Deloitte: Stimulus Offers VARs Three Prime Areas Of Opportunity

As the national director of U.S. Federal Practice at Deloitte Consulting (2008 VARBusiness 500 rank No. 8), Ira Goldstein definitely knows his way around IT solution provider opportunities in government.

Goldstein joined Deloitte in 2003 after executive positions at Unisys and Arthur Andersen's Office of Government Services. Before that he worked in federal service positions, including as U.S. Assistant Comptroller General and COO at the U.S. General Accounting Office (GAO) -- now the Government Accountability Office -- and in leadership roles with what's now the Department of Health and Human Services.

With the $787 billion federal stimulus package promising to enable multitudes of opportunities for solution providers, caught up with Goldstein this week to find out exactly where to look.

How can solution providers best position themselves to engage opportunities created by the stimulus? Where do they place their bets, in other words?

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The federal stimulus funding, although generated directly to create jobs, is also targeted to a set of areas that are going to require resources and support for decades. If you step back from the jobs issue for just one microsecond, you immediately see that investments in energy-related technologies -- especially around the grid -- investments in automating medical services and records and anything around mass transit and also around highway-related systems would definitely be consistent with what Congress has approved. Those are the three areas I would be watching.

Let's take each of those three individually. How can a solution provider ready its practice to focus on energy opportunities?

For people who have any background in energy-related technologies, the stimulus package specifically supports two areas: construction and refurbishment of facilities that have clean or smart or sustainable energy needs. The bill actually provides standards with that, and if you go to the Department of Energy Web site, there's a whole part of the Web site focused on energy-efficient buildings and the EnergyStar program. Start there; clearly getting information in that source would enable a tech provider to see the opportunity.

The overall national transmission grid is made up of electric providers in each region -- the one I'm familiar with here in the Washington area is Pepco -- and there is money in the bill for providers to address security and reliability issues. It's been defined as a significant security issue. Our ability to assure that we'll have energy under extreme conditions is something that's addressed in the funding of the bill.

Another thing is that I don't think that people should view this as a kind of three-week emergency approach. Even though the bill had to be passed very quickly and the administration signed it, it's going to take months and months for various groups to put out plans. A number of departments, including Energy, are working on their plans on how to communicate what's specific and what's available. But the bill is very specific that competition will be encouraged.

Next: Solving Health-Care And Transportation Priorities Puzzles

Among some solution providers I speak with about that deal with electronic medical records [EMR], the thought is that the time to get in on EMR was years ago. If a solution provider isn't already in the EMR game, is it too late?

I don't think so. I think that it's important to be alert to the convergence that's going to occur between the administration's health-care initiative and this bill's funding for medical records automation. Technology providers who can automate any elements of health-care service are going to have time to be able to show that they can be part of a more efficient health-care system. I think the medical records issue is going to be a part of the broader wellness.

While there are [health-care] providers already who are automating medical records " many of the physicians we work with already use automated tablets -- there are very significant levels of activity around simply downloading the existing files into the systems. It goes to people who are involved in scanning technology, and voice-over-Internet [VoIP] to do conferences without telephones. It'll be a component of the whole wellness initiative, and I think there's plenty of time to get up to speed.

Beyond EMR, what else can solution providers look at in terms of the broader health-care play?

Well, I think there's also a convergence between the health-care initiative and the bill's focus on transparency and performance. Both the statute and the specific releases from [White House Chief of Staff] Rahm Emanuel and the White House were very pointed in commenting that implementation of this cash flow is going to be done with what they called unprecedented levels of transparency and accountability.

For the medical profession, I think that means further scrutiny on the effectiveness of medical procedures and the use of technology equipment and expensive tests and how effective they are. I'm not an M.D., but clearly the medical records funding that's going to come from this bill means enhanced attention on how many jobs got created, as well as creating a new challenge for medical providers -- and more pressure on technology providers -- to show a positive benefit for the cost.

All of which means that, if you're going to be in that business, you need to have the capability in your company to be able to show positive return on investment. A lot of our federal clients come to us saying, 'OK, if I get this funding at the transportation department, what do I need to report? What is the metric that people are talking about?' Clearly the first one is jobs, but right behind that is that you have spent your money wisely and taxpayers see a return on it.

And to your third point, transportation projects?

Well, my focus in the firm is federal and our federal civilian work. But the transportation funding, which is really significant under this bill, will pass through the Department of Transportation to shovel-ready projects: bridges, road work, construction like the Big Dig in Boston. One of the two places everyone should focus on is tracking and monitoring systems -- dashboards that allow states to be able to report on progress of a large number of funded projects on a very frequent basis. From a technology provider standpoint, that means the type of integration that can deal with financial management systems and front-end performance reporting.

The secondary positive effect of flow to the states is that what won't go to shovel-ready projects will go to urban and light-rail projects, like the Dulles Access Road. Clearly, those types of mass transit and light-rail projects are very technology-intensive. They have to operate safely and on an automated basis -- there's going to be a significant increase in bringing them online.

Everything Channel recently published the results of our annual Growth Study, and solution providers were cautiously optimistic about growth in federal, SLED [state, local and education] and health-care business. How much growth is reasonable to expect this year, looking at it from a macro level, specific to federal or otherwise?

Generally speaking, when administrations change -- more often every eight years than every four -- you expect a dip. A new administration takes time to get its priorities straight and its budget aligned. But I believe that the overall funding coming through the stimulus package will make this transition the first one in a long time with no dip in federal spending, which means that the normal year-over-year growth rate -- generally 8 to 12 percent in the tech area -- probably continues.

So no real interruption caused by the administration changeover or the recession?

I remember when I was assistant controller at the GAO [Government Accountability Office] for a few years. Every time there was a transition, we did an analysis series and generally focused on agencies and the ability to continue for a year without appropriations. You had to figure out if you wanted to run a department and what you were going to do to bridge the gap. I don't have any clients right now concerned about bridging the gap. Their concern right now is how to meet requirements of the statute to spend the money as quickly as required.

What else concerns them besides the speed in which that money needs to be spent?

I get calls from clients trying to figure out how to still be accountable when questions get asked six months from now. They're trying to figure out how to spend it but seem to very cognizant of the fact that 6 to 8 months down the road they'll need to show it was spent well.

VARs, we want to hear about your stimulus priorities. Let Chad Berndtson know at [email protected].