For many companies, staying close to their state and local customers is an ongoing challenge. Getting around to state capitals is easier said than done, especially for senior executives with pressing tasks at headquarters. And too often when they do have a chance to get out of the office to speak with state and local officials, it's to discuss current contracts and operational issues, not future customer needs and directions.
Conventional wisdom asserts that state and local government is a market of niches. Among the more obvious ones are technology niches (data vs. voice), political niches (red states vs. blue states), policy niches (pro-outsourcing vs. anti-outsourcing) and market niches based on government programs (food stamps vs. emergency response).
If there is one characteristic of the state and local market that sets it apart from its federal counterpart, it's the absence of a healthy and sustainable market for mega deals. The lack of mega deals is the primary reason so many state and local systems integrators struggle to grow their sales.
The turnover of state chief information officers has reached unprecedented levels. As each new governor puts his or her own person in the top technology job, the average tenure of a CIO shrinks.
I bet terms such as claims entry, system takeover, MMIS, fiscal agent or entitlements mean nothing to you. But multiyear contracts, recurring revenue, mega deals, ongoing operations, and guaranteed federally financed budgets ? now, there is language everyone understands.
Most large technology firms focus like a laser on the biggest buyers in the state and local market. But for small companies, a similar marketing focus could result in missed selling opportunities.
The first reaction of many companies to 9/11 was to reorganize around the emerging opportunity. One lesson learned is that moving boxes around organization charts is a whole lot easier than designing, building and delivering new homeland security solutions.
Years ago when I served in a senior capacity with a fast-growing Sunbelt state, I always looked forward to meeting the top technology industry executives who came to town.
Every company with a federal or commercial business that wants to expand into the state and local market faces this challenge: how to leverage those business assets into state and local business.
"Does your company use offshore resources for any of its state and local business?" That's the most dreaded question for companies with business in this market ? and there is no easy answer to it.
Federal funding is the tail wagging state and local technology spending. Unlocking this money has become a major issue for many companies selling into this market, and with good reason: Federal aid to the states and their localities is more than $350 billion annually and more than 35 percent of all technology-related spending.
Scanning the headlines tells you that, depending upon whose numbers you believe, state and local governments spend between $46 billion and $50 billion annually on information technology. This puts the market up there with other heavyweights, such as global manufacturing and financial services markets.
Tired of competing in these tough times? Is it rough making your company stand out in an increasingly crowded state and local market? Maybe it's time to gain an advantage over your competitors by capturing the strategic high ground.
Nothing is more humbling than trying to foresee the future in state and local government. Here's what is keeping everyone -- especially yours truly -- on their toes:
Having trouble getting your state and local customers to commit to more spending this year? A recent fiscal survey sheds some light on why. The National Association of State Budget Officers is projecting a flat growth rate for all state budgets in fiscal 2004 except for Alabama, Michigan, New York and Texas. This contrasts with an average annual historical growth rate of 6.2 percent.
Welcome to the newest roller-coaster ride: It's called state budgets. These days, they seem to swing wildly from forecasted deficits one day to surprising surpluses the next.
