Special Report: Microsoft cozies up to integrators

With agencies favoring solutions over products, software giant becomes part of the team

Microsoft builds a government roster

Over the past 18 months, Microsoft has built up its public-sector division by partnering with systems integrators and hiring experts with government backgrounds. Here are some of the players on Microsoft's bench who help integrators compete for government contracts.

Tom RicheyTom Richey, director of homeland security, Microsoft U.S. Public Sector. Former senior policy adviser to Sen. John Kerry (D-Mass.) and a 21-year Coast Guard veteran.

Stuart McKee, national technology officer, Microsoft U.S. Public Sector. Former chief information officer of Washington state.

Michael Byrne, justice and public safety director, Microsoft U.S. Public Sector. Former director of national capital region coordination in the Homeland Security Department.

Ret. Army Maj. Gen. Bob Dees, executive director of defense strategies, Microsoft Federal. Former director of homeland defense for Electronic Warfare Associates Inc. and commander of the 2nd Infantry Division in Korea.

Ret. Navy Lt. Cmdr. Bill Billings, security program manager, Microsoft Federal Information Assurance and Strategic Programs. Former Navy cryptologic officer at the National Security Agency.

Lee Ramsayer, general manager, Microsoft State and Local Government sector.
Former vice president of BearingPoint Inc. and Oracle Corp.

Bill O'Leary, director of health and human services, Microsoft U.S. Public Sector. Former Massachusetts secretary of health and human services.

Karla Pierce, director of tax and revenue, Microsoft U.S. Public Sector. Former Kansas secretary of revenue.

Source: Microsoft Corp.

Microsoft has spent "millions of dollars" chasing government contracts, said Scott Suhy of Microsoft U.S. Public Sector.

J. Adam Fenster

In 1998, around the time Microsoft Corp. announced it would parlay its desktop computing dominance into an enterprise software strategy, Unisys Corp. forged a relationship with the Redmond, Wash., giant to help it compete for government IT contracts.

The relationship wasn't necessarily collaborative, but it was fruitful and typified the way Microsoft's growing portfolio of infrastructure software gained ground at government agencies.

"In the earlier days of the partnership, it was more transaction oriented," said Gary Erickson, Unisys' vice president overseeing the Microsoft partnership. "When a client was ready to buy Microsoft technology is when we would get engaged."

But over the last 18 months, things have changed. Microsoft has overhauled its public-sector group, added government experts to its staff and begun working with systems integrators to win contracts, not just fulfill them. And integrators are beginning to see the difference.

"Now, we have a much deeper relationship with Microsoft," Erickson said.
As Microsoft and other enterprise software companies have discovered, government agencies are less interested in buying products and more interested in hearing about complete, integrated solutions that address a particular problem.

In recent months, companies such as IBM Corp. and Siebel Systems Inc. have launched efforts to show agencies how their technology can be used to build benefits case management, e-government, public safety communications and other highly targeted government solutions.

With the help of integrator partners, and based on the strength of improved enterprise products such as Windows Server 2003, BizTalk Server and SharePoint Portal Server, Microsoft has been doing the same.

"We've regularly worked with the systems integrators for many years, but it was mostly in the capacity of building out infrastructure technology," said Linda Zecher, vice president of Microsoft's U.S. Public Sector group. "It has only been relatively recently that we've been working with the integrator community on high-end vertical solutions in command and control, integrated justice and public safety, e-voting and digital asset management, for example."

It's a strategy that John Kost, managing vice president of worldwide public-sector research for Gartner Inc., Stamford, Conn., expects more companies to adopt.

"We encourage lots of software makers, as they adapt to the government market, to adapt to the specific domains within that market," Kost said.

Since it set out on its new government strategy, Microsoft has hired several former government employees as subject matter experts, including Tom Richey, former senior policy adviser to John Kerry, and Stuart McKee, former chief information officer for the state of Washington. (See sidebar for more on Microsoft's government experts.)

In all, the company has hired 30 additional people to work on government business and spent "millions of dollars" chasing contracts, said Scott Suhy, Microsoft U.S. Public Sector's director of business development. Among its largest integrator partners are BearingPoint Inc., EDS Corp. and Unisys.

"We've started investing heavily on the pre-bid side of long-term procurements," Suhy said. "It comes down to putting architects on board."

Suhy said when Microsoft gets involved early in a government proposal, it can help integrators save money and deploy solutions faster. Not only are Microsoft's products more cost-effective, Suhy said, but the company also can handle much of the prototyping, letting the integrator spend less time and money building the solution.

"We're always looking for an edge, and if I can have a Microsoft engineer or developer working with me on Microsoft-type solutions, it's much better than having to train my own people," said Kevin Durkin, vice president of sales and marketing for EDS Government.

Ultimately, when Microsoft engineers help build Microsoft solutions, integrators can repeat the solutions more easily at multiple agencies.

"We want them to help us architect it right the first time," said Robin Lineberger, senior vice president of BearingPoint's federal services practice. "We want to get their deep expertise to better apply their core technology. Then the more of these we do, the more self-sufficient we become."

With Microsoft's help, BearingPoint built a managed electronic filing solution that it deployed for court systems in Florida and Texas. They also created and installed an online retirement administration tool in Louisiana and North Carolina, he said.

According to Lineberger, BearingPoint couldn't have brought those solutions to market as cost effectively as it did without Microsoft's involvement. The partnership also helped shave up to 40 percent off the time it took to deploy the systems, he said.

Most of the fruits of Microsoft's partnership strategy can be seen at the state and local level, largely because state and local procurements move faster than federal deals, and Microsoft's new initiative is only 18 months old, EDS' Durkin said.

But integrators said they have been working closely with Microsoft on federal proposals, too. Microsoft's Suhy said his company is positioning itself and its partners for such high-profile opportunities as the Defense Department's Network-Centric Enterprise Services project and the Homeland Security Department's Security Planning and Integrated Resources for IT contract.

It remains to be seen how well Microsoft's integrator strategy will work in the long run. For now, partners are pleased with the results, but they said they would deploy competing solutions if the customer or situation called for it.
Gartner's Kost said Microsoft still needs to build expertise in government-specific areas.

"I'd give them a 'C,' " he said. "While they've acknowledged they needed to do this, they haven't always gotten the subject matter expertise at the level of depth they really need." Kost cited IBM, Oracle Corp. and SAP AG as software companies with strong government expertise.

Kost also wondered whether, in the long-run, integrators would have trouble selling IT services if they deployed repeatable, off-the-shelf solutions, based on Microsoft's or another vendor's products.

"If the customer needs less customization service, it might be counter to a strong relationship between the software vendors and the systems integrator," he said. n

Staff Writer Brad Grimes can be reached at bgrimes@postnewsweektech.com.

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