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Lindsay Smith advises companies on how to make the most of G-Cloud. We asked him for insights as the government announces G-Cloud 10 will open in April.
Can you tell me a bit about your experience and how you got involved with public procurement?
I've been knocking around in the technology sector for quite some time. Most recently I ran a trade association called Euro Cloud in the UK for about four years, starting at the same time that G-Cloud in 2012. It was most interesting, because we had a big network of cloud technology suppliers and they were so interested in G-Cloud because they couldn't get it to work. I found that 80% of companies on there were selling nothing. They were successful companies that were selling to government elsewhere but they were not selling on G-Cloud.
Listening to them in all these networking meetings, they had developed a complete mythology about why they weren't selling. I decided to investigate what were the underlying causes. I produced this analysis of why people weren't selling and it was nothing to do with the myths people had put around it. There were a lot of suggestions that there was some sort of old boys network and that you could circumvent the rules. But what they hadn't appreciated was, they hadn't actually read the rules themselves, and they were making mistakes that were actually preventing people from buying from them following the public procurement rules on G-Cloud.
At the moment I'm working on trying to identify the common mistakes that people are making on G-Cloud 9, and comparing them with that work that I did a couple of years ago and see if people are making the same mistakes, making different mistakes or if there's new things that we can identify.
What’s in the near future for G-Cloud?
CCS forecast that in the 12 months to June 2019, £2.5bn worth of procurement is going to go through the five frameworks that Government Digital Futures manage, principally G-Cloud and DOS. There's £1bn going through at the moment, so in just short of 18 months time, that's going to more than double.
You've got a number of large old IT contracts coming to an end and they need to be replaced by the acquisition of components through things like G-Cloud, the acquisition of professional services through DOS, and by putting together the new systems. Brexit is going to create a huge demand for new systems and new ways of doing things such as border systems, systems to pay farmers, and systems to move livestock around the country. There is a big digital side to GDPR, for example getting personal names and addresses and personal data off spreadsheets and in to secure data repositories. Then of course, you've got ongoing digital transformation. The Ministry of Justice have got a tremendous digital transformation program going on and that is going to continue.
All those things coming together have meant that CCS are looking forward and they're forecasting that increase in demand is there and it's going to take us all by surprise. What worries me is the supply side isn't elastic enough to cope with that. If you look at the demand on just professional services, comparing the level we are at today to the level that we'll be at in June 2019, is the equivalent of more 10,000 IT full time employees. There's a bit of elasticity in the big consulting firms and so on, but they have a model where those people are out working already, so where are we going to get those 10,000 people from?
I think this is going to drive up salaries and consulting rates. People are going to start poaching staff from government, who have got experience of working in these big departments. That's going to make the situation worse. We on the supply side, need to make ourselves as elastic as possible to be able to fulfill the demand that's going to be coming through.
G-Cloud 10 is launching in April, so with all the changes you see coming up in the next 15 to 18 months, how do you think suppliers ought to respond to that? Are there any new services that you think would be particularly in demand to offer? Are there any things to avoid?
Companies going on to G-Cloud 10 or on to DOS, are going to be putting up their price list. These price lists will be fixed in the view of the world in April and May in 2018. Now the real problem is the salaries they have to pay to maintain and keep the talent. Say they go up 20%, that's going to thrash everybody's gross margins. That's a real problem on G-Cloud because they can't put the price up to the government. One of things I suggest people do very carefully, is to plan their pricing because, if I'm right and if salaries do go up and that labor market becomes very tight, it's going to hurt a lot of people to be putting in today's pricing.
Do you think the governments more friendly than it's ever been to SMEs, or do you think that’s actually dropping off a little bit? The figures on spending with SME have actually appeared to take a bit of a downturn recently.
Yes. It is clear from the recently released figures for the seven months that G-Cloud 9 has been running that the amount being procured from SMEs, has dropped off considerably. I think that the cause of this has been that some of the big organizations have woken up to G-Cloud and decided that they will come and compete in the G-Cloud marketplace, so they have been winning business.
It is a concern that the SME agenda isn't being pushed very effectively, perhaps due to a lack of leadership. Civil servants and politicians are putting so much effort into Brexit, that I think the SME policy is one that just is falling off people's agenda. Now when they want something done, they just turn to a large company rather than going through the pain of sorting out an SME that can deliver. Reflect again that some of these SMEs, a good 50% plus, aren't able to supply. I know that particularly central authorities get real frustrated at looking at G-Cloud as a marketplace, because they come up with a whole lot of dead wood. If a buyer is doing a desktop analysis of between 20 or 30 companies, and he finds that he's not quite sure how somebody's pricing will add up, then those companies will just get eliminated. The SMEs need to improve their game to really deserve to come back to the table.
Do you think that pricing's the biggest weakness that companies have on G-Cloud?
Pricing is a fatal problem area. Some organizations have actually put up a price list and redacted every number in there. Others just don't put enough information in, they give examples like ‘it will cost between £4,000 and £80,000 a month’. A procurement officer has got to look at the £80,000 as being the only number he can estimate on, and so that company is going to get eliminated.
There are many other things that people are not doing correctly. Let me give you one good example, that's accessibility. I'd say well over 50% of SMEs on G-Cloud have answered the accessibility questions as ‘don't know’. They don't know what accessibility is, they don't know what the standards are, they don't know what they've got to do to achieve it. There are some organizations within government who would just eliminate any software that can't demonstrate that it meets an accessibility standard. They won't actually go and access the software themselves to see if it reaches the standard, but if it isn't in the catalogue as accessibility compliant then the company will be eliminated and won't get a contract.
A lot of the procurement people are nervous about SMEs because they're thinking about whether they've got the financial standing to support a contract in the long term. If you imagine yourself to be running a procurement and you say to the team who want to implement the solution, "Would you like the supplier to be ISO27001 certified?", all government buyers are going to say yes because it is a badge that somebody is taking the supply to government seriously, yet there are a large number of organizations who just don't think that it's worth investment. Well I believe if you're doing business with the government, then investing in a good internet security and management system is a necessary investment.
Can you think of anything that CCS or someone else within government could do to overcome this disjoint? I know a lot of SMEs wouldn't necessarily know about this and therefore getting excluded straight away. Do you think that there needs to be more outreach or do you think it's more on the SMEs’ shoulders now?
CCS are managing a digital marketplace. I don't think that they can say it's somebody else's job to manage the supply. I think that they have, up until now, pretty much assumed that the competitive pressure, the desire of suppliers to make money and make customers out of the world of public sector, would drive companies to become good at selling through G-Cloud and other digital channels. It clearly hasn't happened and I think if CCS could find the money to invest in improving suppliers’ understanding of what is necessary, then that would improve the marketplace as a whole. I think their focus now is on trying to educate the wider public sector to be good at using G-Cloud from the demand perspective, and they're leaving it up to us to get good at being suppliers that meet what the government needs.
You've been working on this pretty much since G-Cloud started, so how have you seen a transition between how it was and how it is now? Do you think there's been a big improvement? Do you think there's been some things that maybe have been set backs?
Both. On the whole, I think there've been some great improvements and I think that this is shown by the increase in value that's going through G-Cloud, but there are issues around information. A good marketplace makes suppliers produce the best products that people want to buy in the way that they want to consume them at the right price. A perfect market is predicated by there being perfect exchange of information, you know what the pricing is and you know you can go and buy it.
A frustration of mine is that that information is not openly available. We get more information than we did 10 years ago, but the information that is available on sales in the digital marketplace is very low quality. For example, when I want to see where people are spending money, I can't. I can't see whether people are spending money on CRM systems or collaboration tools, because they don't publish the identification number of the services, which are being bought through G-Cloud. They just say that this company has sold £200,000 in December. Well it could be one of a 100 products.
If they would let us see the data, we can turn that into information that is going to inform the market and enable suppliers in the market to make better decisions.
Are there any reports, events or projects that you're working on at the moment that you'd like to share now?
The piece of work that I did on G-Cloud 6, I'm desperately trying to get republished and brought up to date for all the data on G-Cloud 9.
One final truism that I'd like to give you, if you're sitting on G-Cloud and certainly if you're been there for two or three iterations, and you're a chief executive and you know that your product is selling well elsewhere, then please don't do what you did last time, because clearly if you're sitting there making no sales, it is you that is doing something wrong. It was Einstein who said that the definition of madness was to continually repeat doing the same thing but expecting a different outcome. If you haven't sold anything on G-Cloud 5, 6, 7, 8 and 9, and just to repeat your catalogue entry in the way you did it last time, is clearly insane.
Thanks very much, it was great to hear your insights.