Sterling Forms Federal Electronic Commerce Unit

The company still expects big revenues from electronic commerce to go to its commercial group

Seeing the potential growth in the federal electronic commerce market, Sterling Software Inc. has put its eggs in one basket. Not all of them, though.

Sterling has formed an EC division within its Federal Systems Group located in McLean, Va. Although the company already has a highly profitable EC Group in Columbus, Ohio, company officials felt the time was right to pursue federal business.

The new division, which Sterling will launch officially in July, will start with five or six salespeople and may double within a year, said Phil Kiviat, vice president of business development for the Federal Systems Group.

Sterling traditionally has relied on its existing sales teams, which have a strong presence in the commercial sector, to pursue federal work. That meant some teams had Sterling products on the General Services Administration schedules and others did not. They all operated independently, Kiviat noted. The company had salespeople who did business with federal agencies but did not live in the Washington area, he added.

If the federal EC business has as much success as the EC group in Ohio, Sterling could see tangible results in its bottom line. The dedicated marketing team will greatly multiply Sterling's sales of translation and communications software, Kiviat predicted. The translation software converts a regular document, such as a purchase order, into one that complies with certain EC standards.

Sterling's EC group in Ohio last year brought in $163.6 million, up 35 percent from 1993. The EC business in 1994 represented 35 percent of the company's total revenue, and analysts at Alex. Brown & Sons expect EC sales to grow 30 percent this year.

The government has embarked on an aggressive schedule to have electronic commerce systems operational by 1997 to buy items valued at $100,000 or less and to pay for the purchases electronically as well. With federal agencies under pressure to meet the deadline, Sterling can leverage its reputation as a leading provider of EC products and services to win new government business.

But, as Kiviat noted, "the real revenues won't come to us." The new division will help the federal agencies set up their systems. Sterling, however, will continue to treat the trading partners doing business with the government as commercial accounts.

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