A new breed of IT suppliers is cashing in on the public sector, according to a new report, which claims traditional tech giants such as HP and BT are being slayed by them in certain areas of the market thanks to initiatives such as G-Cloud.
The report by DeNove outlines the rise of new public sector suppliers and how they fare in comparison with their larger rivals.
The sales marketing performance company claims in the document that IT suppliers that have traditionally enjoyed more than 40 per cent market share in the public sector – such as IBM, Capgemini, Atos, BT, Fujitsu and HP – are losing out on G-Cloud.
The report claims that offerings from this group of suppliers accounts for only 19 per cent of the services listed on G-Cloud and the group has just a 16 per cent share of the total contract value of deals purchased through the Digital Marketplace, which is the umbrella organisation covering G-Cloud and Digital Services frameworks.
Based on analysis of public G-Cloud sales data from its establishment in 2012 to now, the report claims smaller firms are faring best.
Supplier BJSS topped a table in the report which ranks suppliers on the revenue achieved through the framework, and was followed by Valtech and Methods Advisory. IBM came in fourth place and is the only "traditional" public sector giant to appear on the list.
Other smaller suppliers such as Equal Experts, Mastek UK, PA Consulting Services, Skyscape, Kainos and Thoughtworks were listed in the top 10 in the report.
Getting smaller suppliers selling into the government was one of the key objectives for G-Cloud when it was set up. To date, G-Cloud sales by revenue is split roughly 50:50 between large firms and SMEs. The report said such suppliers are cashing in, often to the detriment of incumbents.
"What is striking about this is the inroads that these companies have made into all parts of the public sector, from central and local government, through to health, blue light and the third sector," the report said.
"This means that these new suppliers are working at the highest levels within the new accounts that they are serving, often producing business plans and reports commissioned directly by the CIO. If these progress, they will produce substantial gains in each of these accounts.
"Some of these new suppliers are achieving spectacular growth. For example Kainos, (until very recently an SME) based in Belfast has announced plans to employ 400 more staff due to expansion that has, in a large part, been achieved via the G-Cloud and Digital Marketplace."
But the report did acknowledge that the big suppliers' smaller presence on G-Cloud does not necessarily mean they are faring badly in the public sector as a whole.
"When reviewing these figures, it is wise to consider that the largest systems integrators and BPO companies are focused on larger outsourcings and complex platform delivery," it said. "Indeed, companies such as Capita and Serco derive the majority of their revenues from other type of services within the public sector. Furthermore, some have invested heavily into other public sector frameworks that they may prefer to sell through.
"We are not therefore suggesting that their market share will vanish overnight, however the G-Cloud sales leader boards demonstrate how clearly they have a problem adapting to the G-Cloud.
"This problem adapting to this new sales channel is doubly serious when one considers that the cloud-first policy mandates central government departments to consider and evaluate cloud solutions before purchasing any other solutions."
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