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How Hackney proactively encourages digital SMEs


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Guest blog: Matthew Cain, head of digital and data at Hackney Council, explains how smaller contracts and proactive engagement are helping it to harness the innovation from small businesses

Why do many public sector organisations appear to seek solace in multi-year digital transformation contracts with large values and long durations?

Working with multiple vendors is nothing new for local authorities: most councils spread their spend across a range of software suppliers. The benefits of working with a range of SMEs to achieve specific outcomes are not yet sufficiently well understood.

Digital is about applying the business models as well as the culture, processes and technologies of the internet era to respond to people’s raised expectations. We can make the most of this opportunity by working with internet era SMEs and there has never been a better time to do it.

In Hackney we want to support a flourishing economy of new digital businesses and we believe that working with a wider range of partners will increase flexibility and help us deliver better services for our residents. Over the past four years we’ve increased our investment with SMEs to support digital delivery from 9% to 33% of our spending; and worked twice or more with companies include DXW, FutureGov, MadeTech, Rainmaker, Snook and Unboxed.

As part of our work to encourage a wide range of SMEs, Hackney recently hosted a breakfast for suppliers as part of our fringe programme to support London Tech Week. This open event was targeted at suppliers who we had not worked with before or who don't yet work with us frequently to explain why Hackney is a great place to do business, and to learn about how we can make it easier for them to bid for opportunities.

14 partners in two years

Hackney seeks partners to lead multi-disciplinary, co-located teams. Over the past two years we’ve worked with 14 different SMEs to achieve an outcome, bringing benefits to residents and businesses in services as wide ranging as foster care, employment and skills, housing repairs and business licensing.

Clearly defining outcomes enables us to choose a supplier and team that arrives with an understanding of user needs. Co-location enables us to invest in internal capability and culture change. We reduce risk by reducing the contract size to a project phase; and increase the chances of finding the best team by procuring a partner at the point we’re ready to start work.

Thanks to the government’s Digital Marketplace, procurement takes three to four weeks and just hours of officers’ time to select a preferred bidder - much faster than traditional OJEU routes to market and much more open and transparent than buying through direct quotation.

To their significant credit, our suppliers continue to work collaboratively with each other. When we reviewed our housing technology strategy, four agencies sat with us for a morning to help us understand which aspects would benefit from being standardised and codified and which decisions would be best left to individual project teams.

Listening to SMEs has enabled us to refine our approach, reducing costs and improving the conditions for success. We have made the onboarding process more effective, creating an open checklist so that agencies can start productive work on day one, and setting out two-way evaluation criteria for both parties to reflect on whether a relationship met our expectations and identify opportunities for future improvements.

Focus on MVPs

SMEs told us that our original approach of procuring separately for the discovery, alpha and beta phases of projects risked a loss of momentum and continuity of the teams they could assign. We have changed our approach in response and we now typically purchase for discovery through to minimum viable product and then for MVP to live. Retaining a break in the phases allows us to measure the outcomes before investing further, but the change in approach has made it easier for SMEs to deliver successful results.

In two experiments we're running now, we’ve procured teams to a sufficient value to solve a whole problem end-to-end, and we'll review the return on investment of that as work proceeds. This will help us learn how we might adapt our model in future.

SMEs also told us that they wanted a clearer view of the work we were planning to do, as learning about a tender opportunity when it was published on the Digital Marketplace was often too late for them to put forward well structured bids. In response, we now publish our pipeline and user research in the open and use public blogs and project weeknotes to make it easy for potential suppliers to understand our work.

We recognise that we can still do more, and in response to Thursday’s breakfast we will be trying an 'open ideas wall' to give earlier sight and service mapping to make early engagement in thinking easier.

Some partners have, at an early stage of our relationship, taken a senior manager to one side to encourage them to consider the benefits of agreeing a larger, multi-year call-off contract. We’ll continue to resist this because we want to keep opportunities open and retain the agility to respond to changing needs.


Working this way has helped us achieve significant improvements. For example, new mobile tools have allowed housing officers to double the amount of time they can spend with tenants; we have got nearly 50 more people into training and employment through Hackney Works; developed APIs to accelerate the delivery of new digital services; and extended the Pipeline collaboration platform - helping to catalyse collaboration across local government.

Smaller contracts, procured quickly to achieve measurable outcomes enables us to access business models for the internet era to respond to people’s raised expectations.  


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