Public Services > Central Government

CCS hails Digital Marketplace success as it eyes £2.5bn sales target

Matteo Natalucci Published 02 February 2018

DOS sees heady growth, but questions remain over whether the wider public sector will change its procurement habits and whether the professional services sector can meet the long term demand


Figures published this week by the Crown Commercial Service (CCS) show that government and other wider public sector organisations have spent more than £3.2bn on digital, data and technology services since 2012.

The latest quarter’s Digital Marketplace sales data shows that 48% of this is being spent on SMEs, with, the government says, £1.43 out of every £3 going to SMEs.

What else do the figures suggest? Public sector SaaS specialist Lindsay Smith argues that they show that the Digital Outcomes and Specialists (DOS) framework is growing significantly.  And so it should be, because if CCS is to reach its transaction throughput target of £2.5bn by June 2019, DOS traction has to grow and grow, Smith suggests, to reach around £700m a year.

That begs another question, how ready is the professional services market to be able to deliver those £700m and £2.5bn targets?

To put the £2.5bn target alone into context, procurement activity through the five frameworks - G-Cloud, DOS, Cyber, Crown Hosting and QA/Testing - currently measures around £1bn a year. The extra growth is going to come from plans to drive greater throughput through the wider public sector beyond the current mainly central-government focus.

As Smith commented in a recent opinion piece for Government Computing , this is an enormous growth target (over 80% compound), which has big implications for those suppliers on the frameworks who can tap into it.

Smith’s continued analysis also shows that consumption of professional services on the Digital Marketplace still dwarfs other spend. It achieved £0.9bn in 2017, up over 40% in a year. That’s  currently equivalent to the work of 7500 full time employees (FTEs), assuming a £600 a day rate. Smith’s analysis  suggests that 7,500 could grow to 10,000 FTEs in 2018.

But, you could ask, how ready will be the supply side be to meet that demand? And if it isn’t ready, does that mean the likelihood of increasing prices? Suppliers listed on G-Cloud of course cannot increase their prices. But something will have to give.

The latest figures coincide with the 3rd birthday of the Digital Marketplace, which was created in 2014 by CCS and GDS to make government procurement easier and more transparent. Thousands of small and medium-sized enterprises (SMEs) are now signed up to provide their digital, data and technology services to government, and public bodies are utilising their expertise to drive the UK’s digital transformation, CCS said.

Niall Quinn, Director, Technology Strategic Category for CCS says, “In the three years since Digital Marketplace was launched, we have overhauled the public sector procurement landscape, harnessing the expertise of innovative companies and giving thousands of SMEs the opportunity to supply to government for the first time. We’re now planning the next steps of our journey, making the platform and processes more commercial, more flexible and better tailored to the needs of users - both buyers and suppliers.”

Warren Smith, Director, Digital Marketplace added, “We've started to bring the tools, techniques, technologies and culture of the internet to public procurement and contracting. What we've achieved so far is testament to an amazing team and the importance of user-centred, design-led, data-driven and open approaches, but we've only scratched the surface. The next 3 years, to 2020, will see a step-change where these approaches are mainstreamed across government."

Some SMEs, however, remain concerned that although CCS is “talking the talk” about the wider public sector providing a Digital Marketplace sales bonanza, the vendors have yet to see a sea change in attitudes to using the Marketplace from wider public sector procurement teams.

One said, “I see no real evidence that WPS organisations are shifting their spend to take advantage of the cloud and digital services available,” and called for a new approach to tackle the problem.

For his part, Smith remains concerned that although there is a “massive surge of demand” coming through G-Cloud, 70% of suppliers on G-Cloud 9 have not made a sale (according to figures to June 2017).

He said, “If you are a company sitting on G-Cloud and have not made a sale – the chances are strongly in favour of you never making a sale, unless you do something differently.

“I have analysed just the SaaS vendors on G-Cloud (there are about 1,800 of them and only 360 (20%) recorded any sales in the 12 months to June 2017). 500 SaaS suppliers of the 1,800 have not bothered to file a service definition with their offering. Add to this, other, simple and correctible marketing gaffes, and I can quickly show that well over 50% of SaaS suppliers cannot reasonably expect to be selected in a standard G-Cloud procurement.

“But salvation is available to all. Most of these basic errors can be rectified and CCS will accept rational changes within the rules (like filing a service description!). So, if you have no sales and are on G-Cloud, find out why – and fix it.”

Despite the success of G-Cloud, DOS and the Digital Marketplace, and much talk about the government’s SME strategy and targets, it’s clear that several organisations that would like to sell into government are getting left behind.

Some SMEs have complained to Government Computing that the government does lots of talking about how it is fostering opportunities for smaller suppliers, but it still isn’t really providing the necessary contacts and practical help companies need to thrive. A conversation with a company this week led by two engaging, successful but frustrated executives suggested that selling into the US federal market seems to be easier than selling into the UK public sector.

CCS’ £2.5bn target is an ambitious one, and the anticipated surge of demand coming through G-Cloud could be a rising tide that floats all boats. However, it seems, for SMEs, choppy waters still need to be negotiated in the Digital Marketplace harbour.

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