A Big, Recession-Proof Opportunity: The Federal Vertical

Venator Partners’ Andrew Ormand knows that the federal market poses both huge challenges and huge opportunities for technology companies. Considering that the federal government spent $60 billion last year on technology and that federal spending rarely goes down, the opportunities are readily apparent, especially in a worsening economy. What is less apparent to most commercial technology companies is how to penetrate the federal market and grow revenues within this sector. That is where Venator’s new Government Practice and its leader, Ormand, come in. Ormand has over 15 years of executive search experience and has been solely focused on the federal market for the last five. He knows that what works in the commercial sector often won’t work in the federal market. Companies need seasoned professionals with specific knowledge and expertise to succeed in this vertical, and Ormand wants to educate companies looking to break in or develop their federal practice as to exactly what that is. As Ormand says, the federal market takes patience and commitment, but there’s a large payoff for those with persistence.

The Venator Report spoke to Ormand to learn why now, more than ever, this is a market that technology companies need to consider, what it takes to break into this market, and what Venator’s new Government Practice will do to guide clients through this challenging and rewarding vertical.

Question: Why is the federal market an attractive vertical for technology companies, specifically in the current economic climate?

Ormand: The federal government is the largest buyer of IT products and services in the world. In 2007 alone it spent $60 billion on IT. Also, federal spending rarely goes down. In today’s economy, when commercial spending is down, the federal market becomes a great hedge market. Even in better economic conditions, the government market is simply too big to ignore.

The tricky part of the federal market is getting in. But once you’re in, you can take that experience and more easily win business from other agencies. You’ve essentially received the government seal of approval.

Smaller companies should know that the federal market has small business “set asides” in which a percentage—approximately 20 percent—of the overall spending has to go to small firms—although enforcement of this has been weak. The other significant point for venture-backed and high-tech firms is, that the Departments of Defense and Intelligence, and, to a somewhat lesser extent, Homeland Security, are always looking for the new technologies critical to their mission.

Question: Where are the best opportunities in the federal market now?

Ormand: The dollars everyone is chasing are in Defense, Intelligence, and Homeland Security. However, upticks in some civilian agencies are now anticipated, particularly surrounding healthcare and energy. The first two years of any new administration are when big initiatives are implemented, so there is definitely going to be some big IT spending in the near future. The companies that do a good job positioning themselves for these growth opportunities have a chance to win big.

Question: What do technology companies need to know about doing business with the federal government?

Ormand: They need to hire expertise. The federal government is somewhat of a byzantine market and if you don’t know how to get things done, you won’t be successful. Many companies make bad hires in this market. In fact, turnover in federal sales staff is very high. And because of the length of the sales cycle in the federal market, if you do make a mistake, you may not realize it for a long time.

DC is a small town and we know this market. Companies don’t usually do enough vetting when hiring, and given we know many of the candidate’s colleagues and customers, we can do a very thorough job to minimize hiring mistakes. There aren’t a lot of search firms that specialize in the federal market. Many companies either get people off of job boards or work with a recruiting firm that doesn’t really understand the space. We steer companies towards the right people and then work hard to get them to join our client companies.

Question: What are common reasons why companies make hiring mistakes when recruiting for federal sales?

Ormand: The majority of federal sales people are pretty average performers, and the difference between the really good ones and the average ones is huge. This is significant because the federal market is a top down market, and if you hire the right person with the right networks and the right know-how it can make a very big difference. What commercial companies see as the ideal salesperson is often the wrong fit for the federal market. The people who make the sales in the federal market are usually a bit older, more serious, and don’t have the aggressive style to which commercial companies are accustomed. Bright and shiny just doesn’t mean much to a bureaucrat at the Department of Defense.

Question: What are people with federal experience looking for in the companies they join?

Ormand: A good federal sales person wants to see how serious a company is about the federal market, how committed they are to achieving success, and how realistic they are about the expectations of doing business in this space. Often, commercial companies expect things to happen at commercial speed and when that doesn’t happen, they’ll blame the sales person or pull the plug. The federal market has a longer sales cycle. It takes patience, commitment, and a willingness to pursue federal certifications, build the right team, and make tweaks in the product or service for government agencies.

Question: How do you define a good hire in the federal market?

Ormand: It’s people who know how to operate at a high level, with specific experience. They can effectively navigate the federal sales process, they have the right contacts, and they can speak the language.

Question: How will Venator Partners’ Government Practice play a role in helping technology companies break in to or expand their role in the federal market?

Ormand: Venator’s model is to provide expertise beyond just recruiting. We want companies to look to us to be more than a traditional transactional recruiter. We are knowledgeable advisors who partner with our clients to help them meet their business objectives.

« Government Sales