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SMEs win almost half government digital framework spend

24/08/17

Figures reveal small firms have large shares in volume but lower in value through three main frameworks for digital and cloud services

Almost half of government’s spending on digital and cloud services through the Digital Marketplace since 2012 has gone to small and medium enterprises (SMEs), according to new figures released by the Cabinet Office.

It said the SME total amounted to £1.2 billion, 46% of the overall £2.6 billion, and that this is part of a trend as demand for services such as cloud storage and IT support has been rising.

The figures, for business up to 31 July, take in spending from central and local government, the NHS and other organisations.

The Cabinet Office has flagged up the figures as part of its effort to encourage take-up of the Digital Marketplace. It also included highlighting the case of Derby City Council saving thousands of pounds by switching to SME managed services provider risual.

Caroline NokesMinister for Government Resilience and Efficiency Caroline Nokes (pictured) said: "Small businesses have an important role to play in helping government to spend taxpayers’ money wisely. That is why we continue to find ways of improving how the public sector, schools and hospitals, for example, puts money back into services for those they look after. 

"The money saved in Derby is a good example of how smart procurement can make a real difference to people’s lives.”

Warren Smith, director of the Digital Marketplace said: “We are continually focused on breaking down the barriers to entry for SMEs to do business with government, for example, by simplifying the application process. 

“We are also breaking down the traditionally large contracts into smaller ones, which favour a more diverse range of suppliers and help government to buy services more efficiently.”

Volume/value split

The figures, which are broken down into the G-Cloud, Digital Outcomes Specialists and Digital Services frameworks, show that SMEs are winning a clear majority of the volume of sales in each, but that larger companies are still pulling in more than half of the value. They also point to 80-90% of the business accounted for by central government in each category.

More than 90% of the business has gone through G-Cloud, amounting to £2.4 billion, with much lower figures of £87.6 million for Digital Outcomes and Specialists and £146.8 million for Digital Services.

The Cabinet Office and Crown Commercial Service have been on a long term campaign to build up the amount of business going to SMEs, and to convince industry that they are making progress.

IT industry association techUK sounded a note of scepticism late last year when it published a survey showing that the majority of small firms felt their potential was still unrecognised by many central government buyers.

It showed that 94% of 171 respondents thought Civil Service buyers did not have a good understanding of how smaller firms could help to meet their needs, and 65% thought the Contracts Finder online service did not help them gain access to the market.

Image from GOV.UK, Open Government Licence v3.0

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