State and Local

State and Local
Government Infotech Market
- By Dennis McCafferty -

Going after information technology contracts in the state and local government market commands a hybrid of skills needed to land federal and commercial work. And it's the commercial aspects of the equation - bringing a more free-flowing exchange of ideas that turn into deals - that has companies buzzing about the sales possibilities under state capitol domes and inside county courthouses.

"You'll find a blend of the federal and commercial contract process there,'' said Gene Kakalec, the vice president overseeing integration business development for Los Angeles-based Northrop Grumman Corp.

"But [state and local buyers] are much more easy to talk to. The customer isn't hindered by federal regulations. They're more likely to express their concerns and problems, and what they need to do to solve the problems.''

Sure, the contracts are smaller. But success in one agency tends to breed success in the agency next door, industry officials say. And a string of proven projects in one state tends to springboard into business with other states.

For the next 12 months, the state and local government market will bring an estimated $44.4 billion to information technology companies, according Framingham, Mass.-based International Data Corp., a market research firm. That figure towers over the $23 billion mark that industry watchers peg to the federal government market. That's the main reason why state and local markets are grabbing the attention of executives.

Last year, state and local government business accounted for 30 percent of the total government market for Clearwater, Fla.-based Tech Data Corp. Now, state and local business accounts for half of the government sales picture for the large technology distributor. Meanwhile, Tech Data's annual government sales are projected to rise from about $400 million in 1996 to more than $600 million this year.

"The federal boys are sending more and more responsibility to the state and local level, and we're finding a lot of hot spots there,'' said Terry Reavis, vice president of government sales for Tech Data.

Like other companies, Tech Data has found big opportunities in providing network systems for state welfare departments and court systems. Both public safety and works departments are seeking geographic satellite location technology so agencies can keep track of where their emergency vehicles are.

And states like Georgia are eager to launch electronic commerce initiatives, with local lawmakers there signing off on digital signatures earlier this year. In the request for proposals, state Chief Information Officer Mike Hale said he will seek responses that best describe how commercial market solutions can be applied to his state.

Because the concept is in its earliest stages, there is no estimate of the contract value for digital signatures and electronic commerce in Georgia. But Hale said the possibilities are staggering, with the electronic processing of titles and liens on automobiles just the beginning of potential opportunities.

"The savings to citizens are enormous,'' he said. "We're going to see a tremendous streamlining of an onerous process.''

Other states known for innovation on the information technology front include California and Washington, the home of Microsoft genius Bill Gates, and lesser known but equally industrious states such as New Jersey and Utah.

Among New Jersey's more innovative projects are the automation of inmate parole records by the New Jersey State Parole Board; a voter registration system that allows constituents to register at state agencies while conducting business there; and a computer-assisted dispatch system for state police.

It's all part of a grand plan started just over two years ago by Gov. Christine Todd Whitman and her private/public partnership commission known as Prosperity New Jersey. Its goal? To develop and execute a shared vision to move New Jersey to "the forefront of the national and international economies."

Spearheaded by its governor, the approach of Utah is to take technology as an enabler and serve as a mentor to other states. A daunting challenge facing the state is to develop the infrastructure needed to support the 2002 Winter Olympics, slated for Salt Lake City but affecting cities from Ogden to Provo. Not only will revamping Interstate 15 be part of the infrastructure equation, but companies are already planning to showcase their products and services, including US West.

Beyond imaginative projects, the state governments must deal with the year 2000 problem just like everyone else. The estimate to fix the problem at state agencies is no less than $1.7 billion, according to the National Association of State Information Resource Executives in Lexington, Ky. And unlike the federal government, states are moving rapidly to address the situation.

"We'll be running up to the door of the year 2000, before they get done with it,'' said John McDowell, CIO for the state of Arizona's department of administration, who estimates a $27 million year 2000 fix-it cost for his state. "But some agencies already have the problem fixed. ... The states have more leeway [than the federal government]. The bigger the bureaucracy, the more slowly the great gods move. With strong leadership at the top, it's easier to get your hands around what needs to be done.''

An up-close look at how several states approach information technology policy and spending sheds light on the range of industry opportunity there.

There are states like Nebraska, which finds off-beat and resourceful ways to get the job done. Then, there's the state of Pennsylvania, with big-money outsourcing possibilities now that Gov. Tom Ridge is reshifting thinking in aggressive fashion.

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