First SmartBuy deal hard won

ESRI of Redlands, Calif., last month became the first vendor to sign on to SmartBuy, the federal government's enterprisewide software licensing initiative, following nine months of hard work by the company and federal agencies to create the agreement.ESRI President Jack Dangermond said his company had to do a lot of research for the government to develop a SmartBuy proposal, because many agencies had not yet identified their needs for geographic information systems software. "It was much more work than normally one would have in a business transaction," Dangermond said. "I'm not sure that this is for everyone. In our case, because of the already heavy penetration of our software in the federal government, it worked. For someone wanting to sell something new into the government, I can't imagine it would work as well."For ESRI, the SmartBuy agreement means six agencies will buy a guaranteed number of software licenses over the next five years. Dangermond would not say how many licenses the six agencies will buy. But the deal doesn't add to ESRI's bottom line, Dangermond said. "For us, it's a better way to serve our customers by having a more simplified enterprise administration," he said. "We have six customers instead of 6,000, and that helps us. I don't think it means more revenue for us. If anything, it is less."For agencies, the SmartBuy agreement with ESRI means a savings of $57 million over five years, according to officials of the General Services Administration, which manages the SmartBuy program. That's not all, however. The agencies also get a host of other benefits, Dangermond said. They get forward deployment of software, which means they can deploy all their licenses in the first year, but pay for them over five years. Software maintenance, Web-based training, technical support and upgrades are also included in the price, he said. "They can have whatever they want. They can have $100,000 worth of software on their machine. It's like a kid in a candy store," Dangermond said. "It's a lower price per unit, but you are actually going to deploy more software."The effort required to put together ESRI's SmartBuy agreement illustrates the difficulty the government faces aggregating software requirements across multiple agencies. The White House introduced SmartBuy last year as a way to drive down the cost of software licensing and improve the terms agencies receive from software vendors.G. Martin Wagner, GSA's associate administrator for governmentwide policy, said agency officials "feel pretty good about the [ESRI] deal," but said the difficulty of negotiating the first multi-agency enterprisewide agreement showed that agencies need better software asset management. "We have to have a smoother way of working this stuff through. I'm actually embarrassed by the trouble we had doing simple interagency agreements," Wagner said.It wasn't easy for the agencies, Dangermond agreed. "To have centralized purchasing of our kind of technology takes a lot of analysis," he said. "The agencies that signed on had already done a lot of the homework to understand and justify the commitment. Many of the others didn't have enough time, so they backed away. They may join in the future."Three of the six agencies -- the Census Bureau and the Agriculture and Interior departments --already had separate enterprise agreements with ESRI. The other three -- the Environmental Protection Agency, National Security Agency and National Geospatial-Intelligence Agency --had discussed the idea, he said. Other agencies can take advantage of the SmartBuy terms after defining their requirements and committing to refurbishing their base over the next four years, said Kathy Beasley, a SmartBuy contracting officer. Agencies that do not need or want enterprise agreements can buy ESRI software from GSA's Federal Supply Service schedules, Beasley said. Wagner said the ESRI deal might not be a model for future agreements. "Other agreements will be easier now that the first one is finished, but we also are looking at other models, such as tiered pricing," he said. Other vendors said they're interested in the SmartBuy program despite the challenges."We're very supportive of the process," said Mark Johnson, senior vice president of Oracle Corp.'s federal unit. Officials of the Redwood Shores, Calif., company and GSA have discussed how to form an agreement "that meets the objectives of the administration and will be a win-win for the government and industry by making the procurement process more efficient," Johnson said. Don Arnold, director of business development for PeopleSoft Inc.'s federal public sector business, said he hopes GSA and PeopleSoft can negotiate a SmartBuy agreement for the entire federal government within months. The Pleasanton, Calif., company already has enterprise agreements with numerous agencies, including the departments of Defense and Treasury, Arnold said. "I wouldn't say we are close to being the next one, but we are interested in helping the government meet the objectives of SmartBuy," Arnold said. "The onus lies on the government in terms of consolidating requirements across agencies. They're not very good at doing that, but they're getting there."It's an incredibly good idea, and I have consummate faith we are going to pull this through and get the savings the government intended. I can see $100 million in savings this year, easily," Arnold said.Government Computer News Staff Writer Jason Miller contributed to this story. Staff Writer Gail Repsher Emery can be reached at gemery@postnewsweektech.com.