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The Department of Homeland Security’s plan to save money on software
purchasing will likely make it harder for solution providers and integrators to
sell into the massive federal agency.

The plan, announced last week by Secretary Janet Napolitano, calls for the DHS
to consolidate software licensing purchasing, which is expected to save more
than $280 million over the next six years.

“By using strategic sourcing—in other words, buying these licenses as one
department—we expect to save over $47 million per year, and $283 million over
the next six years,” Napolitano said in a news conference.

The Department of Homeland Security is a massive organization created by the
Bush administration following the Sept. 11 terrorist attack by consolidating
numerous law enforcement and security agencies. The DHS buys software and other
IT goods through smaller contracts administered by the agency’s subordinate
organizations.

It’s a process that Napolitano says makes no sense, and the consolidation of
purchasing will take effect within 60 days.

While licensing consolidation may save the DHS as much as $47 million
annually, the change in acquisition policy will likely make it harder for
solution providers—particularly smaller companies—to service the agency.

“Normally when the government does these things, there are less deals, the
total revenue available declines and the margin goes down,” says Bob Laclede,
vice president and general manager of Ingram Micro’s government and education division.
“While this might be a good way for DHS to reduce their overall spend on some
particular software vendor, it reduces the opportunity for the channel
players.”

Napolitano says the DHS will cut down on the amount of printing it does,
both to decrease the amount of paper it uses and facilitate more digital
transactions.