Innovation and changeCloud ComputingHow do you help more SMEs into the GovTech sector?

How do you help more SMEs into the GovTech sector?

Romy Hughes, director at Brightman, compiles her own recommendations on how to improve access for SMEs in the UK public sector

This is a question the government has asked itself many times. The challenges faced by tech SMEs when attempting to work in the public sector are well known. With a string of failed IT projects under its belt, and the reality that most IT contracts were consistently won by the same big few outsourcers (irrespective of past failures), the government rightly recognised there was a problem to be solved.

The launch of the first G-Cloud framework in 2012 was the government’s first tangible step in solving this problem, because it really opened up the market to fair competition from SMEs for the first time. Many more frameworks and SME-friendly initiatives have launched since, and in 2015 the government upped its commitment even further by publicly setting a target to spend £1 in every £3 (or 33%) of central government procurement with SMEs by 2020 (a target which goes beyond technology spend but across the whole of the public sector).

Yet while significant progress has been made to open up the process during these years, there is a growing sense that this progress has stalled or even taken a step backwards (the government’s own £1 in £3 target had its deadline extended from 2020 to 2022 for example). The latest statistics for G-Cloud also suggest a slowdown; the total sales by value generated by the G-Cloud framework to SMEs since its launch in 2012 through to December 31, 2017 stood at 48%. As a standalone figure against the 33% target this is impressive, but as with all figures, the devil is in the detail. When compared against the same figure from a year earlier, it is less impressive – as total cumulative spend since 2012 to December 31, 2016 stood much higher at 56%. For the total figure to drop that much in a year, clearly a lot of SMEs missed out in 2017. We await the figures for 2018. Independent analysis by the govtech venture firm Public suggests the same trend, with only 8% of taxpayers’ money going to smaller tech businesses over the past three years.

techUK, the trade association for the UK technology industry, recently published its fourth annual Govtech SME Survey, in which 68% of respondents said “the Government has not acted effectively on its commitment to helping small businesses break into the public sector market.”

Five recommendations to bolster govtech SMEs

To accompany its survey, techUK published five recommendations on how to improve SME access to the public sector. Given the publication of our own recommendations to address this challenge last year, we felt this was a good time to review them.

  1. Encourage Government buyers to drive more procurement through the Digital Marketplace: We need to address the cause of this problem first. The convoluted processes around the Digital Marketplace remain a significant barrier for everyone who uses it. As a result, many parts of the public sector still don’t engage with it, leaving a large part of procurement still taking place outside of the marketplace.
  1. Adopt a more strategic approach to market engagement and engage with industry outside the procurement cycle: This is very positive because it recognises that plenty 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 suggestion of an ‘Innovation Showcase’ to highlight examples of govtech innovation is most welcome.
  1. Develop understanding of SMEs and how to work with them: We have found that public sector procurement processes often fail to keep up-to-date with the latest technological developments, which results in new innovators being shoe-horned into framework agreements that don’t suit them, or being judged on metrics which do not reflect their value (e.g. a digital transformation project being judged against the metrics of an in-house datacentre migration).
  1. Foster the partnership ecosystem: Many SMEs have already joined forces to create solutions which they can pitch to the frameworks as a joint proposition (Crown Hosting’s “Crown Campus,” is a good example of this because it brings together many different services which are pre-selected for their in-depth knowledge of Crown Hosting Data Centres). Anything that encourages more of these joint propositions is a positive step.
  1. Evangelise through your networks: The government must not lose sight of its 33% SME spending goal. Evangelising SME success stories within the public sector will help it towards this goal. Many SMEs are already doing great work in the public sector but are prohibited from talking about it publicly. This needs to change.

techUK have hit the nail on the head with their five recommendations. We urge the rest of the industry to promote these ideas to their public sector contacts whenever they can. SMEs hold the key to the rapid digitisation of the public sector. If the UK government wants to be the global leader in digitisation, it must support the innovation that SMEs bring to the table.

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