The State and Local (S&L) IT market, despite slowing growth and FY2009 budget woes, still holds opportunity for federal contractors able to identify and capitalize on opportunities in the market. The S&L market, according to a recent report from the INPUT Executive Program (IEP), is still a viable avenue for organic growth, as long as contractors educate themselves about the nuances between the federal and S&L markets, as well as those between individual states.

There is a still a continuous flow of federal money in the form of mandatory funding, grants, and other voluntary partnership agreements, while some states and localities are facing tightened budgets. Many of them face some of the same challenges as the federal government, which offers federal contractors a way to expand their presence in the public sector.

Deniece Peterson, senior analyst with IEP stated: “Even in the current environment, contractors that conduct careful analysis and diversified targeting, and find the buyer’s ‘sweet spot’ that aligns with their strengths, can succeed in this market”. “The key is to start small and educate yourself about the customer’s unique challenges,” she added.

One of the biggest challenges federal contractors face in making the shift to the S&L market is in learning the nuances and priorities of each state and locality. The need for increased efficiency is the backdrop for most IT priorities, which provides the opportunity for contractors to introduce innovative solutions with manageable risk. Peterson, however, suggests sticking to solutions that address population-driven, budget-neutral priorities. Peterson stated: “States and localities are very citizen-centric. In a time of budget cuts, programs related to providing services to citizens will have priority in IT spending”.

IEP’s report, Ten Things You Need to Know About the State and Local Market (Especially if You’re Not in It) is available to INPUT Executive Program members.