VAR Long Island Technical, Inc. produced a prototype kiosk designed to save the Internal Revenue Service millions of dollars. The prototype worked. Long Island Tech lost money. Can any VAR make sense (and money) out of the federal government?
Gordon's four-employee company, headquartered in Rockville Center, NY, develops software and provides turnkey touch screen systems enclosed in kiosks. Founded in 1994, Long Island Technical posted $650,000 in gross sales in 1998. Approximately $40,000 came as a result of a prototype multimedia kiosk installation for the Internal Revenue Service (IRS). But, according to Gordon, Long Island Technical hasn't seen a penny from the IRS since.
Technology Exceeds Expectations
Touch-screen manufacturer MicroTouch Systems (Methuen, MA) informed Gordon that the IRS was interested in a system that would, in general, improve communication with taxpayers and reduce costs. The system would answer tax questions and print tax forms on demand at public outlets such as post offices and malls. This would reduce costs by eliminating the need for pre-printed tax forms that are often wasted by the public. Shipping costs for preprinted tax forms and phone calls to federal tax centers would also be eliminated.
Gordon said the IRS did not provide specifications for the system. "Our only specification was that it had to print tax forms," he said. "I figured this was our opportunity to show what the technology could do. We gave them a whole lot more than they anticipated."
Long Island Technical, which services mostly the healthcare and insurance markets, designed a custom-made kiosk for the IRS. The system consists of two MicroTouch touch screens, Hewlett-Packard duplex printers, Pentium processors, and Altek speakers. The kiosks use oversized buttons with colored graphics that are supported by audio and textual instruction. The touch screens provide online question-and-answer screens for frequently asked questions about state and federal taxes. Above the touch screens is a looping videotape featuring messages from the IRS commissioner and the New York State tax commissioner.
"Everybody was happy with what we did," Gordon said. "We installed one system at the CrossGate Mall in Albany, plus systems at IRS walk-in centers in Syracuse and Rochester." Gordon estimates that a statewide implementation of the kiosks would save the IRS $2 million per regional division annually. Costs would be reduced for printing, shipping, warehousing, and labor.
Based on its successful prototype, Long Island Tech should be working overtime to fill more IRS orders right? "The IRS may jump on the bandwagon for this technology at some point," Gordon said, "but I may be dead for 30 years at that point."
Battling The Bureaucracy
"I had prior experience with the government," said Gordon, a former Wall Street financial consultant. "I had an idea of the bureaucracy, but I'm overwhelmed by the level of it. When I wanted to complete an order, they would tell me they didn't have the proper signature. Then they lost the paperwork. They didn't give any money down, and we typically require 50% down. I had invoices that took a year to pay – and that was after I made 97 phone calls. I want to sell 500 of these units, but it won't happen in this lifetime."
Because the IRS has not ordered any systems in 1999, Gordon said he has lost money on the installation. The frustrated small business owner is also losing his patience. "One IRS executive was a visionary and tried to provide better service through automated forms distribution. But he's retired, and we haven't been able to get an order from them since. Nobody takes a personal interest in improving the old system." Gordon does have advice for VARs who hope to make money selling to the U.S. Federal Government. "You need deep pockets, because it's going to take years to get a return on your investment," he said. "You have to be persistent, too, because there's no dialogue from the IRS. As long as the system is working, you don't hear from them. I think you also need to have heavy, heavy government connections."
Hope For Touch Screen Kiosk VARs
Though frustrated with the government, Gordon is succeeding in the healthcare and insurance markets. He estimates Long Island Tech's 1999 sales will top $1 million – a 55% increase from last year. "Companies that are forms-heavy benefit from kiosk technologies," Gordon said. "Health associations are very competitive these days and are installing units inside malls. The kiosks promote valuable physician and hospital services to the community. Through the kiosk, thousands of health articles, plus audio and video, are available on demand to the public."
Gordon said the future holds more promise for kiosk VARs. "I've been using MicroTouch screens for four years, and I never had a problem. And the system can print thousands of pages a day without any jamming. Most importantly, people who have never seen the systems before are able to use them immediately. Eventually, you'll see people ages 8 to 80 using these systems."