Size of the GovTech prize

We've taken a look at the data on the size of the public sector market opportunity for those suppliers thinking of taking the plunge...

We have been writing a lot about the success of frameworks such as G-Cloud and Digital Outcomes and Specialists (DOS). The numbers there are impressive, with over £3.9bn spent on G-Cloud by end of Dec 2018, and £712m on DOS. But what is the size of the actual tech market?

Unsurprisingly this data is even more astonishing. According to Global Data 2017 Public sector spend report, the UK government has spent almost £19bn on technology in 2016/2017. That’s a massive spend and a great opportunity for suppliers looking to achieve their growth targets.

Total Public Sector IT Market Size

Unfortunately for SME’s, this shows that the biggest cash is still being spent on outsourcing to big SI’s such as Atos, Capita, Fijitsu… But before we start to despair, we need to remember that it used to be much worse. In those old (and somewhat dark days) of procurement, the oligopoly ruled the market. Today, the government has committed to 33% of spend to SME’s. Though, to be sure, there’s some sign that this hasn’t had the highest priority this year and the proportion drooped a bit in the latest report. A more positive signal came from the latest PAC report,  driven by the collapse of Carillion back in January. The committee specifically looked at outsourcing and how the government can avoid giving big contracts to suppliers that simply know how to bid for business rather than companies who are best qualified to deliver the services. Hear hear!

Also, before we take out our pitchforks let’s not forget there is a space for big SI’s in procurement. Some projects are just too riddled with high process burdens, financial risk and complex requirements to make SME involvement possible

Now that we know the size of the prize, let’s have a look at who is spending all this money.

Unsurprisingly, central government spends the most on technology. The sheer size and the complexity of central government means that there are indeed a lot of services that are in need of a bit of tech TLC. Central government is also the biggest user of frameworks! Although, with the recent push by CCS and others for the wider sector to embrace frameworks more, we are expecting more uptake. For example, end of last year we saw the launch of the Digital Buying Community by the lovely Emilia Cedeno, aimed at discussing common procurement challenges and developing solutions. The hope is that her work will not only improve the frameworks, but also motivate more public sector buyers to make savings by using them.

One of the areas we are very interested in, since a lot of our clients work in this space, is software and services. More than £2675m has been spend on Software and £2120 on Services in 2016/2017. This is a massive opportunity for technology providers, particularly SME’s. And, here frameworks are the preferred route to market for buyers!

Total Software Market Size

The largest chunk of the spend has gone to Enterprise Applications, 46%, followed by Software infrastructure, 29%.

To conclude, there is an obvious opportunity there for the right tech suppliers. The demand is there. The trick is how you can market and sell yourself successfully. This is where we can help!