New ways of selling to the feds

Getting a handle on federal government purchasing can be challenging at the best of times, but this year is especially difficult. According to IDC Canada research director, public sector, Alison Brooks, the current political climate is wreaking havoc with the planning process.

“The planning window for government is currently about three weeks, and this has taken its toll both on long-term strategic initiatives and on morale, so a lot of spend is reactive by nature and only addressing small, manageable sub processes as opposed to addressing larger transformative initiatives.” she said. And she doesn’t see this changing soon. “This will only change when majority government leadership and vision can take hold, and I’m not certain that will happen this year” she explained.

To complicate matters, each government department has different initiatives and priorities, according to McEvoy Galbreath, executive director, Canadian Public Procurement Council. “It’s difficult to consider the federal government as one entity,” she noted.

Yet, said Rick Reid, president of Tech Data Canada, on the whole, products being sold to the government aren’t much different than they’ve been for the past 10 years. Notebooks, desktop computers, networking products, printers, and so forth compose the bulk of the business Tech Data does with resellers supplying the federal government. But, he adds, there are always new twists.

Kelly Bizeau, president of MarketWorks Ltd., a firm specializing in helping IT solution providers develop business inside Canada’s public sector, adds, “The federal government is transforming, current focus is data centres, networks and IT security. These are not new priorities, but a renewed focus has been placed on them in the last two years.”

There’s a good reason for this, says Bizeau. “Government estimates that they are impacted $300 – $500 million per year as a result of the stovepipe duplication within departments today, and as a result they have a modernization agenda in place that extends beyond the data centre and networks to also include telecommunications and distributed computing solutions.”

The cloud

And, what about the cloud? Bizeau says she’s seen more discussions than action on this front. “They have enough on their plate at the moment,” she noted.

They do indeed, says Brooks.

“Governments constantly toggle between competing needs to modernize services, to remain citizen-centred in their service delivery and to contain costs,” she noted. “The former is reaching a critical tipping point with mission critical apps and infrastructure underpinning business process in jeopardy.”

Infrastructure renewal is extremely expensive, she points out; governments increasingly look to IT vendors as utility providers and long-term value partners.

But not just any IT vendor. The key, says Reid, is in relationships. Resellers need to have relationships within different ministries so they’re familiar with the existing infrastructure, and know its age, warranty status, software licensing status and other minutia, which allows them to better bid on projects. Sometimes, Reid suggests, a well-connected reseller can even give a ministry the heads-up that a license or service agreement is about to expire; since most federal procurement is done by a separate department, Public Works and Government Services Canada</a (PWGSC), the reseller may actually be better positioned than the ministry to track that information.

Galbreath added that many of the same marketing tools resellers use in the private sector work equally well in the public sector. She pointed out that resellers have to keep their names top-of-mind among potential customers from any sector.

Well-connected resellers can keep their eyes open for opportunities, Bizeau notes. “From a commodity perspective, the players inside government today know the landscape and the business that’s coming out of it,” she said. “Many spend their extra time sniffing out big deals and attempt to change them from going RVD (large volume deals that can be won at one low price) to an Elevated Call Up (a procurement method that can be used to avoid RVDs and process an order faster if the vendor agrees to the required discount).”

With government year-end rapidly approaching, Brooks sees opportunities, but not big ones. She says the projects at this time of year tend to be manageable research initiatives, small projects, and hardware. But, she adds, there’s one other item to note that could be lucrative as the year progresses. “A huge chunk of spend in IT services contracting is rolling over this year, so there’s a lot at stake,” she said.

Bizeau doesn’t focus on last minute business any more – she says it’s not worth the effort – but adds, “If they really feel like they need to invest in last minute stuff, we recommend going after small and medium sized government (agencies, crown corporations), or SMG as we like to call it. These accounts aren’t cannibalized by IT sales reps like the bigger ones, and have budgets and dollars to spend. In some cases they can buy on and off the federal standing offers and are more likely to buy a vendor-centric solution to fit their entire requirement.”

However, she went on, while SMG is the best option, it’s not her recommended one.

“This time of year those working at the top of the IT stack inside departments are working on their plans and priorities for the next fiscal year,” she explained. “Getting inside those departments and supporting their new solution requirements is more strategic and focused on doing business long-term.”Bizeau notes that the government is currently renewing its procurement systems in order to improve the value of its purchases, and that offers both opportunities and challenges for resellers. “It will be imperative that providers understand the changes ahead, spend more time at the top of the IT stack and learn their customers’ plans and priorities in the years ahead,” she said. “They need to operate more efficiently and IT solution providers are the ones that need to help them do that.”