https://www.channelfutures.com/wp-content/themes/channelfutures_child/assets/images/logo/footer-new-logo.png
  • Home
  • Technologies
    • Back
    • Analytics
    • Artificial Intelligence
    • Cloud
    • Data Centers
    • Desktop
    • IoT
    • Mobility
    • Networking
    • Open Source
    • RMM/PSA
    • Security
    • Virtualization
    • Voice/Connectivity
  • Strategy
    • Back
    • Best Practices
    • Business Models
    • Channel 101
    • Channel Programs
    • Channel Research
    • Digital Transformation
    • Diversity & Inclusion
    • Leadership
    • Mergers and Acquisitions
    • Sales & Marketing
    • Specialty Practices
  • MSSP Insider
    • Back
    • Business of Security
    • Cloud and Edge
    • Endpoint
    • Network
    • People and Careers
    • Training and Policies
  • MSP 501
    • Back
    • 2021 MSP 501 Application
    • 2020 MSP 501 Rankings
    • 2020 Hot 101 Rankings
    • 2020 MSP 501 Report
  • Intelligence
    • Back
    • Our Sponsors
    • From the Industry
    • Content Resources
    • COVID-19 Partner Help
    • Galleries
    • Podcasts
    • Reports
    • Videos
    • Webinars
    • White Papers
  • EMEA
  • Awards
    • Back
    • Excellence in Digital Services
    • 2021 MSP 501
    • Top Gun 51
  • Events
    • Back
    • CP Conference & Expo
    • Channel Partners Evolution
    • Channel Evolution Europe
    • Channel Partners Event Coverage
    • Webinars
  • Channel Mentor
    • Back
    • Channel Market Intelligence
    • Channel Educational Series
Channel Futures
  • NEWSLETTER
  • Home
  • Technologies
    • Back
    • Analytics
    • Artificial Intelligence
    • Cloud
    • Data Centers
    • Desktop
    • IoT
    • Mobility
    • Networking
    • Open Source
    • RMM/PSA
    • Security
    • Virtualization
    • Voice/Connectivity
  • Strategy
    • Back
    • Best Practices
    • Business Models
    • Channel 101
    • Channel Programs
    • Channel Research
    • Digital Transformation
    • Diversity & Inclusion
    • Leadership
    • Mergers and Acquisitions
    • Sales & Marketing
    • Specialty Practices
  • MSSP Insider
    • Back
    • Business of Security
    • Cloud and Edge
    • Endpoint
    • Network
    • People and Careers
    • Training and Policies
  • MSP 501
    • Back
    • 2021 MSP 501 Application
    • 2020 MSP 501 Rankings
    • 2020 Hot 101 Rankings
    • 2020 MSP 501 Report
  • Intelligence
    • Back
    • Our Sponsors
    • From the Industry
    • Content Resources
    • COVID-19 Partner Help
    • Galleries
    • Podcasts
    • Reports
    • Videos
    • Webinars
    • White Papers
  • EMEA
  • Awards
    • Back
    • Excellence in Digital Services
    • 2021 MSP 501
    • Top Gun 51
  • Events
    • Back
    • CP Conference & Expo
    • Channel Partners Evolution
    • Channel Evolution Europe
    • Channel Partners Event Coverage
    • Webinars
  • Channel Mentor
    • Back
    • Channel Market Intelligence
    • Channel Educational Series
    • Newsletter
  • REGISTER
  • MSPs
  • VARs / SIs
  • Digital Service Providers
  • Cloud Service Providers
  • CHANNEL PARTNERS ONLINE
 Channel Futures

Sales & Marketing


Is Cisco Signaling a Government IT Spending Slowdown?

  • Written by John Moore 1
  • November 17, 2010
Cisco Systems last week disappointed investors with a dismal Q2 sales forecast. Among the factors the company cited: a decline in public sector business. In prepared remarks, Cisco CEO John Chambers said orders from state governments dropped 48 percent from Q4 to Q1.

Cisco Systems last week disappointed investors with a dismal Q2 sales forecast. Among the factors the company cited: a decline in public sector business. In prepared remarks, Cisco CEO John Chambers said orders from state governments dropped 48 percent from Q4 to Q1. He noted that the challenges associated with public sector spending will “be with us for a couple of quarters.” It’s unclear how many IT firms — and public sector-focused MSPs — also experience this public sector downturn. But the environment is certainly difficult.

The Center on Budget and Policy Priorities reported last month that state tax revenue dropped 8.4 percent in fiscal 2009 compared with 2008 and fell by an additional 3.1 percent in 2010.

“As a result, even after making very deep spending cuts over the last two years, states continue to face large budget gaps,” according to the center, which tracks state and federal budget and tax policies.

The center reports that at least 46 states “struggled to close shortfalls” in the FY 2011 budget cycle, which began July 1 in most states.

But Cisco could be encountering another issue in its public sector decline: a huge turnover in state governorships. More than two dozen states will have new leaders in January. The potential for CIO turnover and shifting IT strategies may have caused state IT departments to put new projects on the shelf.

Dan Lohrmann, Michigan’s chief technology officer, cited “a lot of uncertainty” leading up to the November election, adding that states may be holding off on decisions until new administrations take office. Michigan is among the states that elected a new governor. Michigan governor-elect Rick Snyder has yet to announce  a decision on the state’s CIO post.

It remains to be seen whether states with stalled projects will turn them loose next year. Michigan, for its part, has continued to award contracts in the IT space and has initiatives in cloud computing, unified communications systems, and virtualization.

The Big Picture

Overall, state and local demand is expected to grow over the next few years, although not spectacularly. Market watcher Input Inc. forecasts a 3.1 percent annual growth rate for state and local IT spending through 2015. Growth estimates are, in part, based on the notion that governments will continue to invest in IT projects that boost efficiency and posses ROI potential. That’s certainly the argument that advocates of cloud computing like to make.

Input suggests that a number of vertical segments within the state and local sector will outperform the modest 3.1 percent uptick. Those include justice/public safety, transportation, budget/public finance, education, economic development, and healthcare.

The healthcare reform law contributes to the latter market. The Affordable Care Act calls for states to launch insurance exchanges that will let individuals and small businesses review and purchase health plans. Input estimates that state and local spending on health insurance exchanges will reach $595 million by 2015. The caveat is that healthcare reform will face a Congressional challenge next year.

Amanda White, research associate at Input, cited healthcare as the sector where she sees the most activity among state governments. In the case of health insurance exchanges, states may be able to obtain federal dollars to get things rolling. White pointed to the Department of Health and Human Services’ recently announced early innovator grants. The awards, slated for early 2011, will be made to up to five states, or coalitions of states, pursing heath insurance exchanges, according to the department.

States could end up tapping cloud computing and SaaS to speed up implementation. Indeed, the cloud already is finding use in government-related healthcare projects. Health and Human Services in early 2010 selected Acumen Solutions to provide cloud-based customer relationship management and project management.

The takeaway for service providers? States in administrative transition may not generate much sales in the near term. Over the longer haul, state governments can still be source of IT business. But only if the provider mines the right niches and makes a strong business case.

Sign up for MSPmentor’s Weekly Enewsletter, Webcasts and Resource Center. Follow us via RSS, Facebook, Identi.ca and Twitter. Check out more MSP voices at www.MSPtweet.com. Read our editorial disclosure here.


Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs MSP 501 Sales & Marketing Strategy

Related


  • Partner program gears
    Pluribus Networks Launches Expanded, Simplified Partner Program
    The expanded program shifts from four to two tiers to simplify engagement.
  • Depiction of a supply chain
    Full-Stack ICT Supply Chain Ownership Becoming a Thing of the Past
    To own or not to own? Supply chain model changes bring new players to the forefront.
  • Security Merger
    Thycotic-Centrify Merger Poses Potential Threat to PAM Leader CyberArk
    PAM technology is more relevant than ever with widespread remote work.
  • New Direction
    Spectra Logic’s New Partner Program Reflects Vendor’s New Direction
    The vendor says changes to how partners approach the market are behind recently announced updates to its partner program.

Leave a comment Cancel reply

-or-

Log in with your Channel Futures account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • Exertis Continues Calls for Diversity with LGBTQ+ Discussion
  • Channel Partners Virtual 2021 Is Here — Take Advantage of the Amazing Content
  • Massive SolarWinds Hack Prompts Up to $25 Million in New Security Costs for Company
  • IBM Leans on Partners to Bring Cloud Satellite Services to Life

Galleries

View all

From The Second City: How to Use Improv as a Business Tool

March 3, 2021

Industry Perspectives

View all

5 Ways XDR Can Improve Operational Efficiency for MSPs

March 4, 2021

Multi-Cloud: Strategy or Inevitable Outcome? (or both?)

March 3, 2021

Backup Vulnerability: 4 Targets Hackers Might Utilize to Infiltrate Your Backup Solution

March 2, 2021

Webinars

View all

A Partner’s Perspective on Channel Success in 2021

March 23, 2021

XDR and Why it Matters to MSPs

March 24, 2021

Top Security Trends Impacting Technology Security Providers In 2021

March 25, 2021

White Papers

View all

Why Fortinet for my MSSP?

March 2, 2021

Small and Mid-Size Business Security: 4 Steps to Success

March 2, 2021

How SMBs Can Secure Endpoints and Remote Workers for the Long Haul

March 2, 2021

Upcoming Events

View all

Channel Partners Conference & Expo

November 1, 2021 - November 4, 2021

Videos and Fastchats

View all

FASTCHAT: How SOAR Eliminates Security Challenges and Elevates Service Provider Revenues

January 6, 2021

Happy Holidays from Channel Partners & Channel Futures!

December 21, 2020

FASTCHAT: How Old, Unpatched Technologies Are Creating New Security Threats for MSPs and Their Customers

December 3, 2020

Twitter

ChannelFutures

Our latest #Cybersecurity Roundup highlights #CPVirtual, @Huntresslabs, @Entrust_Corp and @InsightEnt.… twitter.com/i/web/status/1…

March 5, 2021
ChannelFutures

RT @Channel_Expo: A HUGE thank you to our amazing #CPVirtual sponsors and exhibitors! 👏 @ATTBusiness @DellTech @8x8 @lumentechco @telarus @…

March 5, 2021
ChannelFutures

.@okta acquiring rival @auth0 in $6.5 billion all-stock transaction. #security dlvr.it/Rtzwdp https://t.co/4LvHCJuwsR

March 4, 2021
ChannelFutures

.@MicrosoftTeams features are coming to @MSFTDynamics365, the company announced at @MS_Ignite. #MicrosoftIgnite… twitter.com/i/web/status/1…

March 4, 2021
ChannelFutures

.@PreciselyData acquired by Clearlake Capital, @TAAssociates. #digitaltransformation dlvr.it/RtzbKg https://t.co/1rNYnTScxq

March 4, 2021
ChannelFutures

Thanks for attending #CPVirtual. Here's a Day 3 wrap and a look ahead to #CPExpo Homecoming in November!… twitter.com/i/web/status/1…

March 4, 2021
ChannelFutures

.@Veeam announces six annual Impact Partner Awards, with @SHI_Intl, @LogicalisUS, more. #cloud… twitter.com/i/web/status/1…

March 4, 2021
ChannelFutures

#XDR can improve operational efficiency for #MSPs. @TrendMicro #security #endpoint #AI #threatintelligence… twitter.com/i/web/status/1…

March 4, 2021

MSSP Insider

Newsletters and Updates

Sign up for The Channel Report, Channel Futures Update, MSP 501 Newsletter and more.

Live Channel Events

Get the latest information on the next industry-leading Channel Partners event.

Channel Partners Online

Want more? Find more channel news and analysis on our sister site, Channel Partners.

Media Kit And Advertising

Want to reach our audience? Access our media kit

DISCOVER MORE FROM INFORMA TECH

  • Channel Partners Online
  • Channel Partners Events
  • MSP 501
  • MSSP Insider
  • IoT World Today
  • Webhostingtalk

WORKING WITH US

  • Contact
  • About us
  • Advertise
  • Newsletter

FOLLOW Channel Futures ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookie Policy
  • Terms
Copyright © 2021 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X