Long road ahead for SMEs in government - Cloud notwithstanding

SME Cloud players are finding it tough to crack government contracts, as local and central authorities alike seem to still prefer to stick to the tried and tested suppliers they're always used.

That was the consensus at least among panellists in the "The Public Sector and the Cloud" session at the Business Cloud Summit in London this week was that government was still hard for smaller players to break into.

Government chief procurement officer John Collington has pledged more opportunities for SMEs in government, announcing recently that 40% of government contracts were awarded to SMEs in September, compared to just 5% in January.

But, "Central government and local government like to make a big outsource and you don't give that to the local corner shop - it's too hard to manage, at least that's the view IT directors take," said Guy Lambert, managing director of one such SME, JISC Advance, which helps the education sector make better use of technology.

Simon Parker, director of the knowledge transfer centre at Cardiff University, pointed out that it was in the "DNA of higher education institutions" to be risk averse and that they tended to go for the companies they knew and were comfortable with rather than a new supplier.

"Invariably you end up with people talking to the big players - the IBMs and Microsofts and so on - therefore bringing in smaller cloud vendors is always seen as a challenge and it could be classed as innovation, which is great, but it is always seen as being new and different," he told delegates.

Overcoming such cultural barriers is the biggest issue for all SMEs, according to Andy Macleod, director of global sales at Cloud contender Actual Experience. He believed that government had not done a good enough job over the last few years of making people understand cloud and that confusion had put off SMEs entering the market. The key issue that would make the difference was establishing an App store, he said.

App Store the answer?

"The light at the end of the tunnel for SMEs at the moment is the [Government] App Store. That will be the key to allowing SMEs low cost access to the market. The second we set that up, we will also see huge innovation," he predicted.

Once that innovation took off within the public sector, then SMEs would be attracted to the market, he said.

At the same Summit, clunky IT systems have indeed made it hard for small businesses to win government contracts and a major cultural change is needed for that to change, the man leading Whitehall's efforts to embrace Cloud Computing claimed.

Chris Chant, director of the G-Cloud programme, said: "The government currently doesn't understand IT performance costs, we don't know when and why people drop out of our online systems and we don't know what our IT people do in the main and how many there are.

"Deep cultural change"

"We don't build stuff that's user centric for employees and the public. There are a few good online services but not enough and we don't deal enough with SMEs where the bulk of innovative IT solutions come from."

Chant, whose programme aims to have half of Whitehall's IT spending to be on Cloud Computing services by 2015, admitted that a "deep cultural change" is needed for many more small businesses to secure government work.

"We've failed to notice that things have changed and carried on in the way that was appropriate for 10 years ago," he said. "Long contracts which last 15 years don't recognise the way the world is changing. The iPad didn't exist two years ago so how can we think we could predict things over 15 years?"

Nettie Williams, head of digital engagement at the Ministry of Justice, said she believed the impact of the project in getting SMEs more involved in government procurement will be "stratospheric". 

Last month, Cabinet Office minister Francis Maude unveiled what he described as a "radical" and "revolutionary" shake-up of government procurement approaches, with £50bn of opportunities published online and a pledge for it to become 40% faster to do business with the public sector.