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Government Needs to Refocus on SME Involvement in Govtech Contracts

"Most damning of all is the finding that 92 percent of SMEs still prefer to work with the private sector rather than the government"

By CBR Staff Writer

Eight weeks ago techUK published the results of its fourth annual Govtech SME Survey. The poll of 101 SME leaders provides great insights into the challenges SMEs continue to face when supplying (or attempting to supply) to the public sector, writes Romy Hughes, Director, Brightman. It also provides another level of analysis from which to measure the government’s commitment to spend 33 percent of public sector procurement directly with SMEs by 2022.

The challenges that SMEs face when working with the public sector are already well known (as the 33 percent spend commitment demonstrates). Yet while significant progress has been made to open up the process (starting with the launch of the first G-Cloud framework back in 2012), there is a growing sense that this progress has stalled or even taken a step backwards in recent years.

Romy Hughes, Director, Brightman

The government’s own data appears to back this up. According to the latest statistics for G-Cloud for example, the total sales by value generated by the G-Cloud framework to SMEs since its launch in 2012 through to 31 December 2017 stood at 48 percent.

As a standalone figure that appears impressive, and competes well with the overall 33 percent target. But it is less impressive when compared against the same figure from a year earlier, where total cumulative spend since 2012 stood at 56 percent. Clearly the trend is going in the wrong direction!

The most recent, independent analysis paints the same picture. According to the govtech venture firm Public, only 8 percent of taxpayers’ money has gone to smaller tech businesses over the past three years. Most damning of all is the finding that 92 percent of SMEs still prefer to work with the private sector rather than the government, with many small technology businesses finding it “almost impossible” to win public sector contracts.

Govtech: Can Anything be Done to Boost SME Procurement?

To accompany its survey, techUK published five recommendations on how to improve SME access to the public sector market (as detailed in the Procuring for Innovation and Growth report). Given our shared common interest in this topic, and the publication of our own recommendations to address this challenge, we wanted to share our thoughts on their recommendations.

  1. Encourage Government buyers to drive more procurement through the Digital Marketplace

While a lack of procurement through the Digital Marketplace is the crux of the issue, we need to address the cause of this problem. The issue is the Digital Marketplace itself; the convoluted processes around it remain a significant barrier for everyone who uses it. Plus – or perhaps as a result of this – many parts of the public sector still don’t engage with it. A good proportion of procurement is still done outside of the marketplace via traditional networks, which brings us to techUK’s second recommendation:

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  1. Adopt a more strategic approach to market engagement and engage with industry outside the procurement cycle

This is a very positive step because it recognises that much of procurement still takes place outside of the frameworks. The frameworks put up artificial barriers to the traditional forms of networking and market engagement, so anything that reduces these barriers is a good thing. techUK’s proposed introduction of an ‘Innovation Showcase’ to highlight examples of govtech innovation is a very positive step which we welcome.

  1. Develop understanding of SMEs and how to work with them

This is key. The procurement processes of the public sector often does not keep up-to-date with the latest technological developments. This is particularly relevant when it comes to categorising suppliers on the frameworks, where new innovators are being shoe-horned into framework agreements that don’t suit them, or they are judged on metrics which do not reflect their value (e.g. a digital transformation project is judged against the metrics of an in-house datacentre migration, which tends to focus on day-to-day cost only and fails to convey the broader benefits that transformation delivers outside of the IT organisation).

  1. Foster the partnership ecosystem

techUK’s involvement in promoting ecosystems is a great initiative. Many SMEs have banded together to create ecosystem solutions which they can pitch “as one” to the public sector to improve their chances of success (e.g. Crown Hosting’s “Crown Campus,” which brings together many different services which are pre-selected for their in-depth knowledge of Crown Hosting Data Centres’ infrastructure and procurement processes). Anything that encourages more of those in the public sector to explore these partnerships vs. the established outsourcers is a positive step.

  1. Evangelise through your networks

As the data suggests, we are not alone in feeling that the focus on SMEs has died down recently. The government needs to remind the wider public sector of its SME procurement target and evangelise SME success stories whenever it can. This may mean changing its own rules on the promotion of case studies with public sector customers, as many SMEs are doing great work in the public sector but are prohibited by the customer from talking about it publicly, which reduces their ability to win more public sector work.

In summary, we feel techUK have hit the nail on the head with their five recommendations. I urge the rest of the industry to get behind these and promote them to their public sector contacts whenever they can. SMEs hold the key to the rapid digitisation of the public sector. Whenever SMEs are unfairly prevented from pitching for new digitisation projects, the government’s journey to digitisation is held back. If the UK government wants to be the global leader in digitisation – as it once was in digital government services – it must do all it can to mobilise the innovation that abounds in our nation’s SMEs. techUK’s recommendations are a good place to start.

See also: “A Masterclass in Incompetence”: DBS IT Modernisation Slammed

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