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Federal Budgets Cuts for HPC? How to Gain Market Share in an Uncertain Market

In this special guest feature, Kim McMahon from Xand McMahon looks at the “skinny budget” proposal coming out of the White House and what HPC vendors can do now to bolster revenue in the face of agency cuts.

Last week was a busy week for the U.S. White House. One of the items they accomplished was releasing their Budget Blueprint.

Any time the White House releases budget guidance, our clients in HPC get a little nervous. Budget guidance from the White House typically affects academic researchers as well as various governmental agencies. Commercial vendors wonder how the news will affect spending by their customers and prospects.

I spent a lot of time learning about the Budget Blueprint. Full disclosure: I didn’t read the entire budget. I read multiple articles written by people who are experienced in reading these types of documents and summarizing their analyses.

This article provides an overview of how the Budget Blueprint may affect HPC spending, explores what happens now that the White House has issued budget guidance, and makes suggestions on marketing activities and communications you should prioritize during this market uncertainty.

How the Proposed Budget Affects HPC

First, it’s important to note that this budget outline tackles discretionary spending — the area of the budget that funds, among many other things, science and research. It has been called a “skinny budget,” and it provides us with a good idea of the direction federal spending may take over the coming years.

Below, I have listed the areas of the budget that we in the HPC community care about. Although most show budget cuts, there are also areas where funding may increase, which could have a positive impact on HPC spending.

Department of Commerce: National Oceanic and Atmospheric Administration (NOAA)

The budget guidance lists cuts in climate change and ocean research at NOAA, including $250 million from coastal research programs that prepare communities for rising seas and worsening storms, and $73 million from the Sea Grant program. This program provides funding for research and encourages collaboration between government, academia, industry, scientists, and the private community in order to understand and sustainably use our nation’s ocean, coastal, and Great Lakes resources.

Health and Human Services: National Institute of Health (NIH)

This agency funds biomedical research, including diseases and conditions. NIH funding supports more than 300,000 researchers at universities, as well as hundreds of researchers conducting studies at their Bethesda, MD campus. Budget cuts will eliminate the Fogarty International Center, which builds partnerships between U.S. and foreign health research institutions. The 21st Century CURES program, which allocates funding to cancer and neuroscience research while streamlining FDA approval, will continue.

Department of Energy (DOE)

Budget cuts to the DOE include eliminating the Advanced Research Projects Agency – Energy, which funds “high-risk, high-reward’ research, and reducing the budget of the Office of Science, which supports research on topics such as high-energy physics, energy, climate change, and biology.

Department of Defense (DOD)

Defense spending will increase the size of the Army and Marine Corps, increase the number of ships in the Navy’s fleet, purchase additional F-35 Joint Strike Fighters, and increase spending to keep Air Force combat planes ready to fly.

Environmental Protection Agency (EPA)

The EPA is facing large cuts across the board, with the unstated goal of dismantling the agency. The EPA is charged with protecting the environment and human health, providing funding for clean-up efforts, and safeguarding the nation’s water and air. The EPA is an enactment agency more than a research agency.

In General

There are no specifics in the Budget Blueprint, just guidelines released by the White House. The document suggests top-line numbers for each agency, but does not supply a line-item breakdown of every individual program.

As Benjamin Corb, Director of Public Affairs at the American Society of Biochemistry and Molecular Biology, said in a statement to Ars Technica: “A $6 billion cut to the National Institutes of Health is unacceptable to the scientific community, and should be unacceptable to the American public as well. President Donald Trump’s fiscal year 2018 spending plan erases years worth of bipartisan support for the NIH, and the American biomedical research enterprise which has long been the global leader for biomedical innovation. Cuts this deep threaten America’s ability to remain a leader.”

What Happens Next?

The President does not decide federal spending by himself — that’s up to Congress. The budget process for the 2018 fiscal year (starting October 1), begins with a fuller budget proposal in May. Congress is tasked with drawing up 13 separate spending bills to fund the various agencies of the government. Congressional committees in both the House and the Senate will hold hearings on the bills, and Congress has a deadline of September 30 to pass the appropriations bills to fund the various federal agencies and programs. Congress controls the budget, not the White House.

This Budget Blueprint sheds light on the types of spending choices we can expect in the coming years. But, any budget requires 60 votes in the Senate to pass. So, even if Republicans vote along party lines, they would fall eight votes short if Democrats also vote along party lines. Congress typically debates spending provisions for weeks, if not months, and chances are pretty good that the Budget Blueprint will not be the exact budget that gets passed for fiscal 2018.

What Does This Mean for Marketing?

Marketing is important in good times, but it can be even more important in bad times. If you have the means to invest in marketing, then do it now. Invest, because there will be many others who will hold onto funds until there is more certainty on 2018 budget spend from the US government. If you are one of the few investing in marketing, your voice will be heard while others are silently standing by.

Diversify Your Target Markets and Conduct a Messaging Exercise

It’s never a good thing if the majority of your revenue relies on spending from any one segment of the market, such as the government or research institutions. If you have not yet looked at ways you can diversify your target markets, now is the time. In particular — and especially if you are heavily reliant on customers in the government and research areas — identify which verticals in the commercial markets would be a good fit for your products. It might be time to try something new.

The best way to do this is to conduct a messaging exercise. Systematically go through the elements of your marketing messaging, analyze where your sales come from and why, and identify markets that struggle with the same kinds of business issues that your current customers do, in order to identify possible new target markets.

Did you identify a new target market? Great! Now, document the business issues that affect your target market, using industry terms applicable to that market. Identify your product benefits succinctly and match them to the issues that industry is experiencing — show how your products solve real problems in that particular vertical. Document it in your messaging document, and build out targeted messaging for your new target market.

Refresh (or Create) Your Marketing Plan

Your marketing plan should always contain a healthy balance of content, digital marketing, outbound marketing, and partner relationships. No one area of your marketing stands alone, it all fits together. For example:

  • You may have a white paper with great proof points about your product…
  • Which you excerpt and turn into a blog…
  • Which you can post to your website, LinkedIn Pulse, and promote heavily on social media…
  • With a link to the full white paper, perhaps behind a gated registration page in order to collect leads.
  • You can share the white paper with your partner, who creates a version that includes their logo as well, and uses it to collect leads from their own database…
  • And create an advertising campaign with one of the industry publications to collect more leads…
  • And create a webinar or podcast of the blog with additional proof points, which you can promote in social media…
  • And everything leads up to promoting your booth at an upcoming trade show, driving traffic to your booth, and collecting even more leads.

These activities will position your company as an expert and spread that news to your target market. Driving awareness to your prospects, key industry influencers, and industry publications will increase the chances that they start talking about your solutions on their own, thus leading to even more awareness.

Did you come up with a new target market? If so, you will need to document your proposed marketing activities in the marketing plan. You many need to update current content (brochure, website, sales sheets, etc.) or create new content with information that speaks specifically to that new target market.

Use the key words you identified in your messaging exercise to show your target market that you know what you’re talking about, and to make sure you come up in the right web searches. You will need to get noticed in your new target market, so your social media and awareness activities need to be taking place where your market is looking for information on how to solve their problems.

Focus on Digital Marketing and Awareness

Digital marketing and awareness is the primary way you should spend your marketing time and money. I touched on it in the above paragraph, but let me go into a little more detail here. Digital marketing and awareness includes a variety of activities, such as social media, emails / newsletters, campaigns, pitched articles, blogs, and advertising. All of these activities fit together and amplify each other.

For example, if you write a blog, you should publish it in a newsletter, you may pitch it to a publication, and you should promote it heavily in social media. If your blog happens to be about how your product solves an issue in a specific vertical market, you have just created a key marketing tool around which you can design a new campaign to capture leads specifically in that vertical market.

Social media is one part of digital marketing that most companies can start utilizing right away. It’s often the most misunderstood marketing tactic, in terms of how to effectively execute it and how to get results. Social media is not about setting up your Twitter account and tweeting. It’s about having an overall presence in the social media channels where your target clients get their information. In our industry, Twitter and LinkedIn are the leading social media channels, with some companies also using Facebook.

For Twitter, you don’t just set up your handle and tweet here and there. You need followers and you need to engage with your audience. You need to know the key influencers in your target market and follow them. Then engage them — re-tweet what they share, respond to their blogs, respond to their social media posts.

For all social channels, you need to share relevant information. That extends beyond your company press releases and your latest blog post, to identifying third-party news that would be of interest to your target market. By maintaining a balance of content sharing, you will better demonstrate your expertise and you will be more relevant to your target audiences.

Engagement is important in any of the digital marketing areas, and there are best practices to keep in mind when engaging. As you read articles and blogs, engage with the right posts and do not share posts that could be viewed as controversial or off point with your message. Make sure to engage with the right people — the industry influencers and people who are sharing a point of view that supports your message.

Monitor your blog posts and social media accounts and make sure to respond promptly when you have interaction from your audience. Maybe it’s a thank you to someone who shared your post or followed you. Or a comment, which you should always respond to immediately (hopefully a positive comment!).

#JustStartToday

This may sound overwhelming, but there are many things you can do on your own to #JustStartToday.

I am a strong proponent of documenting your messaging. You don’t necessarily need a full-blown messaging document, but know and document your branding, key messages, and target markets. This will keep your entire team on point with your message.

Document your marketing plan. For example, if you know you will be exhibiting at a major trade show, think about the communications you can put out to make the market aware of your show activities and drive traffic to your booth. Maybe this is a Twitter campaign or email communications to your prospect database.

Spend a little time on social media every week. Try to build your followers and share something on social media consistently.

If you have a partner network, think about how you can work more closely with each partner to optimize both companies’ marketing activities.

Tackle Market Uncertainty with Marketing

Although the Trump budget does not support science funding, it is not yet clear what budget will come out of Congress. Regardless of the outcome, it has produced market uncertainty in HPC.

This means now is an ideal time to put resources into your marketing efforts. This is a time when many will be inclined to hold back in order to “wait and see” what happens with the market. By investing now, it will be your products or services that everyone is reading about and your company with a chance to measurably grow market share.

Kim McMahon, Xand McMahon

You can do this yourself, or you can hire a marketing firm to help. Being prepared with targeted communications, awareness activities, and marketing budget will keep your company and its solutions top of mind with your customers and prospects, giving you the best chance for success.

About the Author:

Kim McMahon is the co-founder of Xand McMahon, a full service marketing firm with over 15 years of experience in HPC, Enterprise Technical Computing, and the high-end IT space, working with clients around the globe. Kim has performed sales and marketing for more years than she cares to count. She writes frequently on marketing, life, the world, and how they sometimes all come together.

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