Small biz gets creative
Companies are using a variety of approaches to market their products and services to the government. A combination of conditions — including commercial companies being less eager to spend money and federal agencies snapping up new technologies — continues to draw new entrants into the world of federal contracting.
To get the attention of contracting officers, chief information officers and other key agency officials, companies are trying a multitude of tactics ranging from free samples to targeted sales teams.
Although none of the techniques are unique, they are indicative of the companies that try to stand apart from the pack, get the right people's attention and lay out a compelling case that will lead to sales.
Experts suggest it is getting a first hearing that's essential.
"Technology companies are used to selling to the private sector," said Kevin Anderson, marketing manager for DataPower Technology Inc. "The government behaves a little differently. They don't buy into the hard sell, the fast sell. They need a much more intelligent approach," he said.
One way to be intelligent is to hire and train specialists to not only develop products but also to sell them. That's an approach that Citrix Systems Inc. is taking with its direct government sales team, which is marketing its secure network technology.
Citrix's MetaFrame system gives computer users access to applications and data stored on a shared server. About 18 months ago, the Fort Lauderdale, Fla., company opened a federal sales office in the Washington, D.C., area, said Mark Goldman, Citrix vice president of government systems. The company has slowly raised the staff to six, with two people each focused on the Defense Department, civilian agencies and the intelligence community.
The time is right for companies like Citrix because of the emphasis on consolidation, especially in the Homeland Security Department, Goldman said.
"Citrix becomes a really promising solution regardless of what the back-end systems were," he said. The company's federal customers include the Army, the National Institutes of Health and the Department of Veterans Affairs, he said.
DataPower, based in Cambridge, Mass., is giving away free samples in the form of a 30-day free trial of the company's Web services security product, accompanied by an on-site consultation and a research paper on security best practices.
"Because [the technology] is so new and not well understood, how do you figure out what to buy without being able to try it, and how do you try it without spending a lot of money?" Anderson asked, describing an agency's dilemma. "It's hard for government folks to get advanced technology without spending a lot of money. They can deal with the [IBM [Corp.s] of the world, but a lot of the innovation is coming out of smaller companies."
Too many small businesses trying to enter the government market don't appreciate the difference between commercial and government customers and the processes each must use to make buying decisions, said Eugene Kuznetsov, DataPower's chairman and chief technology officer.
"Because a lot of smaller companies don't know how to do this properly, the government doesn't get access to the latest and best technology," he said.
Such free trials are easier for product companies than service offerings, said Alan Chvotkin, senior vice president and counsel at the Professional Services Council. Service companies fear that once the free trial is over, the agency may have received all the service it needs. Intellectual property issues also cause service companies to shy away from free offerings. "Free may be all [the agencies] ever pay for," he said.
Another company that has just recently broken into the federal market did so by starting small. SevenSpace Inc., based in Ashburn, Va., offers what it calls selective outsourcing, a model that allows agencies to hire the firm to manage specific parts of an information technology project.
SevenSpace, for example, might take charge of specific applications. Or it could be hired to manage a specific layer of the infrastructure, such as the network or the application layer. SevenSpace does most of its management remotely, from its Ashburn data center.
The company started in the late 1990s, selling to commercial customers and to state and local governments, said Peter Weber, president. It signed its first two federal clients — agencies Weber declined to identify — earlier this year.
"It was harder for us two years ago than it is today. Growing from this base of referenceable [state and local] customers, we're able to point to these success stories," providing a past performance record for federal agencies to consider, he said.
"Generally speaking, they're not as hard to penetrate from a purchasing perspective as the federal government is," Weber added.
Weber has also formed partnerships with integrators, which he considers important to success. Although they could regard one another as competition, SevenSpace encourages larger service firms to see the 125-person company as an ally. The integrator develops and implements solutions, and then SevenSpace takes over the management.
However, he points to the selective outsourcing approach as the most important component in his company's success so far with agencies.
"We don't have to take ownership of anything. They don't have to give up the keys to their castle" to use SevenSpace's expertise, Weber said.
Because the company's upfront investment in personnel or equipment is lower, it has less to recoup and can offer agencies shorter contract terms. "They can use outsourcing and then revisit the subject in two or three years instead of five to seven," he said. "It's a very clear value proposition."