Is G-Cloud a bad place for SMEs?
Our Strategic Adviser Lindsay Smith, has crunched the numbers and looked at who the most successful suppliers on G-Cloud are and what SMEs can do to beef up their G-Cloud 11 offering.
The dashboard monitoring G-Cloud 10 supplier applications counted 3,512 completed applications at 23rd May 2018. When it went live in early July, the list shows a population of 3,505 suppliers. Proving the point that getting on to G-Cloud is not a great obstacle.
More than 90%, according to a government blog at the time were SMEs. We don’t have a precise figure and indeed some of the classifications have been seen over time to be a little questionable, so let’s use this 90% figure as a working estimate. G-Cloud 10 starts life with approximately 350 Large Enterprises and 3,155 SMEs.
The spend data published up to December 2018 shows 394 suppliers not designated as SMEs made sales in the previous 12-months. The numbers are a little woolly because suppliers from earlier frameworks will still be recording sales, but it’s a fair deduction that most if not all large enterprises on G-Cloud 10 are making sales.
Sales by SMEs in the same period are accredited to 742 suppliers, the same approximation applies, but that means about 75% of SMEs on the framework are not making sales.
Does that mean G-Cloud is a bad place for SMEs? We argue that the answer is emphatically – no.
These pictures tell a story of remarkably consistent growth in sales.
Taking sales for each calendar year from the start of G-Cloud in 2012 they count the number of companies each year with sales in 4 intervals:
- Under £100,000 – just starting
- From £100,000 to £1 million – where, particularly for an SME we can be making a respectable profit
- £1million to £5 million and
- Over £5 million
The big enterprises with global brands, established presence and elastic supply dominate the ‘over £5 million’ category. In 2018 the top 3 ‘big-beasts’ Capgemini, AWS and EntServ sold over £120 million between them. But there are more SMEs in each of the three lower sales categories than large enterprises and this has been consistently true for each year.
Looking further into the detail shows SMEs migrating up the sales scale year on year. For example, 20% of the SME suppliers recording sales of under £100,000 in 2017 had moved into the higher echelon in 2018. With 115 SMEs selling over £1 million of Cloud services to the public sector in 2018 it is a highly successful marketplace for SMEs.
The question is, why is it that only 1-in-4 make it into the winners’ circle?
The answer is surprisingly easy. The majority of SMEs on G-Cloud have made it extremely hard for themselves, to the point where it’s unlikely that they will ever make a sale. If you are one of them, read on! We can show you what to do.
There are almost 25,000 services for sale on G-Cloud. Most SMEs don’t have brand recognition*. In this situation an SME must have an effective marketing presence. That’s not to say they have to spend a great deal on marketing, but they need to look at their position on the G-Cloud catalogue and ask some simple questions:
If someone in public sector had a problem which my product solves:
- Will they find me through the search facility?
- Is there enough information on G-Cloud to answer all their questions about my product or service?
- Can they reasonably work out what it would cost?
- Do I stand out better than competitors?
Studying the successful SMEs on G-Cloud, these are the issues they handle well. Unsuccessful SMEs needlessly fail to address one or often more than one of these questions.
There’s a further angle we want you to think about when you look at your offering on G-Cloud. In most cases your service, assuming it has been found, will be subject to a desk-top evaluation against competing products (and against how the objective has been traditionally managed). Assume this evaluation will by a team of three or more including users, analysts, finance, I.T. and others. They all look at the evaluation from a different perspective. Is there enough information to allow them to score your offering better than a competing product?
Let’s show you how this is a fairly obvious fail for a large number of SMEs in the software segment. There are 2,165 suppliers promoting software on G-Cloud. 42% of them have no Service Definition explaining what their product is, how it works, what it is like to use and why it is better than a competing offering.
In the clarification period for G-Cloud 10, some suppliers asked if it was necessary to file a Service Definition. The commercial lead for CCS, whose job it is to know how buyers procure technology, responded:
“You don’t have to provide a service definition document but the lack of one would severely impair the quality of your submission in the eyes of the buyer. It should include more in depth information about the service you are offering.”
This is not the whole story; we provide a range of services to help SMEs enhance their marketing presence and reach on G-Cloud to address a complex market where the field is tilted to favour the large players. But with more than 40% of software vendors ignoring basic advice it is no wonder that only 1-in-4 SMEs are making money. And while it is only 1-in-4, there are hundreds of them, making serious returns and it gets better each year.
Sales to SMEs grew 46% in the last 12-month’s reported figures. This is an opportunity that should be taken much more seriously than 75% of SMEs are doing.
*This is not true for all, some SMEs resell global brands and others have very strong reputation in areas of the public sector for specialty products and services*