Canberra-based Tower Software made the press this week with their $45m, 5 year win with the US Department of Defence for its TRIM enterprise content management software. The deal, said to be Tower’s “biggest ever”, extends US DoD licensing from 360,000 to more than 1 million.
Tower deserves the Australian ICT industry’s congratulations on its continuing success in the notoriously hard-to-crack US market.
The big win shows the extent to which the government market is hugely important to the ICT industry, and this is true both domestically and offshore. However, for many suppliers of specialist solutions the government market is exceedingly ‘lumpy’, with opportunities coming infrequently. This in itself dictates that Australian ICT developers of software solutions must crack the overseas market to help smooth out the peaks and troughs of the domestic market.
A straightforward reading of these figures suggests an explosion in this market in 2003-04. However, that’s not quite the case. In fact, most of the apparent growth can be attributed to a single contract by the ATO with IBM, for $9.5m. If that contract is eliminated, the overall value was $3.6 million, and the next largest contract was valued at only $765k. The ATO contract has clearly been the only sizeable opportunity in the last 4 years.
Tower Software’s published contracts for the fours years are $400k, $552k, $202k and $1.80m illustrating the degree to which the company has to be reliant on a far wider group of public and private sector markets.
With long awaited tenders for Electronic Document and Records Management solutions (sub components of the broader content management category) at both Defence and Customs closing in December last year, figures for 2005-06 can also be expected to spike sharply, as both of these are likely to be multi-million dollar deals. Defence has published contracts worth $22.6m to its incumbent supplier, Objective Corporation, between December 1999 and October 2004. The Customs opportunity has been in the wings for at least three years, being temporarily put on the backburner by the focus on the cargo management reengineering project. Customs will be an interesting result, being a virtual ‘greenfield’ site for content management.
With these big contracts rare in this market sector, it makes it difficult for content management companies to resource their sales effort appropriately in the Canberra market.