Think Globally, Act Locally
With its new Citizen Service Platform, Microsoft is making a big play for small-government customers. But will those entities play along?
- By Rich Freeman
- July 01, 2008
As the legendary, longtime U.S. House Speaker Thomas P. "Tip" O'Neill put it: "All politics is local." While O'Neill wasn't referring to small governments' commercial potential, his famous quote does neatly double as a reminder that those thousands of little entities add up to one big marketplace. So why has the information technology industry historically paid so little attention to them?
Some 80 percent of transactions between governments and their constituents occur at the local or regional level, according to recent Microsoft-sponsored research by global consultancy Capgemini. Yet enterprise software vendors with big-time government practices, such as Oracle Corp. and SAP AG, scale most of their offerings to the needs of state and national governments. That's left the local government market largely in the hands of smaller players with niche expertise in areas such as emergency services and roads management. "It's a market that's underserved right now," contends Alim Somani, president of Infusion Development, a New York City-based Gold Certified Partner and solutions provider that also markets city government applications.
To make the situation even more puzzling, city and county governments actually spend heavily on IT, at least in aggregate. Technology outlays by U.S. local governments will rise from $21.68 billion in 2007 to an estimated $31.12 billion in 2012, according to Datamonitor plc, a U.K.-based IT research firm with U.S. headquarters in New York City.
Big spending? Relatively puny competitors? Perhaps it was only a matter of time before Microsoft set out to conquer local and regional governments. In April 2008, the software goliath announced the official release of Citizen Service Platform (CSP), a new offering designed to help cities and counties swiftly enter the world of e-government. The CSP combines back-office products such as Exchange Server and SharePoint with ready-made application templates from both Microsoft and its partners that address common municipal functions such as citizen communication, records management and procurement.
|Local Government Apps to Go|
Some in the Microsoft partner community are similarly upbeat. Infusion Development is among more than 90 partners committed to building applications for CSP as of its launch. "It's a huge opportunity," Somani says. "It's hard to quantify in terms of dollars, but I'd say it represents an opportunity in the next two years to at least double our presence in the [small-government] market."
Still, Microsoft's small-government push faces significant hurdles. For every partner eager to be part of CSP, several more say they've barely even heard of it. And if they're not familiar with it yet, it's a safe bet their customers aren't, either. Yet even a concerted marketing effort may not be enough to spur rapid adoption of the new offering. As Microsoft could be about to discover, nothing is ever fast or easy when it comes to small-government technology.
The initial release of Citizen Service Platform included eight ready-to-use application templates, developed internally by Microsoft programmers:
E-councilor: Enables live interaction between citizens and government employees via Microsoft's Windows Messenger instant-messaging client.
Web TV: Helps small governments create Web sites that record and stream video of community events.
Role-based My Site collection: Provides pre-formatted intranet home pages for comptrollers, human-resources managers and other city officials, based on the "My Site" functionality in Microsoft Office SharePoint Server.
Agenda management: Helps local councils track activities and votes around agenda items.
Electronic forms: Offers InfoPath forms that cities and counties can use to streamline processes such as permitting and tax declaration.
Windows SharePoint Services 3.0 collection: Offers 40 government-specific templates designed to simplify creation and administration of SharePoint intranet and extranet sites.
Local government communications: Provides sample implementation of a city portal Web site, with sections customized for visitors, municipal employees and elected officials.
Microsoft Dynamics CRM collection for municipal governments: Offers tools that add local government functionality to a baseline Dynamics CRM deployment.
Closing the Gap
Just ask any tech company that serves small governments: Though their combined spending power is sizeable, individual local governments have significantly tighter budgets than peers at the state and federal levels. Their procurement practices, however, are every bit as complex and lengthy. "Everything goes through a bidding process," sighs Michael Wharton, president and project architect at Gold Certified Partner Wharton Computer Consulting Inc., a custom developer and systems integrator in Winston-Salem, N.C., that earns about 60 percent of its revenues from local municipalities. IT managers are usually fanatical about keeping that process fair, says Wharton; big purchases often need approval from city councilors or county commissioners generally in no rush to provide it. The upshot is a protracted sales cycle culminating in a relatively small payoff.
To top it off, most local governments have small, overstretched IT staffs that lack the knowledge and resources to define an integrated enterprise-wide technology strategy. "Each agency has little pockets of funding that they spend on point solutions," says Somani, of Infusion Development. "Everything becomes very siloed." The ugly result for elected officials is that voters often find working with city hall a headache-inducing nightmare. Property records and zoning information that should be online remain locked away in stand-alone applications, while processes involving multiple agencies, such as opening a new business, are time-consuming and confusing.
"The capability that links all of the departments together is typically the citizen or the businessperson, who walks around from department to department," observes Alan Day, vice president of Gold Certified Partner NWN Corp., a Waltham, Mass.-based networking services and solutions provider that works extensively with small governments.
CSP is intended to help local governments quickly and economically deploy solutions that make delivering services simpler by linking disparate systems together. Day asserts that it's a role Microsoft is almost uniquely qualified to fill, given the proliferation of narrowly focused ISVs that currently dominate small-government IT. "None of the vendors out there on their own would have the interest or capability to build an integrated platform," he says. Microsoft, however, has the products and influence to bring some order to a disjointed technology market. "It's a huge gap right now," Day laments.
Microsoft points to Camden, N.J., a city of about 80,000 residents, as evidence of the benefits that can come from closing that gap. Since November 2006, officials there have been using a case-management system based on technologies from Microsoft and Infusion Development that later inspired CSP. Called Contact Camden, the system tracks incoming questions and complaints. In the past, Camden citizens often had to phone multiple agencies before finding someone who could help them. Now one call is all it takes -- if the person who answers can't offer assistance, he or she simply logs a record in Contact Camden, which then forwards the information to the appropriate department for follow-up. The system also generates reporting data that feeds into a separate digital dashboard application that Camden Mayor Gwendolyn A. Faison uses to track key performance metrics.
|"It's hard to quantify in terms of dollars, but I'd say
the Citizen Service Platform represents an
opportunity in the next two years to at least double
our presence in the [small-government] market."
Alim Somani, President, Infusion Development
Tapping into the Channel
Some partners are hoping Citizen Service Platform will prove similarly beneficial to them. For one thing, they say, CSP at least partially offsets Microsoft's tendency to focus on technologies rather than on business needs when talking to government customers. "Until now, we've pretty much seen Microsoft drive from the product perspective out," observes Melissa Dever, vice president of engineering at Competitive Computing Inc., a solutions provider and Gold Certified Partner in Colchester, Vt., that attributes about one-third of its business to government clients. Microsoft's business case for CSP, however, emphasizes the unique problems local governments face before eventually linking those to software. "It feels like progress," Dever says.
Additionally, some partners predict that the new Microsoft offering should boost sales of the company's platform technologies. SharePoint, for example, is of little value to small governments without accompanying vertical applications, Infusion Development's Somani notes. CSP's templates and partner solutions provide the crucial extra ingredient that makes the logic of a SharePoint purchase easier for municipal IT managers to understand.
Matt Miszewski, general manager of government for Microsoft's worldwide public sector organization, sees CSP boosting partner revenue in other ways as well. Services providers stand to profit from customization and integration projects, he says, while application hosters can use the new offering to grow their small government clientele. But the biggest opportunity surrounding CSP is marketing templates and add-ons, Miszewski says. Somani agrees. Fledgling software vendors such as Infusion Development lack the sales muscle to reach more than a fraction of the sprawling city and county market. CSP, however, offers ISVs a way to put Microsoft's sales force and partner network to work on their behalf. "That's one of the reasons we're excited about CSP," Somani says. "It gives you a distribution channel."
Of course, the value of that channel hinges on how aggressively Microsoft pitches CSP generally-and its partner components specifically-to customers. According to Miszewski, Microsoft has assigned CSP sales goals to its field account teams. But the company declined to specify whether or not those quotas include partner revenue targets.
No matter, some partners say. What they're really looking forward to tapping into isn't the Microsoft sales machine so much as the Microsoft brand. Wharton, for example, has been trying unsuccessfully for the past 10 years to resell a project-tracking solution he originally developed for the city of Greensboro, N.C. "People are often leery of buying from a relatively unknown company," he says. Attaching his system to CSP, however, could alleviate that problem.
Plus and Minus
Still, Microsoft has some sizeable barriers to cross before CSP is a winner. For starters, it must significantly raise awareness of the new offering. Most partners describe their present knowledge of CSP as sketchy at best, and few have even heard much from Microsoft about small governments being a sales priority. "I can't say necessarily we've seen a lot of communication or direction as far as what size or piece of the market to go after," says John Schloemann, vice president of software solutions at Gold Certified Partner Eskel Porter Consulting Inc., a Sacramento, Calif.-based integrator with an extensive public-sector practice.
Meanwhile, local governments are even less familiar with CSP, partners say. Microsoft plans to correct that by holding in-person promotional events across the United States and Europe through the end of 2008. But given the current shaky economic conditions, marketing alone may not be enough to guarantee sales. Declining real estate prices are putting a dent in property tax collections, a critical revenue source for most cities and counties. That has many local governments trimming IT expenditures. "Their budgets have gotten tight and they're looking for ways to cut," Wharton notes.
Either way, Microsoft argues that it's looking well beyond this year and next. "This is a long-term commitment to the local and regional government community," Miszewski says. The open question, of course, is whether that community embraces Microsoft's commitment or votes it out of office.