New digital marketplace a game changer for IT SMEs

29th February, 2016

A new scheme to make it easier for small and medium-sized businesses to win some of the $5 billion a year the Federal Government spends on information technology is good news for SMEs.

The new Digital Marketplace won’t just list opportunities to tender on government projects, but will break them down into individual components of the relevant job. In the past a large multinational IT firm might have been considered the only option because the need was for multiple products and services, but now Australian SMEs can offer to take on just the sections they’re capable of delivering.

A prototype version  of the marketplace, based on a UK trial, will be available later this year.

UK success

Although the UK service is technically still in beta, SMEs there are finding it’s a game changer.

Web development, hosting and support firm Ixis has already seen a 50 percent profit increase after winning contracts with government agencies and local authorities.

“This has been hugely beneficial to Ixis as an SME,” says founder Chris Haslam. “It has opened up a level playing field. We can now work directly with the public sector, something we were already doing but indirectly via outsourced contracts from the large service integrators.”

The company has also increased staff numbers by 50 percent as a result of the UK initiative, which was first introduced in 2012.

Buyers are equally enthusiastic.

Andrew McHattie of the Driver and Vehicle Standards Agency needed an ICT firm to carry out a “health check” on an application quickly.

“Digital Marketplace allowed us to run searches on our key criteria and apply filters so that we could reach a shortlist of potential suppliers very quickly,” says McHattie.

“We then evaluated our shortlist by looking at the supplier service descriptions and pricing. Buying in this way meant we saved time and resources because we didn’t have to run a full procurement. The supplier rates on G-Cloud were at the lower end of what we expected to pay. In fact, we saved around 10 percent on our estimated cost.”

READ: Harnessing digital technology for business growth

Australians are cautiously optimistic

Business consultant John Denton of Denton and Associates is uniquely qualified to comment on the Australian initiative, having several clients in the ICT sector and in the past having worked in Canberra for Unisys, AUSSAT and Datacraft.

“The Digital Marketplace is a great initiative,” says Denton, “but it will all come down to how government departments are directed to purchase.”

“Most IT is bought from panel contracts (lists of pre-selected suppliers), so innovators will need to get on the appropriate contract, or in the directory. They will then still need to knock on doors, have something that is needed, and bid for business.

“I find the idea that IT will be broken down into component parts interesting. In the past the move has been to buy solutions from one supplier to make procurement easy and best value.”

SMEs’ input sought

The project is being managed by the Digital Transformation Office, which is keen to hear from SMEs about their experience with government procurement of digital and technology services. Initial contact can be made via a form on the website. CEO Paul Shetler points out that procuring from startups and SMEs isn’t easy for government, either.

“Agencies have to navigate through a raft of legislative and policy requirements as well as their internal procedures,” says Shetler. “This puts a significant strain on resources and constrains our ability to be agile.

“We think [the Digital Marketplace] would help agencies to build and deliver better services across government more quickly and for less money. Not only would government benefit from the fresh ideas and innovation that competition brings, it also means more opportunities to support the startup sector and to bring SMEs onto an even playing field.”