G-Cloud Opens UK Government To SMEs

The UK public sector spends £227 billion each year buying a range of goods, services and works, £45 billion of which is spent by Whitehall departments. That is a huge amount of money and one that historically has been very difficult for small and medium-sized enterprises [SMEs] to target.

A 2013 report by the Public Administration Committee on Government Procurement was excoriating. “It is intolerable that UK public procurement still takes 50% longer than it does in France or Germany under the auspices of the same [EU] Directives,” the committee found.

The government is hopeful that CloudStore, an online marketplace where suppliers offer their services to the public sector via the G-Cloud framework, will go some way to address those concerns. Companies agree fixed terms, go through a simple web-based application, and are then free to list on the CloudStore, accessible to the more than 300 government and wider public bodies.

Bracken: “We are changing the way government IT works.”

Image by GDS Team is licensed under CC BY 2.0

Some companies, such as London-based Huddle (see box) have already used the service to great effect.

It is early days; G-Cloud was only launched in 2012, but Mike Bracken, Executive Director of the Government Digital Service who has responsibility for G-Cloud, says of the sales to date, some 60% of total sales by value and 59% by volume have been awarded to SMEs.

A “Phenomenal Impact” On UK Tech Sector

As one of the most successful companies on G-Cloud not surprisingly London-based Huddle is a big fan. According to Alastair Mitchell CEO and co-founder of the cloud- based collaboration and content management software company “We have done 75 contracts through G-Cloud this year alone — the average is about five.

“It is a force for good. The more SMEs [small and medium sized enterprises] sell into government the more you can drive innovation.”

About 30% of Huddle sales are in the public sector in both the U.S. and UK. Mitchell said the G-Cloud, and a wider government drive to bring far more SMEs into government procurement, was arguably the most important thing it could do to stimulate the sector. “There is now a policy-driven decision that if you are a government department or a public sector body buying tech, you should buy it off the G-Cloud and you should target SMEs.

“Given that 44% of the GDP is in the public sector, bearing in mind it is already been spent — if you can deploy even a small part of that to the SMEs, and stop it going out of the country or to large corporations, that will have a phenomenal impact.

“It is bigger than any other single investment the government could do.”

However those sales are only £175 million, a tiny drop in a vast sea of government spending. Bracken accepts that much has to be done, but is confident that the big steps have already been taken. “We are changing the way government IT works,” he says. “We are commissioning not procuring. You need to have an arrangement with commercial providers to allow you to do that.”

60% Of Sales Have Been To SMEs

One who has embraced the new openness is Piers Linney, Co-CEO of Outsourcery, a cloud service provider with offices in London and Manchester. “It is reducing the ridiculous paperwork,” he says. But as of today CloudStore is more of a catalog with a standardized procurement process than an app store. “It is not click, put your PayPal details in it, and off you go.”

According to Huddle CEO Mitchell, while getting listed on the CloudStore is relatively simple “there are a whole bunch of things you have to do for government that are quite complex.”

There are stringent accreditation processes and while you don’t have to be accredited to list your service, Linney strongly recommended getting that sorted. “It could take you three to six months to get it [accreditation]. Who ever you are trying to sell to will have moved on.”

Nor does the service do away with the need for sales and marketing. “People don’t magically know about your service,” says Mitchell. “They might search for you, but you have to get out there and do your sales job and go and talk to customers, articulating the business case and what problem they have that you are solving.”

“You need the right people who understand the language of government,” says Linney. “You need to make sure you understand the sales process, and not being too optimistic about how long it will take.”

“It Is A Market In It Own Right”

Huddle’s Mitchell warns the sales cycle could be as long as a year. “It is like tackling a whole new geographic market — it is a market in its own right,” he says.

Given that sort of investment, Mitchell says it is vital to make sure you have a product that solves a need for the government.

“You might have a great product but you might not solve a problem for people in government. Always remember that government is not about generating revenue. Government is about saving cost and delivering public services. If you can do one of those two things then you are in.”

Mitchell was optimistic about the future. “We work very closely with the U.S. government, and we have done a lot of work in Europe.

“I can say quite safely the UK government leads the world. It is more forward thinking in the way it procures new tech and in the way of open standards than any other government we have worked with globally,” he says.




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