Relieving Public-Sector Fiscal Pressure

When a British Columbia transit system began receiving complaints from the public that many riders were catching free rides, it had to develop a prevention system quickly—and luckily it chose its subcontractor wisely. “The transit system got the okay to proceed in May, did a nationwide search for a software provider, and selected one of our companies to develop a system,” Ron Begg says. “Within four months, that system was up and running.” Begg works for StarDyne Technologies, Inc., and through targeted acquisitions, careful oversight, and a deep understanding of its market base, the company has made such public projects its bread and butter.

The Kelowna, British Columbia-based company makes strategic investments in businesses that provide software and related services to the public sector—primarily to local government and education markets—and then it manages internal growth of these businesses. However, though StarDyne Technologies manages its businesses as a group, it still has them operate independently from each other. “When a company comes to the StarDyne family, we don’t necessarily take it apart and integrate it,” Begg says. “We try to preserve the management and staff, and that was very important in [the case of the rapid-transit software system] because the system was quite advanced in its functionality and the company that was offering it was intact, with significant expertise in place.”

Begg is StarDyne’s COO of government solutions, a division with 150 employees, and he helped the company’s subsidiary quickly implement its rapid-transit software system through his strong understanding of the public sector. Public institutions are under immense fiscal pressure and in need of systems that will help them plan, budget, and manage fiscal resources, and working with them involves a much deeper understanding of how they differ from entities in the private sector.

First, it’s important to understand the complexity of local governments. “They deliver a far broader range of services than pretty much any private-sector company and any other government level,” Begg says. This is because while larger government entities transfer tax money, local government entities actually spend it to get things done. “You don’t have a single bottom line such as profit,” Begg says. “You have multiple bottom lines because you have political and other considerations.”

As a result, it’s critical when working with a local government to understand that its decision-making process is completely different than it might be if it were in the private sector. “Don’t confuse taking a long time to make a decision with lack of intelligence or competence,” Begg says. “It’s a natural result of the complexity of the entity, and you have to think of it as a fact. If you resent it, you’ll never succeed; if you understand it, you’ll have no trouble building a successful company.”

Another key is understanding a local government’s need to be up front and open. “One of the most notable needs of the public sector is transparency to constituents such as taxpayers and voters,” Begg says. “And a system that keeps track of what an entity did, why it did it, and what alternatives it considered is critical.”

Public-sector organizations are reference-driven, which has been good news for the company. StarDyne has gained 4,900 customers and earned revenues of $44 million per year since its founding, in 2001. “The sector has a very active grapevine because local governments don’t compete with each other and are willing to share information,” Begg says. “Once you get a handful of successful assignments, the work finds you. It’s not magic, just dedication to a good job.”