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Good news; bad news scenario for Government VARs

New study provides recommendations for solution providers in the National Capital Region

Last year’s announcement by the Federal government to develop a shared services approach to IT service delivery and procurement hit the solution provider community in Canada like a thunderbolt.

The move to modernize and consolidate IT systems and resources in 43 government departments through the aid of Shared Services Canada put uncertainty and fear inside every major IT solution provider in the National Capital Region.

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But a new study published by MarketWorks of Ottawa, commissioned by the Office of Small and Medium Enterprises and Strategic Engagement (OSME-SE), a division of Public Works and Government Services Canada (PWGSC), has revealed several business benefits from the government’s move. The study was done to explore the impacts on IT SMB companies who supply the government and how these solution providers can play a role within the new procurement framework.

Bad news first!

According to the study, the majority of federal IT solution providers are very dependent on government contracts, with many deriving more than half of their revenues from government IT sales. These federal IT solution providers have been significantly impacted by the modernization initiative to date. The companies that collaborated with MarketWorks on this study revealed that business is down 10 per cent to 25 per cent on average.

Now, the good news

MarketWorks president Kelly Hutchinson, the author of the report, told CDN that the government earmarks about $4.75 billion for IT which includes staff and Shared Services Canada has about $1.75 billion of that business currently. “So go get the rest of that business,” Hutchinson said. “The business is there, but you have to bring a more valued based approach,” she added. Hutchinson believes there is plenty of opportunity both within and outside of Shared Services Canada. Of the $4.75 billion, the report found that more than half is still controlled by CIOs at a department level.

The key factor in all of this is that the Federal Government has started moving away from the transaction-based supply chain IT and is seeking creative and innovative solution providers that can support their modernization requirements.

Hutchinson added that consolidation makes sense because the way Government was operating was no longer sustainable.

Corinne Charette, CIO of the Government of Canada, said during her keynote at last year’s GTEC conference, that “it’s no longer business as usual. Our modernization strategy requires a rethink of how we do things.”

Four new ways

The report came up with four recommendations for SME Government resellers: Get Informed, Connect and Collaborate, Support Modernization, and Maintain Alignment.

“The one beautiful thing about Government is that it has to be transparent and you do not find this in the private sector. What customers publishes there IT priorities online? For example, PWGSC’s data centre feasibility study is information that is out there. Resellers should go ahead and read it. Get the information and learn what they are going to do and adapt your portfolio accordingly,” Hutchinson said.

She also encouraged solution providers to remain connected to associations, participate in roundtables, and become thought leaders for government. Government has also learned from passed mistakes, she said and is willing to work and collaborate with industry.

Another suggestion Hutchinson has is for solution providers to get in front of those CIOs who managed the 43 departments impacted. Shared Services will be tasked with email, data centres and networking, but these departments still have other IT projects such as printing, computing and applications.

The report also listed recommendations for Government in how to deal with the solution provider community.

They are: Host a government-industry town hall, incorporate a “Government Modernization” section within BuyandSell.gc.ca, modify communications strategy, offer training, leverage distributors as a communications channel, and consult regularly with distributors.