Tech Data Corp. of Clearwater, Fla., has formed a new government sales unit to better target integrator customers and enhance a federal sales strategy that has helped the distributor double its government sales for the last four years.
The distributor named Terry Reavis, formerly head of the Eastern sales region, as vice president of the unit, which now has about 75 employees and is expected to earn more than $400 million in annual sales.
"We're evolving our corporate philosophy to be a more customer-centric company, and it just made good business sense to spin out the government unit to provide greater focus on government both inside and out of the company," said Reavis, who indicated that a major goal of the new unit will be to enhance reseller opportunities and capture new state and local government and academic business.
"I think the state and local market is now about half our government sales, and with ... developments [in] federal procurement reform, we believe more and more of these dollars will be pushed out to the state level. We plan to be well-positioned," said Reavis.
Tech Data's state and local business also has experienced high growth over the last several years as the federal government continues to downsize and shift billions of dollars of technology spending to the state and local sectors. State and local governments are expected to invest $38 billion on information technology solutions in 1997, representing almost 11 percent of all domestic infotech spending and $5 billion more than the federal sector will spend, according to market analyst G2 Research Inc., Mountain View, Calif.
"There's real opportunity here. We know a lot of our customers are now preparing to tap deeper into the state and local market," said Reavis.
A survey conducted last year by Andersen Consulting, Chicago, reported that out of 151 state and
government human services executives from 49 states, 75 percent of respondents said they are redesigning their existing computer processes, while some 79 percent said they are updating or further integrating their computing systems.
Tech Data is now looking to support state and local integrators with a variety of services including custom configuration. Having built its business supplying products to small and medium-sized value-added resellers, government configuration could help Tech Data gain new ground in the state, local and federal configuration markets where a variety of integrator fulfillment deals are being pursued, officials said.
"I think clearly its getting easier to do business. The government is mapping itself closer to our model by procuring a lot more off-the-shelf products," said Reavis, who believes the government's acceptance of off-the-shelf products is now helping drive the growth of its configuration business.
"My experience is [that] the largest portion of business with [the] government these days is configured. If it is a PC that has been ordered, there is a 90 percent chance that it will be configured," said Reavis.
Tech Data is making headway selling both its configuration and electronic data interchange capabilities to federal integrators, according to company officials.
"Integrators began looking to us to leverage our strength in shipping and logistics. Now, more are coming for product fulfillment and configuration," said Reavis.