For a lot of solution providers serving government clients can be a frustrating experience. There’s usually a lot of paperwork involved and if you don’t really know how to navigate the bidding process profits can be hard to come by.
At the same time, however, thanks largely to Federal stimulus spending there’s a lot of money flowing through government IT projects. In addition, many of these governments are now embracing Open Data initiatives that span the entire spectrum of data management projects.
Against that backdrop it’s not too surprising to see Ingram Micro expanding its presence in government IT by acquiring Promark Technology, a distributor with about $100 million in revenues that specializes in government IT. While government contracts are often looked askance at by the channel because of the pricing requirements for products on the General Service Administration (GSA) schedule, Promark CEO Dale Foster says that much of the profit for the channel in government accounts is tied to knowing how to structure a bid in a way that balances services revenues tied to the sale of any given product. By acquiring Promark, Ingram is looking to add that expertise to its portfolio at a time when government spending on IT projects looks like it will increase in many key areas such as Big Data projects.
Federal IT spending overall is expected to decline. But spending by local governments, many of which are using Federal funds, is expected to increase. The market research firm Gartner says state and local government IT spending is expected to reach $56.6 billion in 2013, a modest increase of about 2 percent before growing nearly 5 percent in each of the following two years. In contrast, Gartner expects federal IT spending to drop 8 percent to $75.2 billion in 2013 and isn’t predicting a return to growth in federal IT spending until at least 2015.
Whether you agree with deficit spending policies or not, the fact remains that government IT projects now represent some of the biggest opportunities for solution providers. The challenge is figuring out how win that business using the right mix of products and services to make winning the business worth more than the trouble of not only getting it, but also keeping it.