It's about people

Doing business with the federal government is increasingly attractive to information technology companies. The federal IT market is stable, profitable and growing, more so with the Bush administration's emphasis on outsourcing. But some companies come to this attractive market with unrealistic expectations of quick sales and early profits.

Besides the delays that can come from not understanding complex federal funding and buying procedures, these expectations are unrealistic for two reasons. First, the federal IT business is a relationships business, and it takes time to build trust and mutual understanding with the people who run the federal programs that depend on IT.

Relationships are important to agency officials who need confidence that their suppliers will be there for them when things go wrong. For midlevel and senior career officials, the system punishes failure much more effectively than it rewards success. Unlike the private sector, agency program managers have few incentives to take risks.

And there are many risks. Congress, a 535-member board of outside directors, is an unpredictable master. The average political appointee in an agency leadership position stays in place about 18 months. The career official is the one who must live with and manage risky decisions. Working with a trusted corporate partner, whose people he or she knows and trusts, is often the more prudent course of action.

The second reason for unrealistic expectations is the belief that the U.S. government is the "world's largest vertical" and can be marketed to as one line of business. While a $59 billion IT market is indeed large, the government is composed of many verticals. Any business line in the private sector is present in the federal government, often in several agencies. A company with health care-related IT products must learn the idiosyncrasies of the myriad agencies that run hospitals and clinics. Similarly, the General Services Administration runs a 150,000-vehicle rental car company, and parts of the departments of Defense, Treasury and Justice operate similar businesses.

Many government officials have been visited by a vendor who brings a general commercial capabilities briefing not targeted to the agency's mission. Often these visits start with the vendor saying, "So, tell me about the EPA!" This lack of preparation — the failure to learn about and tailor the offering to the agency's mission, hot issues and priorities — dooms such vendors to a frustrating cycle of referrals that lead nowhere.

Companies that want to do business in Washington, D.C., must make a long-term investment in people. Those that do will be rewarded, and the agencies they serve will benefit from world-class technology solutions. Government increasingly joins with the private sector to serve the public. The private sector will be most successful when it invests in trust, making the partnership easy.

McConnell, former chief of information policy and technology at the Office of Management and Budget, is president of McConnell International LLC (www.mcconnellinternational.com).

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