May 26, 2009

Grabbing your share of Obama's billions

by Adam Stone, Senior Writer, SoftwareCEO

The U.S. government is about to dump $787 billion into the economy through the American Recovery and Reinvestment Act.

Here are just a few examples:

• Energy Department: $4.5 billion for smart grid technologies
• Health and Human Services: $3+ billion for IT enhancements
• Rural Utilities Service: $2+ billion for broadband development.

You can see a detailed breakdown here.

"You are talking about billions and billions of dollars in stimulus money. It is just an unbelievably large opportunity," says Eric Gillespie, CIO of ONVIA, which provides B2G information services.

And much of this work will require (how cool is this?) software. How can you get a piece of that action for your company?

To answer that question, SoftwareCEO rounded up four helpful people to walk us through this challenge.

Our sources include:

• Steve Charles, co-founder and EVP of the successful B2G consulting firm immixGroup in metro Washington, DC
• Mark Amtower, a long-time B2G consultant whose company Federal Direct publishes many resources on building government sales
• Curt Finch, CEO of Journyx, a SaaS firm that provides time tracking and project management to government agencies such as the Drug Enforcement Administration, FCC, and U.S. Navy
• Elie Ashery, CEO of e-mail service provider Gold Lasso, which is just starting to develop its B2G business.

They shared 15 practical tips on how to get your share of Obama's billions in stimulus money.

Getting stimulated tip #1: Match your experience to new funding areas
"Right now a software CEO needs to be trying to understand where his technology might fit in the areas of the Recovery Act funding," says consultant Charles.

"You need to actually go back to the bill and walk back through the funding areas to see if you can make a logical connection where your technology might fit.

"You are looking for the no's," he says. "I have done nothing in transit commercially, so how I am going to do anything in the public sector? Have I done anything in health care IT? If I haven't, I scratch that.

Narrow down the list to the areas where your firm has real experience, he says. Those are the only areas where you're likely to land any stimulus money.

Getting stimulated tip #2: Scan old deals for government connections
The best way to get into the government market is to already be in. It's tough to be a newcomer.

But maybe you aren't a newcomer after all. Have you looked at all your past projects?

"With the stimulus money, it is going to be harder to get into the government market now, because there are so many companies trying to get in. So any toehold you may have had in the recent past is going to help you in," advises consultant Amtower.

"If you are making software, and you made $75,000 three years ago as part of someone else's contract, you may have been just a footnote. But that gives you an entree to go back into that company, to show them your latest upgrades, and to talk about how you can help them to pursue some opportunity now.

"You are not going to be able to approach General Dynamics with that kind of scenario. They are not going to remember you.

"But if you are talking about a smaller company, under $100 million, somebody there is probably going to remember. If you know the names of the people you dealt with the first place, I would look is on LinkedIn and see whether they are still there."

Getting stimulated tip #3: To be first in line, get some intelligence
Before they can spend any stimulus dollars, many states will need to ramp up their accounting and reporting infrastructure. Watch for that to happen, and be ready to jump.

"The state comptroller, for instance, has to have the financial tracking apparatus in place. The healthcare infrastructure within the state also has to have that apparatus in place," says Amtower.

"Only when those things are in place is that money going to flow.

"You have to watch that situation, and be ready when that money is finally ready to go out. The people who know that will be early in line.

"For a smaller company, that means you really have to be working with a channel partner or a systems integrator. You have to have a relationship with someone currently in this market, because they will have that business intelligence."

Trying to go it alone won't be easy at a time like this... with so many other vendors trying to crowd to the front of the line.

Getting stimulated tip #4: Change your tune; now you are all about the mission
Selling to the private sector, you talk about productivity and cost-savings. It's time to change that tune.

The federal stimulus is all about tangible results. You're here to help agencies achieve practical ends.

"You have to be brutally honest with yourself," says Amtower.

"How does your product differentiate itself from all the others? You need to start spending marketing money to highlight that differentiation for the government market, which means, 'We are not targeting a profit. We are targeting a mission.'

"Your main message is, 'How are we going to help you accomplish your mission?'"

For example, how will your product help prepare eight-year-olds to do math by the time they're ready for college? he says. Or how will your software help save energy in government buildings?

Get ready to retool your pitch.

"You need to start changing slides on your PowerPoint to show that this tool can in fact adjust from 'profit' to 'mission,'" he says.

Getting stimulated tip #5: Boost your visibility by promoting your expertise
With the stimulus package drawing vendors out of the woodwork, a software company needs to rise above the noise.

The time has finally come to TwitFaceWikiBlog.

"I would throw up a blog or a wiki, and start posting topics to it. You write about whatever your specialty is, and particularly how your software fits into some present need," says Amtower.

"If you make electronic record-keeping software, how does that help improve the overall health of the American public? And is it cost-effective?

"Then you start drawing attention to that through social media, through Twitter or LinkedIn. You solicit comments from intelligent people, you stimulate discussion, and the bigger the discussion becomes, the more you appear as a thought-leader.

"What you are looking for are influencers, the people at the state and county and federal levels. You get comments from these people, and you build on that."

And keep building. And keep tweeting.

Getting stimulated tip #6: To find opportunities, work the phones
On the other hand, consultant Charles favors a more direct approach: the phone.

"Your inside sales people may start by asking one question: 'Who is in charge of blank?' — a keyword that will indicate some funded requirement.

"You want to stick to that simple question, 'Who is responsible for determining rural broadband architecture?'

"The answer will be a person who is open to hearing more. Forget about buying lists. Just get on the phone with a single, pointed question," he says.

This is the bottom-up part. At the same time, you want to be working from the top down too.

"Meanwhile, your CEO-type is talking at senior levels, possibly with your congressional representative about which appropriation committees they are on."

You can find that out through the free Thomas service from the Library of Congress.

"Then you map those committees back to agencies, and map that back to the Recovery Act to see what agencies got what kind of money, and ultimately whether that matches up to your technology."

Having put all the pieces together, serve them up as a single coherent picture.

"Tell your congressman that your tool can make a difference in agency XYZ. You say, 'I would like some help from your office in finding out who is responsible for fulfilling this requirement within this agency.'

"Every phone call comes back to finding the right person."

Getting stimulated tip #7: Make sure your business development pro has deep expertise
With so much research to do, and so many opportunities to chase, a smaller software firm may well need more help.

If your in-house business development team doesn't have the muscle, by all means make a new hire. But read those resumes closely. Not all government experience is the same.

"They may know about logistics in the Air Force, but they may also pretend that they know about mission planning in the Air Force. Or they may pretend they know something about the Army.

"Well, the Air Force and the Army are not the same thing, by any stretch," says Charles.

"Many companies hear a big title, they see a lengthy resume, and they assume this person knows everything about government, when in fact they have had a very narrow view. So you need to look for business development people who have some experience in the domain you are trying to address."

Here's a test. Hand that expert a phone, and see if he can get anyone to pick up in Washington.

"He should be close enough to know who is the likely implementer within that agency. He should know the people to talk to, and he should have some relationship with those people.

At the end of the day, Charles insists that any new hire or outsourced assistant "should extend your reach by giving you actionable information about who to call and why."

Sounds fair to us. Otherwise, why do you need them?

Getting stimulated tip #8: Get a partner, and pay the piper
of course, another strategy that saves time landing government sales is to get a partners who already have standing contracts. They've already done the legwork to get there.

"In my opinion, to get on the GSA schedule, you need a Ph.D. It's something that even a large software outfit would have a problem doing," says Gold Lasso CEO Ashery.

"We'd have to invest $20,000 up-front for a consultant to get us on there, and we don't really even know if there is a true government need for our services.

"So we've found software reseller August Schell and they've agreed to put us on their schedule so we can test the marketplace."

But the price is steep.

"The government is already going to get the best price. Even though we are SaaS, they are still going to pay the whole thing up-front, and they will want a discount for that.

"So a big chunk comes out just for working with the government. Then this partner is going to take a commission off of that.

"Our typical deal size is $50,000 to $60,000. When all is said and done, a government sale would be 32 percent off what I would sell to a normal commercial customer. But the margins are still fat enough for me to test the waters this way."

And the revenue gets shared with the partner, even if Ashery does the heavy lifting.

"They will market my stuff if the need is staring them in the face, but I have to support that with our own efforts as well. And if I sell to the government myself, I still have to include them in it, because I am riding on their contract."

That's the nature of the beast.

Getting stimulated tip #9: When looking for a partner, think local, think mutual
The other software firm we spoke to has also lined up a partner to help land government deals.

"What we're doing, since we don't have a strong federal presence, is partnering with a consultancy that does: Cognitive Technologies," says software CEO Finch.

"Although they're a national firm, they also have leadership executives here in Austin, which is hugely important for maintaining the relationship through difficulties. It's nice to be able to go have a drink with the CEO.

"Most people are looking for a way to ramp up sales for free, with no effort. 'We'll just pay them 30 percent of whatever they sell. That's a great deal!' No, it isn't. If it was, people would already be tackling you to go sell your stuff.

"Agree on what you can do together that is clearly in the interest of both firms. How will you both make money?

"It's all about making them successful. If we do that, the money will come."

Getting stimulated tip #10: Don't give away the farm to be fair
The government wants to know that contracts are fair, that it's getting the same deal as your commercial clients.

There's a temptation to give government a break, to drop your price below what you charge the private sector to reassure everyone that Uncle Sam is getting a good price.

Don't do that.

"Certainly the first thing is to make sure your government practices are in synch with whatever you are doing on the commercial side. You just want to keep parity with how your channel operates commercially," says Charles.

"But it has to be parity, no less, but also no more.

"If you give government deeper discounts, that's a mistake. Once you show that you'll do that, government will always be asking, 'Why not more? Why not even more?' It never works."

So stand firm on your pricing. Show that you're giving the government the same price you give your corporate customers. And then stop.

Getting stimulated tip #11: Use your (small) size to your advantage
Sometimes a smaller software company has an advantage. Use your niche status to bypass the big-time bid processes.

"For lots of purchases, the government will solicit bids to make sure things are competitive. But because we are really niche and we are not that high of a price, they are not really going to bid that out. It would hardly be worth it," says software CEO Ashery.

"For the size of our deals, they will just pull out that American Express card."

Especially with the pressure to put stimulus money to work speedily, this may be an effective way in.

To find those small-time deals that fit your narrow offerings, seek out the agencies that best fit your specialty.

"For what we do, there has to be a large constituency for it to make sense. For instance, the Fed will need to publish thousands of documents, or the FDA will send out thousands of warnings," he says.

"These are the places where it makes sense for us to sell."

This approach saves the complex and time-consuming process of seeking out and responding to federal RFPs. It takes some legwork — not every agency will want or need software with Ashery's particular functionality.

When he finds a match, though, Ashery is in the strong position of being able to treat a federal customer just like any commercial client.

Bigger isn't always better. A lot of the stimulus money may be spent in small doses. Be ready to catch the droplets as they fall.

Getting stimulated tip #12: Give the competition a plug, then tell how you're better
Your agency contacts will have to make purchasing a competitive process. By putting in a good word for the competition, thus defining the terms of the debate, you give yourself a leg up.

"They do need to identify competition, they need to identify multiple sources, multiple brands. This is a chance to show them that you are competitive," says consultant Charles.

"If they are running Oracle, tell them up-front what Oracle can do, tell them who else is out there for them to talk to. But also say, 'I believe I am the better value because of this, this, and this.'

"Your objective is to find places where you can set the bar higher than your competitors. That is where you are going to win the most."

Getting stimulated tip #13: Help them define what they want
Don't just be a vendor. Be a partner with government. That means helping buyers understand what they really want.

"This sales process is actually helping them to write the requirement so that it is a state-of-the-art requirement, one that is more about the product you are trying to sell, rather than something that anyone and their brother can write," says Charles.

"You want the requirement set high, so that only the most cutting-edge technologies, like yours, are going to meet that requirement."

"Do this by providing credible outside resources, not by handing them pat answers."

He suggests pointing them to analyst reports and other resources on the web to give them some guidance, and help them think through their requirements.

Getting stimulated tip #14: But don't get your fingerprints on the RFP
But don't go too far in helping government contacts define their requirements.

"The thing is, you don't want your fingerprints all over the process," warns Charles.

"It's an old trick: You can click on the Properties box in a Word document, and many times see that your competitor actually authored that requirement.

"If that happens, you want to file a protest that very day, and make them start the procurement over again.

"You don't want to be in that position yourself. So you want to do this in a way that keeps your fingerprints off any documents you might submit.

"Don't actually write the requirement, don't actually write the statement of work. Don't cross that line."

Getting stimulated tip #15: Forget the hype, take it slow
Yes, the administration wants to get stimulating. But the need-for-speed can be over-stated. Slow down. Take a step back.

Your government buyers may be doing the same.

"There is a lot of education going on right now on the federal, state, and local levels about the constraints on the spending, and how people need to account for every single penny," says Ashery.

"It's not like they are just going to go ahead and start writing checks."

So he's not worried about the timeline.

"The bottom line is, I am not scrambling. I am using this time to narrow it down, to look at where different agencies are going to be expanding into, and what their communications needs are going to be in those expansions.

"That means talking to people not just about their needs now, but about their needs going forward, and where these expansion are taking them."

The message here: Take this time to understand where the money is going to flow. Then be there when they turn on the spigot.

About the author: Adam Stone is an award-winning journalist who follows trends in software, wireless, government IT, and general business. With more than 20 years experience, Stone writes about entrepreneurs, HR, business financing, and industry verticals for numerous business publications.