Eye on the States

Although homeland security is just a few months old, state and local governments are already deep into appointing top-level executives, setting up governance arrangements, assessing needs, developing plans and determining resource requirements. Not surprisingly, companies maneuvering to capitalize on the emerging homeland security opportunities have a similar sense of urgency. They are building sales pipeline, reassigning personnel, developing marketing plans and reaching out to customers. In the midst of all this activity, companies frequently overlook one critical element: the implications of homeland security for their well-established channel practices. Homeland security may require many companies to restructure their go-to-market channel strategies for state and local. Channel strategies that have been reaping benefits for years must take into account new customers, new needs and new sales goals. Taking a fresh look at the integrators as potential channel partners is a necessary part of this rethinking. In many regards, homeland security creates an opening for companies to bypass the leading integrators who dominate many segments of this market. Before a company commits to doing so, however, it should develop a general channel strategy for homeland security, and then a specific strategy for selecting integrator partners.Companies should start by understanding homeland security customers and their needs. Most integrators that lead this market traditionally do not have a deep relationship with "first responders" ? fire, police and emergency-response personnel. Experience with human services, environmental departments, revenue and tax agencies will not readily carry over to criminal justice, transportation and health units.That's why companies such as Maximus Inc., TRW Inc. and Unisys Corp., which have well-established customer relationships in programs such as public safety, have an advantage here. A second consideration is the buying practices of those responsible for homeland security. There is a strong precedent in many state and local agencies for IT outsourcing, business process outsourcing and large, complex, custom software development projects. However, for many homeland security buyers, there is no such tradition. Local health care agencies, for example, which play a critical role in responding to bioterrorism, often struggle to even find the expertise to fill their day-to-day IT product requirements.The resources needed to build a channel to homeland security buyers are likely to be substantial. Customers must be cultivated, contract vehicles need to be established, a market image needs to be shaped and promoted, and partnerships need to be arranged. Now is not the time for companies to overreach and spread themselves too thin.Another consideration is speed. Besides being expensive, it takes time to establish a new channel into any single segment of the state and local marketplace, even if it's only on a regional basis.Time-to-market may be a determining consideration for many. Homeland security is so large and so immediate, it's forcing companies to pick and choose where and how to play. Finally, there is the concern of reach. Even if a company chooses to limit its focus solely to the largest states, cities and counties, it would require a sales, marketing and delivery capability that reaches all parts of the nation. Even the largest integrators struggle to maintain such a presence. Companies are much better off optimizing their reach within specific market segments.These are not the only factors that should shape a company's homeland security channel strategy. Profit goals, sales objectives, potential conflict with channel partners in other market segments, available resources and skill sets all need to be considered. While complex, the market will richly reward those who get it right.