Is the threat posed by big platforms to SMEs in the public sector market real?

 
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By Denis Kaminskiy, CEO at Arcus Global

 
 

 
 

There have been recent articles in the press about the potential threat posed by large platforms like AWS, MSFT Azure or Salesforce to SME suppliers working in the government space.

The view in some quarters is that government should perhaps intervene, and mandate that SMEs are invited, included, or even preferred in procurement exercises. Indeed, it is clear that these large companies are doing incredibly well in the government space, and are winning business at an ever increasing rate.

In some respects, it is also obvious that many government procurement professionals are struggling to reconcile this new reality with their experience of the traditional VAR model, where volumes are the key metric, and if you bought large enough, you needed to speak directly to the OEM to get the best deal.

So the logic is clear - AWS, MSFT, SF and others are here to replace Capita, Fujitsu, Accenture and any other traditional outsourcer as the magnet for 90% of government (and public cash).

Not quite, in my view...

As I commented on in other articles, unlike the traditional outsourcers; behemoths, both AWS and MSFT are also creating huge opportunities for SMEs through their advanced, well known and largely trusted partner networks and structured partner engagements.

This of course depends on what you do as an SME. If you run a small data centre or co-location facility (called a private cloud), then AWS and Azure are direct threats to your existence, not just in the public sector, but anywhere. This is not new, and has been clear for a long time. There is nothing that government could, or should, do about that.

If, on the other hand, you offer true value to customers through expertise, managed services or some other means, then AWS and Azure can create amazing possibilities, given that they can allow you to apply your value to massive infrastructure scale. It only becomes a problem when government departments (and some absolutely do) insist on working with AWS, Salesforce or MSFT directly and prevent their partners from applying for business. There are some very notable projects where this has happened, and we ourselves have "lost" business to AWS, our biggest partner on infrastructure because the customer (government) insisted that they want to go "direct", even though both us and AWS recognise that there are no advantages to this, and IT WILL COST MORE.

I think both AWS and MSFT can spend more time explaining to government, the potential value of working with their very advanced and very willing partner networks, and this would certainly help create more opportunities and scope for SMEs to grow, while the government is able to take advantage of massive scale and diversity of services that both AWS and MSFT eco-systems offer.

Smaller, more focussed, niche and specialist providers (full disclosure, Arcus is certainly one), can apply these hyperscale technology platform to newer and harder problems within governments, be entrepreneurial, nimble and hungry. If customers understand this value (and are educated by the platforms too), then opportunities are vast and everyone wins. In fact, we know that Salesforce has decided not to prime or be present on G-Cloud directly, preferring instead to work through partners. Perhaps this is an example worth following.

If government mandates to only "go-direct", then these platforms will eventually become the new oligopolies. I believe this is unlikely, given how diverse government (and business) needs are.

About Arcus Global

Arcus Global, formed in 2009 and based in Cambridge UK, is a market leading GovTech cloud company, delivering mission critical technology solutions that enable local authorities and other public sector organisations to transform their service delivery to citizens.

The Software as a Service division of Arcus has developed a platform based suite of Applications for Local Government. Addressing the challenge of legacy technology in Citizen Digital interaction, Planning, Building Control, Licensing, Environmental Health. Arcus has grown to over 30 customers including Folkestone & Hythe District Council, Eastleigh Borough Council and the London Borough of Southwark.

The Managed Services Division of Arcus provides Consultancy, Managed Services and Cloud Storage to a large number of Public Sector bodies across Central Government, Local Government, the NHS and the Education sector.


Contact

Kate Warboys, Marketing Manager at Arcus Global - kate.warboys@arcusglobal.com