Stimulus Package Could Be Shot in the Arm for Solution ProvidersBy Sharon Linsenbach | Posted 2009-05-21 Email Print
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Don't miss out. With nearly $800 billion flowing from the federal government, there’s plenty of opportunity for solution providers to cash in by helping customers craft new technology solutions.
Solution providers may be the biggest beneficiaries of recent economic stimulus legislation, as a commitment to technology spending by the new administration opens up incredible opportunities for new customer wins and accelerated growth.
"Technology will play a key role across almost all of the programs and spending addressed in the stimulus bill," says Michael Balsam, chief solutions officer at Onvia, a research and analysis firm that tracks government spending across nearly 90,000 federal, state, local and educational agencies in the United States.
Balsam says Onvia’s staff has been camped out in Washington since the American Recovery and Reinvestment Act began taking shape in December of 2008. Since then, Onvia has served as a key advisor to Congress and the new administration, Balsam says, helping to draft legislation, shape policy and track how and where the nearly $800 billion will be spent.
Balsam says that solution providers can find opportunity across a number of vertical markets that will benefit from an influx of stimulus money, including education, health care, transportation and "green" initiatives.
"There will be about $500 million allocated for schools, and that will include things like laptops, networks and broadband," he says.
Another huge area of opportunity lies in the health care space, which has been creeping slowly toward a more high-tech approach to patient care and record-keeping, but will get major support and backing from the current administration, Balsam says.
"Health care initiatives are a much longer road, so to speak, and those dollars won’t be immediate," he says. Health care, therefore, could be a lucrative market for solution providers looking to grow their business in the space over a period of many years.
In the short term, Balsam says, opportunities lie in solution providers that can help customers digitize their facilities.
"Eventually, we’ll get to a universal patient information system," Balsam says. "But for now, it’s important to focus on health care agencies, hospitals, clinics and insurance companies that are going to push hard to digitize their backlog of paper records," he says.
An area that tends to get overlooked is transportation, he says. The stimulus bill provides more than $50 billion for upgrades to transportation systems and infrastructure, and includes a lot of technology-based initiatives.
"There will be direct technology spending for more computers, new software for dispatching systems and solutions to ensure interoperability between new and existing systems," he says.
And as going green becomes more and more of a priority, solution providers can take advantage of opportunities to help clients achieve greater energy efficiency through integration of building automation and controls, says Balsam.
In fact, many solution providers may already be playing in many of these markets already but aren’t aware of the new avenues open to them, he says.
"Maybe they service these kinds of customers every day, they just may not realize these opportunities are out there," he says. Finally, Balsam says, one of the most important areas of opportunity is hiding in plain sight.
"Anyone that receives stimulus funds is going to need solutions to keep track of where all this money goes," Balsam says. "Most state and local governments are overtaxed and understaffed, and they aren’t under any current requirements to track where specific agency budgets are spent," he says. Previously, keeping track of these budgets was the responsibility of the federal government, but now many state and local agencies are having to police themselves and are in need of help to do so, he says.
"The spending portion and allocation in this bill is pretty exciting for us," says Bob Laclede, vice president of business development at IT technology distributor Ingram Micro. "We believe there will be somewhere between $50 billion and $100 billion in IT spending, though research firms like IDC and Gartner are estimating $60 billion to $90 billion," Laclede says.
For the large community of solution providers that source their products through Ingram Micro, Laclede says the opportunities fall into six major areas.
"The six areas we see, in order from greatest opportunity, are health care, education, public safety, energy, infrastructure and broadband Internet," he says. There are two ways money spent on these initiatives will trickle down to the end user, Laclede adds—through state and local line-item appropriated spending and through grants awarded.
"Line-item spending is pretty straightforward. Agencies and companies outline what they want to achieve with the budget they have," he says. "With grants, state and local governments, health care organizations, [and] educational institutions state what they’d like to accomplish and apply for money from the federal government," he explains, citing the Edward Byrne grant, which provides funds that will improve the functioning of the criminal justice system, emphasizing violent crime and serious offenders.
"So if a police department received an Edward Byrne grant, they could use that money to install surveillance cameras in high-crime areas," he says. For a solution provider, that could mean a lucrative contract designing, installing and managing a digital video surveillance solution as well as back-end storage for the solution.
This kind of granular analysis is key, says Laclede. He says Ingram Micro is planning a number of initiatives to help solution providers connect stimulus money to potential customers that need to spend it on specific solutions. What is, for instance, the Philadelphia Police Department looking for? What does it need, what can it buy? Now you’re looking at a customer who needs to spend that money and craft solutions.
"We’re looking not just at the tracking of that money, but how solution providers can really drill down to identify granular opportunities rather than just say, 'Hey, I’m getting into public safety, or education, or health care," he says. "We want them to think, 'What does the Philadelphia Police Department need? How can we fill that need?’"
In essence, Laclede says, Ingram is attempting a monster lead-generation program for its solution providers. By proactively researching where the stimulus money will be spent, Ingram can help solution providers track down the hot business leads more quickly, close more deals and grow their businesses.
"Customers now have this money, and there has to be something they need to buy with that," he says. "Solution providers are in an excellent position to help them build those solutions," Laclede says.