July 26, 2004

Novell federal buying deal comes with new fed workforce blood

Author: Jay Lyman

No one thinks Novell's recent deal to participate in a federal IT purchasing program will open the floodgates to Linux and open source in Uncle Sam's boxes, but the deal coincides with a trend toward a younger federal workforce set to replace aging workers, and the technology that they use as well.

Linux and other open source software is likely to be a big part of that change. However, the U.S. federal IT work force is not set to start retiring in significant numbers for another five years or so, according to Yankee Group analyst Andy Efstathiou. So how did Novell pull that deal?

Drew Nowak, the company's federal business manager and negotiator of the deal, said it was a combination of Novell's six-year track record with the federal government and a dedication to government above other vendors that view the feds as an entry-level, low-priority market.

"We stepped up to the plate with the [General Services Administration] GSA," Nowak said, referring to the Novell-Uncle Sam relationship as flexible for both sides. "We really see them as a premier place for our products."

Novell's Linux shot in the arm with its SUSE acquisition and open source support through Ximian and other products also helped, according to Nowak, who said talks with the GSA began the same time Novell announced its SUSE buy.

"Of course, right after (discussions started), we had some inkling we'd have some additional open source offerings in the short term," Nowak said.

Novell -- which will be offering three non-OS bundles and three bundles with Linux and open source software such as Ximian through the SmartBuy deal -- will sell a Linux "starter bundle" with SUSE desktop Linux, a server starter bundle with SUSE Linux server, and a managed server environment with the company's Enterprise Linux Services. The SmartBuy program, launched last year, dictates the spending of US$60 billion per year. Novell is now the third software company, and the only networking infrastructure company, to participate. It also represents the only Linux/open source offering in the program, which is aimed at easing contract negotiations and licensing for more effective purchasing.

Nowak said the Linux and open source parts of the GSA agreement became increasingly important during negotiations.

"I think open source is becoming more important to SmartBuy as a whole," Nowak said. "I think they're realizing it is an important, new alternative. They're not putting barriers there; I think that says a lot."

Nowak, who said all federal agencies likely have some small pockets of open source testing or use right now, added that the announced deal may bring competitors into the government programs by legitimizing the market.

Yankee's Efstathiou agreed, adding that despite lagging behind comparable nations adopting and using open source, the U.S. is poised to change, particularly if deals such as Novell's bear fruit.

"If government expresses an interest and actual activity starts to occur, the other vendors will want to be certified within this category," Efstathiou said, referring to a typical number of 10 vendors that usually compete in such programs if they're successful.

He described the SmartBuy program as an "umbrella procurement policy" developed by the U.S. to allow federal agencies to buy hardware and software based on certified vendors rather than through per-purchase reviews.

"It makes it much, much easier for [agencies] to buy software or services, but it certainly doesn't guarantee it," Efstathiou said.

Pointing to the difference between newer government agencies such as Homeland Security -- which has utilized open source and other software packages for some capabilities -- and older, well established institutions such as the Department of Defense, Efstathiou said it shows a recognition and desire for open source on government's part.

"[The U.S. government's] actual purchase of open source tends to be small compared to other national governments," Efstathiou said. "They are laggards, but that's not to say they won't accelerate into it in the future."

Efstathiou also pointed to aging legacy systems and a federal IT work force that will reach retirement en masse in five years or so as drivers of open source and other newer technologies.

"The majority of the U.S. systems remain custom-developed systems from many years ago," Efstathiou said. "They're in the process of thinking through their migration. They are trying to change. As they prepare for the next-generation systems, they know these systems will have to be more open source. It's clearly the direction they'll have to go, but it's just the beginning of that journey."

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