities within the federal government marketplace: Thousands of Social Security Administration employees are getting new smart cards that allow entry and access to multiple agencies. Air Force employees are becoming better equipped to hunt down needed parts for fighter jets. And patent workers are aiming at getting a better command over all of the data they sift through.

A cultural shift needs to take place before any major adoption of custom systems by federal agencies. But once misconceptions are addressed, VARs and vendors are finding that the potential for spillover, word-of-mouth sales is strong.

"You need to dispel the notion that proprietary systems sold by first-tier vendors are somehow superior to white-box systems from lesser-known vendors," says David Valencia, vice president of sales and marketing at Pogo Linux, a Seattle-based storage solution provider. "Most [federal customers] think our systems will not integrate with their first-tier, homogeneous solutions, or that we won't support them as well. But our business depends upon our being able to interoperate. It would be irresponsible for us not to take them into account. We created a white-box storage solution for a federal customer who raved internally. The result was a slow but steady stream of orders from others in the same department."

There's no known research that pinpoints sales growth of white-box systems within the federal government marketplace, and the mindset of standardization amid agency cubicles is tough to crack. But pricing matters, and this is one key advantage that VARs are finding when it comes to convincing an agency to consider a white-box solution purchase--generally, they can save 10 to 15 percent on the total cost. In the end, it's often the smaller, nimbler government customer that's eager to authorize a white-box purchase.

"[Here's] the bottom line: When an agency needs to replace dozens of PCs at a time, they tend to lean toward the well-known brand names," says Shawn McCarthy, director of research over government vendor programs at Government Insights, a Falls Church, Va.-based research company formed by IDC. "But when individual departments need to buy just a couple of PCs at a time, and if money is tight, they go shopping for the white-box solutions, and there are several of them available on the GSA Schedule."

The same holds true at the server level, he says. While agencies tend to standardize on well-known brands in the larger data centers housing multiple systems that support infrastructure, they consider custom systems with a more attractive price point for individual, department-level servers.

Beyond price, a drive for "best-of-breed" products at many federal agencies often leads to white-box purchases, as government customers seek offerings that easily integrate with third-party products to provide a complete package. This has been going on since the 1990s, when the Clinger-Cohen Act of 1996 pushed for more commercial-style practices in government procurement.

"Prior to this trend, government off-the-shelf solutions were the order of the day," says Randall Jackson, director of federal sales for Mark Logic, a San Mateo, Calif.-based vendor specializing in XML content servers. "These solutions, however, were expensive to maintain over the life cycle of projects and kept many programs chained to legacy systems that were far behind the commercial world. The emergence of cheaper, faster hardware, along with standards for data access, storage and transfer, has accelerated the popularity of white-box systems. In addition, the sense of urgency in the intelligence, defense and homeland security communities, post 9/11, has increased the need to build new, more agile systems faster."

NEXT: Thinking out of the (white) box.

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