HOW MUCH MONEY HAVE YOU WASTED ON G-CLOUD?

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1 Winning on G-Cloud & The Digital Marketplace 6 TIPS FROM SUCCESSFUL SUPPLIERS HOW MUCH MONEY HAVE YOU WASTED ON G-CLOUD? As of 2 February, there were a total of 1,852 suppliers registered on the G-Cloud frameworks, advertising some 19,966 services. However, only 476 suppliers had actually taken an order, for a little over 1,000 services. The other 1,376 suppliers had expended energy and money on securing a place on the framework, but had received no sales whatsoever. Just 476 Get Orders 1,852 Registered G- Cloud Suppliers 0m IN REVENUE WITH 41M WASTED BID COSTS 467m IN REVENUE WON 14M IN BID COSTS Figure 1 - Registered G-Cloud suppliers and revenue IT S TIME TO CHANGE THINGS 1

2 INTRODUCTION In 2011 the government established a framework agreement called G-Cloud. G-Cloud was intended to act as a marketplace for public authorities to buy cloud IT services, including application development, hosting and subscription software. Qualifying suppliers were listed in an online catalogue called the Cloudstore (now being replaced by the Digital Marketplace). Any public body could purchase from it. Kelvin Prescott, Director, Newbury Management Consultants The G-Cloud framework is recompeted roughly every six months, but with a duration of two years for each award. This means that at any one time there can be up to four live frameworks in operation. In 2013 the government issued policy guidance that public bodies should use Cloud as their default delivery model for IT services. The best way for public bodies to comply with this guidance is G-Cloud. The qualification threshold for the G-Cloud framework is relatively low - making it easy for small and medium sized businesses, and those with little public sector experience, to obtain a place on it. So they have done, eagerly anticipating the flood of opportunities that would come their way. On the surface, G-Cloud is ideal for both buyers and suppliers. Buyers gain an easy route to purchase from a large range of suppliers, using a framework that complies with the EU procurement regulations. Suppliers have ready access to a wide pool of customers who can view their services and procure using a standard process. IN PRACTICE THE MAJORITY OF SUPPLIERS ON G-CLOUD HAVE WASTED THEIR TIME AND MONEY. This whitepaper provides insight and analysis from successful suppliers. The ones who are making consistent sales on G-Cloud, and who will continue to prosper as services are migrated onto the Digital Marketplace. It s time you joined them, winning business and delivering the great products and services that your public sector customers want to buy from you. 2

3 HOW TO WIN ON G-CLOUD 1. ANALYSE THE MARKET FIRST Before deciding whether G-Cloud is a viable route to market for you, you need to understand: 1. Whether your target customers are currently using it, and if so which ones 2. What products and services they are actually buying. Adoption of G-Cloud is on the increase at the time of writing this paper (February 2015), but even so the level of awareness of its availability is limited. Some organisations have adopted it enthusiastically, but in other areas procurement teams have not even heard of it, let alone understood how they can use it to procure ICT services. Adoption varies widely by sector. At the end of 2014, central government spend made up 80% of the total, compared with just 5% from local government. The Cabinet Office issue regular updates providing information about orders placed on G-Cloud, but the data set is large and unwieldy. This makes it hard to interpret whether your target customers are using it, or for what purpose. Figure 2 - Govspend.org.uk provides an interactive reporting service on G-Cloud spend Fortunately, there are a number of websites available that provide management information and reporting capability on G-Cloud. Foremost of these is www. govspend.org.uk, an opensource initiative that extracts spend data provided by the Cabinet Office and converts it into an interactive reporting tool. It allows you to query different lots, customer groups, suppliers and spend information, as well as providing monthly analysis of trends in buying behavior. 3

4 2. OFFER WHAT YOUR TARGET CUSTOMERS ACTUALLY WANT SIMPLY PUTTING AN OFF THE SHELF PRODUCT ONTO THE CATALOGUE ENCOURAGES A RACE TO THE BOTTOM. YOU HAVE TO CUSTOMISE YOUR OFFER. This may sound self evident, but its clear that most companies on G-Cloud are NOT offering what customers want to buy. If they were, then there wouldn t be 18,000 product offerings languishing on Cloudstore without the benefit of a single order between them. and services that customers bought through other contracts. This enabled customers to extend the value of investments they had already made, even if their original procurement route wasn t available to them. A large number of suppliers describe G-Cloud as a route to market, but in practice what they have done is take boilerplate collateral, adjusted the format to match the Cloudstore requirements, published it and then sat back waiting for the orders to roll in. Neil Cruden, formerly Public Sector frameworks manager at Dell observed: putting only off-the-shelf service offerings onto the catalogue doesn t always work. It encourages a race to the bottom where customers will select solely on the basis of price. We found that we were able to obtain good results by joining up our G-Cloud consulting service offerings with products Before deciding on your G-Cloud submissions you need to answer the following questions: 1. Who are my target customers, and what specific types of product are they likely to want from this framework? 2. What other routes to market exist, and how will my G-Cloud submission complement them? 3. What is the trigger that would cause my customers to use G-Cloud? Expiry of a current contract? New project requirements? 4. How do I ensure that my customers know that my service is available and that they can make use of the framework to access it? 4

5 3. INTEGRATE THE USE OF G-CLOUD INTO YOUR SALES PROCESS G-Cloud can provide new opportunities with new customers, but it is most useful for your second sale not your first. Some customers will purchase a particular product or service, often on a trial basis or via an existing prime contractor. They evaluate it, conclude that it is a good thing, and then put together a business case for a more substantial investment. service, although in practice it may be indistinguishable from the bespoke version that has already been accepted. 1. The customer makes a business case to buy in greater volume. 2. Lo and behold, the service is available on G-Cloud, and the procurement manager is able to confirm that this is an acceptable way to buy. WE HAD A COUPLE OF YEARS OF GETTING NOTHING FROM G-CLOUD, THEN THIS GAP IN PROVISION OCCURRED AND THEN SUDDENLY A LOT OF CUSTOMERS STARTED TO NEED TO USE IT. It is rare indeed, for a customer to make even a small purchase solely on the basis of a catalogue entry. Even with direct handholding and support from a knowledgeable account manager, the probability of regular sales is low. So, in practice the most successful approach towards a G-Cloud sale is this: 1. the sales team engages with the customer 2. a small bespoke proposal is submitted and accepted through the customers CURRENT preferred procurement route 3. the quality of the service is confirmed by the customer. IN THE BACKGROUND, the supplier submits an updated G-Cloud catalogue that includes a standard version of the This has one key implication: you have to integrate the use of G-Cloud into your sales process. This means a regular, and structured process of feeding back from the sales teams on what product offerings should be incorporated into the catalogue, so that your effort is targeted on things that your customers actually want to buy. Suzanne Angell from Actica Consulting explained: Most of our G-Cloud business comes from people who have already heard of us. There was a gap in framework provision between the expiry of the old BuyingSolutions framework and the start of the ConsultancyOne framework. So a lot of our existing or historic customers switched over. We had a couple of years of getting nothing from G-Cloud, then this gap occurred and suddenly a lot of customers started to use it. Of course, once they had become familiar with it and understood how straightforward it was, they then used it for new requirements. 5

6 4. OPTIMISE YOUR DIGITAL MARKETPLACE SUBMISSION The Cloudstore is being replaced by the Digital Marketplace to make it more user friendly, but the process of searching for potential suppliers, assessing their suitability, and then selecting them continues to be labour intensive. If you think that it s difficult finding a customer who will use G-Cloud, take a moment thinking about their experience of searching for a supplier! There are thousands of products and suppliers, and they have to evaluate the suitability of all relevant catalogue entries and clarify the fitness for purpose of each offer before they can place orders. HOW DO THEY CHOOSE? In many cases they will simply search for a keyword, as they would on ebay, and then invite further information from the suppliers that come up on the list. This is why it is essential that you optimise your Cloudstore submissions. For example, imagine that you are offering enterprise architecture services. If a potential customer were to search Cloudstore for these keywords they would (as of June 2014) come up with 33 pages of responses! Imagine trying to wade your way through 33 pages of product offerings trying to identify the ones that are suitable. Would you expect your customer to do this? So how do you improve your chances of being selected? There are a number of strategies, including treating your Cloudstore submission like an exercise in Search Engine Optimisation. This means ensuring that you have included every possible keyword that a customer may use within your service description. In the Enterprise Architecture example, one company came out at the top of page one of the search results. Their two-page service description contained 18 repetitions of the words Enterprise Architecture. Now, this is not necessarily the best, or only strategy to adopt. Search results are randomized during each search! However, if your customer is looking for companies with enterprise architecture expertise then you need to ensure that your company s name will come up on the list. The G-Cloud buyers guide requires users to conduct a keyword search in order to create the long list of potential service offerings that meet their needs. If you don t include all possible keywords within your submission, then you may not even appear on the long list. 6

7 5. HELP YOUR BUYERS CREATE THE PROCUREMENT AUDIT TRAIL Although further competition is not permitted under G-Cloud, there is still a procurement process required for each buyer. This has five steps, and must be documented in order to provide evidence that they have followed the required process. Your sales teams need to understand this process, and be able to explain it to buyers so that they can be confident that the process is lawful, and to remove any worries or concerns that they may have about the procedure itself. Some suppliers have even produced simple how to guides to explain what keywords to use when searching the Cloudstore, and what sorts of questions to ask during the Assess/Award stage. Ensure that you provide a named point Figure 3 - The buying process for G-Cloud DO YOU KNOW THIS PROCESS? DOES YOUR SALES TEAM? They should. G-Cloud offers a great advantage to most public sector buyers: it is a legally compliant procurement route that allows direct award without a further competition. This reduces the cost and time required to appoint suppliers substantially, compared to the previous frameworks and to a formal OJEU process. However, buyers still need to follow the defined process for long listing and shortlisting potential suppliers, and maintain a proper audit trail to prove that they have done so. of contact for clarifications. Although Cloudstore is intended to operate on the basis of a catalogue, in practice there are often questions that the customer needs to ask before making a commitment. The buyer s guide allows users to request further clarification on aspects of your offer, to help them make the final decision on who to purchase from. In the case of Specialist Cloud Services, that clarification can be in a form similar to a mini tender. And don t forget that Crown Commercial Service has a strong incentive to promote the use of these frameworks. They can, and will, assist you in educating potential buyers about the process of using the Cloudstore, as well as providing assurance that the framework fully meets all of the required procurement regulations. 7

8 6. MAKE SURE THAT YOUR TERMS AND CONDITIONS ARE PUBLIC SECTOR FRIENDLY Finally, one element of the purchasing process that needs attention is your terms and conditions. G-Cloud and other frameworks are set up on the premise that suppliers should offer their standard terms and conditions, and that customers will accept these rather than negotiate a bespoke set of terms. This dramatically reduces the time required to contract with you, and also enables orders to be placed without the need for further competition. Crown Commercial Services state in their procurement process that bidders should simply operate on their standard terms. So that s what you should do, shouldn t you? No, absolutely not. Although you can do this, and you will get onto the framework, it is foolish to think that your customers will sign up without reading those terms. The procurement manager within your customers organisation will be very concerned with them, and in the Assess phase of the G-Cloud buying process will ask for clarification on any aspects that they are uncomfortable with. If they perceive that your standard terms are too onerous or one-sided, or that there is a significant risk to them as buyers, then they will simply go elsewhere. The same flexibility that allows them to award contracts directly to any G-Cloud supplier also means that they have greater choice. Therefore, it is strongly in your interest to ensure that the terms you use on G-Cloud are as close as possible to the current public sector standards as you can get. If you have established public sector business then you will already have been required to accept these terms on other contracts. You should understand whether and how to deliver services in accordance with them. Remember also that your terms and conditions are junior to the G-Cloud framework terms and conditions. If there is a difference (e.g. a lock in period) then the G-Cloud terms have precedence. If you have signed up to the G-Cloud terms, it doesn t make practical sense to have conflicting terms in your own terms and conditions. It will just put buyers off. DON T GIVE THE CUSTOMER A REASON TO PERCEIVE A RISK WHERE NONE EXISTS 8

9 CONCLUSION G-Cloud and the Digital Marketplace represent one of the great opportunities to develop a successful business supplying to the public sector. However, to capitalise on it requires a change in mindset and approach. Many companies are wasting that opportunity, risking irrelevance as their competitors establish a firm pipeline of repeatable business with customers who appreciate the advantages that G-Cloud provides. If you have put effort into obtaining a place on G-Cloud, I hope that this whitepaper has identified some ways in which you can stop wasting time and start achieving real sales. Feel free to share this with any colleagues or companies who you think may find it useful. You have my permission to pass the content on to anyone, provided that it is not altered. If you would like to explore ways to improve the performance of your public sector business, then feel free to get in touch. Kelvin Prescott ABOUT NEWBURY MANAGEMENT CONSULTANTS Newbury Management Consultants helps IT businesses and organisations to dramatically improve their performance. We specialise in business development, commercial strategy and bid management. For further information and the latest insights see or follow Kelvin Prescott on NEWBURY MANAGEMENT CONSULTANTS LTD IS REGISTERED IN ENGLAND NO PO BOX 6234, READING, RG19 9HD. 9