What happens when a private software firm partners with a public agency? How do private-public business relationships work? What does this whole concept of “partnership” mean, anyway?”

Paladin’s public sector work began around the year 2000. Along the way, we’ve come to realize that the public sector is a relatively untapped market for software development firms and other technology providers, and, as such, is a market that suffers from a lack of technology tools that many private companies take for granted.

I’ll admit our initial foray into the public sector was not an altruistic gesture, but was driven by economic realities. The slowing economy was beginning to pinch. One of our major clients had folded. Another had drastically slowed down its development projects to save money. I had 20 people that I needed to keep employed.

Around this same time, Kitsap County was looking for a company that could build them a new, custom assessment taxation solution, as there were no off-the-shelf options that met their needs. We responded to the RFP and were awarded the contract. As we developed the ATS system it became clear that the county’s permitting process also needed improvement, and we were asked to also build them a new permit processing system.

Kitsap’s Land Use Information System integrated permitting and assessor data, as well as GIS information and licensing functions, and was launched in April 2002. The system was quite successful. It helped increase permit processing at the county by 30 percent and received a fair amount of press and publicity. As a result, other cities and counties came to Paladin asking for their own permitting systems.

It did not make much sense for us to build entirely new systems for each jurisdiction that approached us, and so we went to Kitsap County with an idea: to allow us to re-sell the system to other jurisdictions on a tiered, revenue-sharing plan. The county agreed and Paladin formed a separate company, Interlocking Software, to handle the sales, marketing, implementation, and support of the permitting system.

The arrangement works as follows. Kitsap County currently owns the rights to the software. Interlocking Software handles sales and marketing of the software to other jurisdictions. Interlocking Software pays the county 50 percent of the revenue from each software license until a monetary threshold is reached. The county then transfers the software rights to Interlocking and we’ll pay the county a percentage of profits until a second monetary threshold is reached.

Sounds complicated? It is, at least from a paperwork perspective. But the arrangement offers three significant benefits to all players. It allows other agencies to purchase rights to use the permitting system. It enables the county to earn back the money it spent to have the system developed in the first place. And our partnership with Kitsap County, and the support we’ve received from county officials and staff, gives Paladin and Interlocking Software significant credibility with other agencies.

The permitting system helped inspire another product Paladin developed for the public sector, the Environmental Knowledge Organizer, or EKO-System.

A meeting with Congressman Norm Dicks about the permitting system led to a conversation about salmon habitat management, science, and reporting. Over the course of the conversation we began to realize how challenging natural resource management was from a legislative, financial, and in-the-field perspective.

We left that meeting thinking that we could modify the permitting system to meet some of these needs. But as our research progressed it became obvious simply modifying an existing system was not sufficient. So we set about developing an entirely new system: EKO-System.

EKO-System is, in many ways, a completely different animal from the permitting system. Unlike permitting, which started out as a one-time development project we were hired to build for the county, Paladin funded all the R&D for EKO-System. We sought out experts in the field during development and went out and found organizations that would work with us to field test and prove the system.

EKO-System is, in many ways, a completely different animal from the permitting system. Unlike permitting, which started out as a one-time development project we were hired to build for the county, Paladin funded all the R&D for EKO-System. We sought out experts in the field during development and went out and found organizations that would work with us to field test and prove the system.

We are now forming partnerships with conservation districts and other natural resource management organizations, not only to help them implement and maintain EKO-System, but also to help them obtain the necessary grants and funding so that they can afford to implement EKO-System.

Time consuming? Yes. But this is a market with no significant competition and an industry begging for a solution. We’re finding, as we talk to organizations, that it’s rarely a question of whether they want EKO-System, it’s just a matter of how they can pay for it. So it’s worth it to us to do a little extra legwork to help these organizations find the money they need.

And that’s the key to working with public agencies. You have to be willing to put in some extra legwork; you have to be ready to be in it for the long haul. Public agencies, by and large, are not looking for a technology firm to come in, hand over a new system, and disappear. They want to find a firm that will work as a team with their own IT staff to build and then maintain the system.

The disadvantages to this are that you may have to deal with slower sales cycles, extended timelines, and projects that are not as immediately profitable as work with private companies. But what you lose in speed and quick money you often gain in steady, contiguous work, long-term client relationships, and clients that are interested in working as a team, listening to your ideas about their business processes and how technology might improve them.

Is there a need for more technology firms in this arena? Yes. I don’t see that many mid-sized software development companies willing to work with public agencies. If you asked me who our closest competitors were in this area, I would say IBM and Oracle. That’s fairly remarkable when you contemplate the size of those companies compared to the size of Paladin and Interlocking.

By and large public agencies suffer a significant technology gap when compared to their private counterparts. The last time the public sector technology market was really tapped was 5 to 10 years ago. Public agencies are frequently making do with outdated custom solutions or using off-the-shelf software that, while less expensive in the short term, don’t really provide the solutions and support they need.

As with any business decision, choosing to develop technology solutions for public agencies and organizations comes with its own set of pros and cons. Overall it’s an area that is fairly untapped in the Puget Sound region. So for those companies that are willing to put in the extra effort involved it can lead to rewarding and beneficial partnerships on both sides.