Civica brushes off SMB competition as it eyes growth

Company questions practicality of government's 'admirable' SMB intentions

Civica has insisted it is holding its ground in the public sector despite a swathe of SMBs - backed by the government - looking to woo authorities with new services offerings.

In recent years the Cabinet Office has enforced a range of measures designed to make doing business with the government easier for SMBs, including putting a £100m cap on IT contracts and enforcing a two-year maximum term on new hosting deals.

Civica, whose group revenue for 2013 surpassed the £200m mark in 2013, admitted that this has prompted more, smaller firms to jump into the public sector.

"There are different layers of suppliers in this marketplace - at the lower end there are lots of people coming in and touching local authorities and central government and it is an interesting challenge," said Civica Services managing director Steve Shakespeare (pictured).

"Some of them are fantastic businesses and some of them are fantastic websites and marketing machines with not a lot behind. I think we're OK in the space we work in.

"Because we are at the core line of business applications and services, it is not something that is easily [replaced] - you can't just come up with a new revenues and benefits systems, for example. There are three major players in that and they have all spent 20-plus years developing that so it's hard for someone to break into that market. But around the edges, especially the cloud area, lots of people have come into it."

He pointed to a longstanding deal with Capgemini and HMRC - which is set to expire soon, and questioned how well SMBs could cope with such a contract.

"By law now, [the government] cannot give that [contract] back to Capgemini in its current state - they have to break it down because it is too big," he said.

"For me, the principle of making the area more open to SMBs is an admirable one but if HMRC, for example, have a contract that is working really well for them and they are really happy with, it seems strange that someone can say ‘you cannot renew it'. Would we as citizens want a contract of that size given to an SMB? It's the dilemma between principle and how to act."

Looking ahead

Civica Group has enjoyed 10 consecutive years of growth with a compound annual growth rate of nine per cent since 2003. Shakespeare said his company is putting the final touches on its financials for 2014 so would not be drawn on the details. But he did say future growth is on the cards.

"The growth trajectory you've seen from Civica, we want to continue and accelerate where we can. Our customer-retention rate and length of customer status is admirable and we want to build on that."