When will the true potential of the G-Cloud be realised for SMEs?

The figures for the uptake of G-Cloud are impressive. According to the gov.uk website nearly £1.3bn in sales have been reported, with over half of this – whether by value or volume – being awarded to SMEs. There are now 2796 suppliers on the framework providing over 26,000 services. The G-Cloud has transformed the way the public sector procures its IT, however, the numbers do not paint the full picture and there are certainly a range of challenges and barriers to entry for SMEs.

One of these is the behaviour of IT procurers. While £1.3bn worth of sales have gone through G-Cloud, the culture behind these purchases has not significantly changed. Many IT procurers are choosing their shortlists of providers during the tendering process from a known list, rather than genuinely looking at all companies on the framework and widely advertising the opportunity to tender. The result is that providers with more traditional (and costly) sales teams are winning out over SMEs that lack this resource to hunt out sales opportunities outside of the framework. In this sense, being on the G-Cloud could be considered more of a quality stamp of approval rather than a portal to seek out the best supplier available. The framework is not the level playing field that it could be.

This means that only half of the revolution is complete – the government has achieved a market place to create greater competition and enabled potential customers get a better price. However, procurement behaviour still favours more established IT providers with the deepest pockets. New companies coming onto the framework go through a complicated process to get on the G-Cloud, only to then face an uphill struggle to get noticed. 

Perhaps the greatest issue with the framework is the disparity in uptake between central government and the rest of the public sector. Currently, 73 per cent of total sales by value have been through central government. When considering that the size of the wider public sector is so much greater than Whitehall, this figure should give cause for concern. It is hardly surprising though as central government is the only part of the public sector mandated to use the G-Cloud framework, and it is highly likely that it too would be lacklustre in using the framework if this was not the case.

Local government and the wider public sector is a big market and one that still largely excludes SMEs. Our own research conducted earlier in 2016 using a Freedom of Information request found that in the north of England, over half of local councils’ spent nothing with SMEs, and only three local authorities in the Northern Powerhouse region said they spent over a third of their IT budget with SME suppliers (the government target for procurement in the public sector). While not an exhaustive survey, this suggests a pattern for government spending outside Whitehall. Opening up this part of the public sector market could be a significant boost for SMEs in particular as the scale of contracts tend to be on a scale that gels well with SMEs. Additionally, smaller businesses tend to have a more regional footprint so the government could use its buying power to procure more locally and boost businesses across the country.

Public sector organisations also need to learn to be more trusting of the G-Cloud. The framework was intended to remove the need for repetitive and complex tender questions for every contract opportunity; the idea being to answer the questions once and for this to be shared with procurers. The reality is that many public sector bodies still insist on conducting their own procurement process, meaning that G-Cloud has in some situations just added even more unnecessary bureaucracy.

Additional challenges in the system exist as bids can be closed off or become prematurely out-of-date, which has prevented SMEs from bidding on the necessary services, which further increases their hesitancy to believe that that the G-cloud can provide business opportunities. The problem is only perpetuated by the Cabinet Office’s abandonment of updating its G-Cloud dashboard - which provides a breakdown of the types of cloud services the government has bought - adding more uncertainty to both suppliers and customers alike.

Whilst this sounds pretty negative, the G-Cloud still represents an initial starting block. Many SMEs have been able to secure contracts that would otherwise have been closed off to them, and it is has also provided a better deal for the taxpayer. However, for the G-Cloud to be truly effective, leverage the SME space and make a difference competitively then there needs to be a stronger impetus for SMEs to showcase what they are able to cater for. A clear level of adoption disparity between local and central government, fuelled by a temperamental G-cloud system and a slow process of cultural change to procurement have been significant hurdles for SMEs over which to jump. Until these concerns are addressed in further iterations of the G-cloud, the question will still beg, when will the full potential of the G-cloud be realised? 

Kevin Timms is the COO and co-founder of Streamwire and manages both existing and potential clients in IT provisioning. Kevin brings a wealth of experience, having previously worked as IT Director at both Ford Motor Company and Jaguar Land Rover.