Making the business case for your G-Cloud technology
With G-Cloud 11 open for applications, we've looked a bit deeper into how hopeful G-Cloud suppliers can build a sound business case that will impress buyers.
Proving to buyers that your product is indeed a sound investment is never easy. It is not easy to create a killer business case when pitching to private sector, so it is no surprise that selling to the public sector often present as even more of a challenge. We’ve taken a more in-depth look into the subject to help suppliers excite their potential buyers.
What are we trying to achieve?
Let’s start from the beginning and see whether creating a public sector business case is any different than pitching to the private sector.
Businesses are for the most part simple, understandable equations. They are ‘for profit’ entities and in the straightforward model where we market technology we need consider:
- The problem or issue we are trying to solve
- How the prospect currently addresses that issue
- What investment will be required to implement our solution
- The financial benefits that will ensue over time are greater with our system than alternatives
It’s a ‘before’ and ‘after’ expectation we market, with a Return on Investment (RoI) illustration at its heart. Financial benefits may come in terms of increased revenue or decreased cost. We make the illustration and support our claims with data-rich examples or case studies. Here is a clear and concise example from HubSpot.
Of course, this is just one of the tools we need to use, we will in parallel be addressing soft goals like user contentment and well-being, quality of support, reliability, etc. But our basic objective in RoI is to give the individual in the prospect’s organisation the positive argument to show finance there is a profit enhancing business case. That individual actor has a problem to solve, it could be a retailer wanting to develop an online market presence or an insurer wanting to replace a legacy underwriting system. We are making our product easy to buy, looking at requirements through a simple lens.
Can we do the same for public sector organisations?
In simple cases, yes. The same approach could work without modification. Replacing a network of fax-machines with scanners and email might be an example. If your G-Cloud products have that simple arithmetical relationship, it’s a good plan to show the actor how to capture the cost of the present network and how to calculate the investment.
But in many instances the picture is more complicated and the benefits, while measurable may not be financial. We advocate reaching out and making the business case despite these complexities. But it takes a special approach and you may find there is no ‘bottom line’ result, in the traditional way. Nevertheless, in articulating the business case for your service in the manner the buying team see their desired outcome, you build a unique way to connect with the prospect and differentiate your service and your organisation from the competitors.
There is another type of ‘particular-to-G-Cloud’ business case. To guide the buyer’s thinking at the expiry of a contract term. We will look at that as a separate exercise at the end of this article.
Where to start
G-Cloud is a procurement platform open to over 38,000 public sector organisations. However only roughly 2,000 have ever used it and of these only 300 have spent over £1 million. Of those, some never (or seldom) buy from SMEs and some may exclusively buy services designed and built natively in the public sector for the public sector (e.g. waste collection system for local government). So, a good place to start is identifying the open-door. If you already have meaningful sales to public sector customers – this is a good reference point. You will already have insight into the business case that generated those sales.
Who is the actor with the problem?
This is where the differences with the simple RoI statement begin to multiply. In a significant procurement there are going to be a number of actors: users, analysts, architects, staff from other departments that will be impacted, professional buyers, finance, legal, risk management, security and compliance.
Our business case is going to appeal to this diverse audience and in so doing set us apart from the competition by demonstrating we are easy to do business with because we understand the problems from the perspectives of the stakeholders. We speak their language and address their requirements.
Focus is key
The needs, language and priorities of the different agencies vary considerably. To make a stand-out business case you should address a specific need in the language they use to articulate it.
In the NHS, for example, the need may be shared by a number of independent buying organisations. We can campaign against that need. A separate landing-page, social media and outbound marketing campaign to show we understand and can deliver against the business case (in the way they express it) and from there generate leads, awareness and enquiries.
An excellent example is one articulated and curated by NHS Digital supporting Trusts in their investment in Mobile Technology to deliver against 4 strategic objectives of the time (2016). From the considerable amount of documentation providing clear insight into the key outcomes and benefits we have extracted a High Level Benefits Map.
Tasks plotted lead through outcomes to deliver benefits each supporting a strategic goal:
- Improve quality of service
- Be the local provider of choice
- Be the local employer of choice
- Improve financial position
Another even more impressive example comes from our client Malinko, authors of an advanced scheduling application now enjoying success in several NHS Trusts. They have with utmost clarity and very succinctly aligned their service to a full complex business case through this short video. One-by-one stakeholders from one of their customer Trusts (clinicians, finance, administrators, operations and the patient’s perspective) reference successful delivery of many of the outcomes described in the map above, supporting each of the strategic goals. Visits to patients are never missed, better patient outcomes, no fines for pressure-sore failure, happier and safer staff.
An exceptionally accessible way of making a business case, without a spreadsheet!
Focus and selection
With the wide range of different priorities, outcomes and strategic goals of the different branches of government, together with different levels of digital maturity and SME friendliness, this example underlines the need for careful target selection. From there, online research, attending supplier engagements and trade association support will enable you to build the comparable map of needs against which your business case (however articulated) needs to align. For a horizontal product the method should be to develop in-depth campaigns for a manageable number of prime targets, expanding your addressable market as resources and opportunities permit.
End of G-Cloud contract business case
At the end of a G-Cloud contract term, it is our experience that users and buyers are unclear how to proceed.
This section does not deal with Exit Plans for extension of the 24-month contract term (or 12-month, thereafter) nor Spend Control approval for Central Government.
What needs to be considered at the end of the contract (whether extended or not)?
We recommend a supplier has a policy and documented process in place which can be passed to the customer in time for the customer to follow all necessary steps, including reference to that department’s governance and CCS if required.
The policy we advocate is as follows:
- Calculate the fully-burdened cost of moving to another solution (ignoring the cost of that solution). This includes training, temporary lower productivity, data migration and system disruption and the cost of a full procurement. This is called the Cost of Change.
- Check, have the top-level requirements materially changed? If yes, customer needs to go to a full procurement (G-Cloud or otherwise).
- Is the supplier’s performance unsatisfactory? If yes, customer needs to go to a full procurement (G-Cloud or otherwise).
- Supplier provides a Cost Benefit Analysis (CBA) comparing the cost of supplier’s solution at projected volumes for contract duration (say 24 months) – LESS the Cost of Change.
- If the CBA is negative (Cost of Change is greater than continued subscription) then there can be no solution more economical than the incumbent and we consider that the CBA be reviewed by the buyer and a new Call-off Contract could be made.
- If the CBA is positive we would advocate a Scan of pricing of products on G-Cloud meeting the same search criteria as the original procurement. With a focus only on price, it should become quickly evident whether any product exists which could be an economic alternative. If there is no such product then document the process, review the calculations and offer a new Call-off Contract under MEAT principles (2&3 above attest that the solution is satisfactorily meeting all necessary requirements and there is no more economically advantageous solution.)
While it is the responsibility of the buyer to ensure that the above policy conforms with their departmental guidance and regulation it appears to us to make contractual sense.
Example: 1,000 users use an HR appraisal system costing £2.50 pu/pm.
- Cost of a new 24-month contract = £60,000
Cost of change (say)
- Training 1,000 users (e.g. ½ day burdened wage cost £37.5 per hour) = £150,000
- Cost of trainers, travel & subsistence, materials = £20,000
- Data migration and system implementation = £20,000
- Cost of 5-person procurement team for 25-person days (burdened) =£7500
Total Cost of Change of £197,500 plus 10% project contingency = £217,250.
The CBA of staying with the incumbent supplier is negative and a new contract should be awarded irrespective of what any alternative system might cost, because the department will save money even if the new system were free.
As any seasoned sales person will know, explaining the core business benefits of your G-Cloud technology is not an easy task. But it can be done! With some hard work and using the suggestions we mentioned, you will be in for a much better chance to make the most of the upcoming G-Cloud 11. Don’t forget it opens in April and as we keep on saying it is not enough to just list, you will need to do some marketing and selling. Creating a killer business case should be at the heart of it!