Targeting the federal government IT opportunity

An informal survey of government-focused resellers, analysts and industry observers indicates the federal government’s information technology priorities aren’t all that different from most large private sector organizations: infrastructure consolidation, virualization, and improved service delivery. However, with a move to shared services likely on the horizon, changes may well be coming in the way the channel interfaces with the federal government.

In the short-term, there is an opportunity for the channel to grab a piece of public sector business right now as the feds approach their fiscal year-end on March 31st. Alison Brooks, research director, public sector with IDC Canada, says it’s far from a myth that federal departments ramp-up spending at the end of the budget cycle. There’s always unallocated dollars at the end of the year, and while there isn’t time remaining to devote them to broader strategic projects, federal departments will be launching smaller, targeted projects in February and March that support the broader strategic initiatives they hope to pursue in the new fiscal year.

“Broader initiatives and service modernization projects can’t start and stop in weeks, so departments will be looking to bite off pilots and surgical strikes to give them some directional insight,” says Brooks. “You’re looking at smaller projects at this point, setting-up next year’s priorities.”

The projects will be posted through the usual procurement channels, so Brooks says the IT channel community should be watching government procurement engines for end of fiscal IT opportunities with deliverables that need to be “done and dusted” by March 31st.

In other areas of government business though, existing standing offers are the likely vehicles for last-minute purchases of devices such as notebooks or printers, for example. Frank Haid, vice-president, sales for distributor Tech Data Canada, says it would be challenging for resellers without previous government relationships to jump-in at year-end hoping to score business.

“Most of our resellers focusing on MNSO and the federal government work those relationships all-year round, so they know what’s coming down the pipe and make sure they have the right people and skills in place to offer the right advice,” says Haid. “It’s difficult to come in at the last minute and pick up a deal.”<pHaid added the government IT spend has become more spread-out in recent years, with the annual end of fiscal bump becoming less and less prominent.

Greying infrastructure, greying workforce

With six years of successive minority governments meaning regularly shifting priorities on the political side, long-term project planning has been a challenge for the federal government. Departments have been challenged to put multi-year transformational projects in place, unsure if the focus will be able to be maintained in an uncertain political climate.

Still, there are overarching strategic government priorities that will be driving the federal IT spend in the near-term that resellers and solution providers looking to carve off a piece of government business would be wise to educate themselves on and align themselves to.

IDC’s Brooks says there’s a major focus on improving service delivery and on process re-engineering. Particularly with a belt-tightening budget expected from Finance Minister Jim Flaherty in March, departments are facing intense pressure to justify each dollar they spend.

Accordingly, technology such as CRM software or others that can improve and modernize service delivery are seen as a priority.

The IT channel is also set to capitalize on a coming cyclical infrastructure renewal opportunity says Bernard Courtois, president and CEO of the Information Technology Association of Canada (ITAC). He sees opportunity around a challenge many complex organizations are now facing: the complex and customized IT systems they put in place about 15 years ago, in the lead-up to Y2K, are getting to the point where modernization will mean wide-scale overhaul with modern systems.

“Like many complex organizations, the federal government is facing a significant rusting-out of its systems in the near-term,” says Courtois.

This will also have ripples into human resources, where the difficulty of finding the skills to maintain the older equipment will be compounded by the wave of boomer retirement that will soon hit the public sector, as well as private industry. The government will have less people to meet its needs at the same time it’s under pressure to improve service delivery. It’s both a challenge and an opportunity, says Courtois.

“They’ll use more technology and they’ll outsource more, so that a smaller number of people can serve more users,” says Courtois. “That’s going to be a very big opportunity for our industry.”

Data centre transformation

Tech Data’s Haid sees virtualization, green IT, data centre efficiency and green IT all as pressing government IT priority. That’s echoed by xwave, a national IT solution provider and division of Bell Aliant. David Babbitt, director of sales for xwave in Ottawa, says he’s seeing a continuing investment by the government in IT solutions that will enhance and improve service delivery to citizens.

“We’re seeing a steady investment by the federal government, certainly on the hardware side, around reinvesting in desktops and high performance servers to achieve the productivity benefits that newer technology can bring,” says Babbitt.

Despite a push around centralization and consolidation, Babbitt says there are differing priorities between departments. Some departments putting a greater focus on security, for example.

“As the government moves forward with data centre initiatives there’s definitely an opportunity to modernize the current environment, reduce facilities and improve energy flow, and they’re looking for channel partners to help do this,” says Babbitt. “If you step forward with some creative solutions, the government is really receptive to embracing not just large partners, but small and medium-sized partners as well.”

In other areas, IDC’s Brooks still sees interest in storage and server virtualization but sees interest but come trepidation around cloud computing, as the government waits for the security and regulatory issues to play themselves out.

A shared services future?

If a cyclical infrastructure renewal is in the offing, there are increasing signals that the federal government may be poised to seize this opportunity to fundamentally rethink its IT philosophy, and potentially embrace the shared services models that have been adopted by several provincial governments.

Brooks notes shared services has been an arduous road for the federal government, which has faced internal resistance trying to get all the departments, each with their own concerns, priorities and needs, onboard. The scope of the federal government makes the project far more complex than other shared service models adopted by other levels of government.

“I think the federal government is moving more towards an Ontario model that’s cluster-oriented, where like-minded departments are pooled so there’s a balancing and tradeoff of consolidation vs. specialization,” says Brooks. “I think you’ll see more of that from the federal government as they move forward.”

Still, ITAC’s Courtois and Tech Data’s Haid agrees that shared services appears to be coming federally, and it’s only a matter of time.

“The government is looking to achieve significant savings by proceeding with a lot of shared services, the way other governments and the private sector are doing,” says Courtois. “In the coming months we’re expecting something to do with distributed computing and the consolidation of their data centres.”

Brian Bird, director of business development with xwave in Ottawa, agrees the sheer scale of the federal government presents shared services challenges, adding he’s still unsure what the new model could mean for channel solution providers such as xwave, or smaller players that have built strong government businesses.

“We’re looking at if there is still opportunity around the shared services model for the channel,” says Bird. “The government isn’t there today, but with their plans to move forward, there is concern from the reseller community about how this will impact ongoing business.”

In the meantime, however, xwave’s Babbitt says their government businesses remains strong and steady, largely un-impacted by the economic downturn.

“We’re seeing it as business as usual right now, with the government really focused on providing new and improved services to Canadians,” says Babbitt. “We’ve seen a steady stream of opportunities in the last 12 months.”

Would you recommend this article?

Share

Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.


Jim Love, Chief Content Officer, IT World Canada

Featured Download

Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

Related Tech News

Featured Tech Jobs

 

CDN in your inbox

CDN delivers a critical analysis of the competitive landscape detailing both the challenges and opportunities facing solution providers. CDN's email newsletter details the most important news and commentary from the channel.