Small biz must build better mousetraps
- By Steve Kelman
- May 23, 1999
In danger of becoming conventional wisdom is the idea that procurement reform has made it more difficult for small businesses in the federal marketplace. Much of the wisdom is based on the problems traditional small-business government contractors have had in the new environment.
I was therefore intrigued by a recent article in Federal Computer Week ["Two vendors look for breakthrough in federal market," April 19] on the experiences of two small firms that started not as government contractors but rather as companies selling in the commercial marketplace and now trying to break into the government market. I decided to call the two companies to learn more about their experiences.
I spoke first with Jay Lightfoot, the one-person federal sales force for Cognet Corp. This 50-employee business sells a software tool, introduced in 1997, that enables organizations to configure and distribute software packages to remote locations from a central point. Cognet's 1998 revenue was about $1.5 million.
The company decided to enter the federal marketplace because it seemed like a logical market for Cognet's product. The company recently exhibited at an information technology trade show in Washington, D.C., netting a dozen leads.
The fact that Cognet is a very small, new business with no established brand name did not stop federal customers from looking at its product, giving the company their names and welcoming it to their agencies. Cognet has secured itself a General Services Administration schedule through a reseller, with the hope of negotiating blanket purchase agreements with agencies.
I then spoke with Lois Melbourne, chief executive officer of a 13-employee, woman-owned small business called TimeVision Inc. Her company makes a software product, introduced to the marketplace in 1997, that allows the display and constant update of an agency's organizational chart over an intranet. The company has revenues of about $2 million a year and has sold to about half the Fortune 500.
TimeVision has approached the federal marketplace by advertising in a trade magazine oriented toward government human resources professionals and by purchasing a booth at a trade show on public-sector human resources management. "We were inundated by people who were mesmerized by our product," Melbourne said.
TimeVision is selling to government customers via open-market purchases, but Melbourne is considering obtaining a GSA schedule.
One fascinating common theme the two companies mentioned was the role of the Internet in helping their firms gain a foothold in the federal marketplace. "We're finding that potential federal customers are doing a mini-evaluation of our product from our Web site before they even talk with us," Lightfoot said.
Melbourne reported that the first concrete sign her company had of government interest in its product was when she discovered that a number of federal agencies had downloaded a trial version of the company's product off the Web site. "The Internet is a wonderful equalizer," she said.
I believe we are in a tough transition period for some traditional small-business government contractors. Some of these firms got used to an environment where they were able to generate business even if they filled no special niche or satisfied no special need.
Those days are disappearing, and some small firms have had difficulty adapting. That's not to say small businesses don't have some legitimate gripes about, say, the impact of governmentwide acquisition contracts on their access to federal customers. But the big picture is that the new procurement environment offers government sales opportunities to small businesses that have made it in the commercial marketplace by providing something special. Melbourne summed it up perfectly: "If you fill a need, then you're there. You've paved a path for yourself."
In an environment where federal customers have more ability to choose business solutions, the old adage, "Build a better mousetrap, and the world will come marching to your door," must become the guiding principle for small businesses seeking to make it in the federal marketplace.
--Kelman was the administrator of the Office of Federal Procurement Policy from 1993 to 1997. He is now Weatherhead Professor of Public Management at Harvard's Kennedy School of Government.