More VARs Joining Federal Open-Source Bandwagon

By Herman Mehling

April 9, 2008

The federal government’s widespread and growing use of open-source technology during the past few years has created new business opportunities for VARs that have become more involved in the frenzied contract bidding for services, security and support.

 “By bidding open source applications, VARs can cut their costs and their bids,” said Shawn McCarthy, director of research for government vendor programs at Government Insights, an IDC company.

McCarthy warned, however, that delivering open-source solutions can be a double-edged sword for the channel  because VARs have to be prepared to do more support and maintenance that they would with proprietary software.

However, such a scenario is just fine with many VARs, as long as they can charge for those services.

“Open source in the federal government is fast-growing and pervasive,” said Rick Marcotte, CEO, DLT Solutions, a Herndon, Virginia-based VAR that specializes in selling, implementing and supporting open-source solutions for state, local and federal government agencies.

“The largest federal government open source adopter is the Department of Defense (DoD), which has the highest IT budget in the government and is the department most focused on security,” he said. “It was the slowest to adopt until open-source security was vastly improved.”

A few years ago, developers at the National Security Agency hardened the kernel of the Linux OS, giving it the fireproof security government and enterprise IT folks wanted, said Marcotte. While that enhancement of Linux did not single-handedly transform the open- source federal market, it had a huge impact.

“Open source became credible in government once the DoD started to consider it seriously a few years ago,” said Craig Abod, president of Carahsoft, a Reston, Virginia-based VAR that has built a government practice around open source. “Government agencies now understand the value of open source and the subscription model, which they didn’t understand three or four years ago."

Federal interest in open source is grounded in the technology’s benefits, Abod added. “The government knows that open-source technology is a cost-effective, secure way to deploy and build products in mission-critical environments."

The federal government’s appetite for open-source technology is reflected in the findings of a recent study of federal market adoption rates. The Federal Open Source Referendum study found that 71 percent of respondents believe their agency could benefit from open source, while 58 percent are more likely to consider moving to open source as they consolidate their data centers.

The study’s findings are based on an online survey of 218 federal civilian, DoD and intelligence agency IT decision-makers. The study was done by the Federal Open Source Alliance, an organization devoted to open-source education. The alliance is supported by Hewlett-Packard, Intel, Red Hat and others.

Another report, published more than a year ago by IDC’s Government Insights unit, predicted that the Linux share of the U.S. government’s enterprise server market will rise from 11.6 percent in 2004 to 15.2 percent by 2009. Just four years ago, Linux’s share hovered around 3 percent, the report states.
Marcotte said the federal government open-source market has exploded since DLT first started selling Red Hat to government agencies eight years ago. “Back then, only the developers were interested in open source,” he said. “Government IT folks had concerns about security – and rightly so because the security of the technology is not what it is now."

 His own business is growing at about 40 percent annually, Marcotte added, with revenue coming from various sources such as reselling Red Hat support, assisting with implementations, ongoing engagements, and training and education courses.

Last September, DLT’s government business got a massive shot in the arm when the Department of Energy (DOE) awarded the company a blanket purchase agreement (BPA) with a ceiling of $45 million and a five-year term. The first schedule attached to the BPA includes Red Hat products and services.