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Companies' reorganizations reflect more public sector collaboration

More technology manufacturers are consolidating their public sector businesses as governments and educational and health care institutions collaborate on how to better communicate and share information.

Comment on this article in The Forum.Cisco combined its public sector business on Aug.1, bringing together its business groups that oversee federal, state and local governments, and education and health care businesses. Previously, Cisco managed its federal business, which the company launched in the 1990s, separately from its other public sector businesses, which its commercial operations primarily managed.

Network Appliance, a storage hardware vendor, underwent a similar reorganization at the beginning of its fiscal year in May. NetApp consolidated sales, engineering, services and marketing teams for all its public sector business. Previously, the company's wholly owned subsidiary Network Appliance Federal Systems, which was created in 2000, managed the federal business.

The consolidations illustrate that that different levels of government as well as the education and health sectors now adopt new technologies at the same time, rather than moving from one group to another. Traditionally, IT innovation emerges first in higher education, where various product bugs and security risks would be solved before products were sold to the federal government, said Bob Laclede, vice president and general manager of public sector business at IT distributor Ingram Micro. Once products were adopted by most federal agencies, they would filter down to state and local governments, and then eventually to the K-12 education market, he said. Butvarious public sector missions have become increasingly similar, pushing the groups to collaborate more on IT solutions, which has flattened the technology adoption curve.

"This kind of change makes perfect sense," Laclede said. Ingram Micro has kept its public sector business under one group since its inception, a strategy that competitors, who followed a more siloed approach, often challenged. Public sector organizations "are talking more than they ever have before," he added. "States used to watch what federal was doing at arm's length, but now they're moving a lot closer than that."

For example, an emphasis on developing solutions for homeland security has encouraged federal, state and local governments and education to work together. The Sept. 11 terrorist attacks pushed state and local governments to improve communications with the federal government to coordinate responses to disasters, and the shooting last year at Virginia Tech University was an impetus for higher education institutions to talk more to state governments to develop security solutions.

"There are key issues today that span well beyond federal government," said Bruce Klein, senior vice president of the U.S. public sector organization at Cisco who was promoted from vice president of the federal sales organization. "What if there is another pandemic, or terrorist attack, or cyber [war]? We need to respond with a common architecture, and knocks the walls down."

Patrick Finn replaced Klein as manager of Cisco's federal business.

Federal customers won't notice much difference in how they do business with Cisco or NetApp under their unified public sector models. But they could benefit from the cross-pollination of innovative ideas that comes with a more horizontal approach, the company's executives believe.

For example, an e-government tool a local municipality uses to collect outstanding fines for parking tickets could be brought to the Internal Revenue Service as an option for tax collection. The Cisco Open Platform for Safety and Security, released in April, is gaining traction across all segments of the public sector after initial deployment in the Navy. The network-based platform, built on open standards, offers a common infrastructure for interoperable communication via voice, video and data in real time. It's being deployed in state and local government for first responders.

"I applaud any vendor that goes in that direction," Laclede said. "It makes sense for this market to collaborate, and industry has to follow [that trend]. One strategy gets everyone together in one room."

Cisco reported revenue of $39.5 billion for fiscal 2008, which ended in July. While the company does not break out numbers for its federal business, some market estimates claim it makes up about 10 percent of total revenue. Cisco has worked on the new model, which counts 1,500 employees as part of the public sector organization, for a few years. It's the latest in the company's evolution from a focus on product, to architecture, to solutions, and finally to the mission of the customer, Finn said.

NetApp reported revenue of $3.3 billion in fiscal 2008, and grew its federal business by more than 50 percent in 2007, according to Mark Weber, president and general manager of the company's U.S. public sector business.

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