Government must ensure SME agenda is pragmatic – not dogmatic

Written by Sam Trendall on 18 September 2017 in Opinion

PublicTechnology editor Sam Trendall asks if the tone of the procurement discussion is becoming a little too Orwellian

Whitehall's drive to embrace SMEs has driven more than £1bn in spending with smaller firms on cloud and digital services in the last five years  Credit: PA

January 2008 witnessed a number of events that can, with hindsight, be seen as hugely significant milestones. 

The US Federal Reserve moved to try and stave off recession by enacting its biggest lowering of interest rates in a quarter of a century. Another drop came just a few days later, and the UK soon followed suit, with the Bank of England slashing rates from 5.5% in February 2008 down to just 0.5% by March 2009.

In the same month, Barack Obama began his march towards the White House by winning a series of Democratic primary races across the US, starting with victory in the opening contest, the Iowa caucus on 3 January.

And, in perhaps the most era-defining development of all, this reporter began a career writing about IT.

The people I was talking to and writing for were, as often as not, senior management figures of SME IT providers, many of which sold into the public sector. The perception, pretty much across the board, was that government contracts were good work – if you could get it. 

The public sector, the received wisdom had it, was in possession of a big pot of other people’s money and, consequently, had a much higher appetite than other markets for investing in the bells and whistles of new technology.  

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But, unlike the commercial sector, no amount of rounds of golf or boozy lunches could help you win such lucrative business, suppliers told me. Even being demonstrably cheaper than everyone else was no guarantee. The only way to get your foot in the door was to resign yourself to a labyrinthine ordeal of trial by red tape. Many SMEs were dissuaded from attempting to navigate such a maze of bureaucracy. 

Fast forward almost a decade, and much has been done to change both the above perceptions.

The ruthless focus on cost saving and efficiencies that was the hallmark of the Cabinet Office under Francis Maude’s leadership has done away with any notion of Whitehall as a free-spending land of milk and honey for suppliers. Meanwhile, funding cuts across the wider public sector have necessitated cutbacks and elongated investment cycles.

Another strategy driven by Maude – and pursued to this day by both civil servants and ministers – was the disaggregation of big overarching contracts. A number of single-supplier deals have been broken up and doled out to a far wider range of companies, with a keen focus on encouraging greater SME involvement.

Last month the government proudly announced that, since 2012, some £1.2bn – out of a total of £2.6bn – has been spent with SMEs on cloud and digital services, via the Digital Marketplace platform. This equates to 46%, or £1.39 in every £3. 

Admittedly, this is just one small corner of the vast procurement landscape. But, even so, the thought that small businesses might account for half of all government spending in any area would have been unthinkable a decade ago.

On a mission to support SMEs
But the government is not resting on its laurels just yet.

At a recent event, Caroline Nokes, the minister with responsibility for the Government Digital Service, went so far as to say that “if my mission is [about] one thing, it is to make sure we support SMEs”. This message was heartily endorsed by other speakers from GDS, the Crown Commercial Service, and the wider Whitehall community.

The drive to become SME friendly predates the coalition and Conservative governments of recent years, but since 2010 the agenda has felt like more than just lip-service. 

The bruised egos – and wallets – of some large systems integrators and IT manufacturers are evidence of the demonstrable changes that have occurred in the last seven years. As are the hundreds of small firms – many of which did not even exist a decade ago – that are making good money from G-Cloud.

But, as an impartial observer, not to mention a UK citizen and taxpayer, it sometimes feels like the government’s SME mantra is in danger of becoming just that: a mantra; a sound whose meaning only comes from its religious repetition, and the altered state of consciousness that brings.

In even the most SME-friendly sector of the procurement world, big firms still account for 54% of spending. But larger companies never seem to be referenced in discussions about public sector procurement in any context other than hinting at the eye-wateringly overpriced and inefficient horrors of large single-supplier deals or, worse still, tower-based contracts. 

The tone of the debate feels apt to create dogmatists, rather than pragmatists. 

Some are more equal than others?
When I talk to interested parties – both large and small suppliers, as well as public servants – I’m often reminded of that famous fictional propagandising catchphrase: four legs good, two legs bad. 

Or, in this case: SMEs good, large SIs bad – or, indeed, vice versa. There are ideologues on both sides.

In George Orwell’s Animal Farm, that idiom effectively served a rabble-rousing purpose in the short-term. But its reductive dogmatism ultimately saw the phrase first reduced to meaninglessness and, latterly, hijacked and subverted.

Rather than simply rolling out stats and slogans that reaffirm the commitment to working with new faces, perhaps we could hear a little more about exactly what the best and most innovative suppliers – regardless of the size of their top line – are bringing to government and, more importantly, how their skills are helping service delivery.  

The Cabinet Office seems to have succeeded in its aim of breaking the central government oligopoly. And its commitment to continue helping small UK businesses work with government is admirable.

But perhaps it could also work to ensure that, rather than viewing each other as doctrinal enemies, SMEs and big companies feel empowered to compete with one another on a level playing field. And, what is more, perhaps even work together, in a way that benefits all parties.

Most of all the public sector, and those to whom it provides services.


About the author

Sam Trendall is editor of PublicTechnology

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Lou Valdini (not verified)

Submitted on 21 September, 2017 - 14:13
What is an SME to do when it spends a year bidding for a significant contract to replace an ageing and unsupportable system, wins against all the major suppliers, only for the Department to do nothing? Then, 18 months later, the Department decides it must find a new solution, but rather than go for the SME's solution, it decides to re-tender. Again, the SME beats all the major suppliers, including its previous Tier 1 partner, and starts work. After a collaborative and very positive 3 months engagement, and achieving the given objectives, the SME is told the Department has decided to take a different route, but will not tell the SME what that route is, and will not permit any discussion. 5 months later, the SME learns the 'different route' is actually one of the major suppliers the SME had previously beaten. What's more, that supplier's solution is extremely complicated and costly to implement, and its software costs are many £millions greater than the SME's. How can this encourage SMEs to compete for large contracts, and how can that Department claim it is delivering value for money for taxpayers?

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