B2B Lessons From the UK’s Digital Marketplace

Last year, Britain combined the G-Cloud and Digital Services programs to form the Digital Marketplace. The goal was to create a clearer, simpler and faster market for the public sector to buy—and SMEs to sell—digital products and services. At the end of its first year, Digital Marketplace has both enjoyed success and faced some scrutiny.

As the program has matured, lessons have emerged.

Buyers Are Getting Comfortable

Since the launch of the G-Cloud framework in May 2012, total spend topped £431 million ($643 million). In February G6, the sixth iteration of the G-Cloud Framework, an initiative that launched in May 2012 aimed at digitizing the information technology procurement process, was introduced. The latest version added 516 new suppliers to the roster, bringing the total number of participating businesses to 1,852 offering almost 20,000 services.

There’s Still A Lot To Learn

Feedback from Digital Marketplace users shows buyers are still learning to better articulate their requirements and commission services from suppliers that will fit their needs. Providing support for buyers is a central tenant of the British government’s recently published Digital Marketplace Strategy. Officials are also producing in-person training events to supplement information available through the electronic channels.

Suppliers are eager to help potential buyers learn more about their services and have called for a better platform to share information. Sellers are interested in increasing engagement with buyers and are looking for ways to build community.

The Big Picture

Part of the success of Digital Marketplace is encouraging business to engage in smaller-scale buying, maximizing the benefits of the lower barrier of entry and scalability of cloud-based technologies. The response from buyers shows it’s important to balance finding the right solution while remaining aware of the all other technology projects. Keeping an overall view in mind helps departments increase efficiency and assists in avoiding integration issues.

SMEs Are The Winners

Digital Marketplace and its processors were designed to support the U.K.’s SMEs, making it easier for smaller companies to gain access to the work offered by the government and the wider public sector. If success is based on participation, the program accomplished its goal. Eighty-seven percent of current suppliers are SMEs. According to the Digital Marketplace Strategy released this month, smaller companies may succeed where larger enterprises have failed. “Big IT and big failure have stalked government for too long; that is why this government is radically rethinking the way it does business,” Francis Maude, minister for the Cabinet Office said in a statement. “We are creating a more competitive and open market for technology that opens up opportunity for big and small firms.”

Moving Forward

Although the government is already looking to the future, the current iteration of Digital Marketplace has brought several concerns. The February update revealed invoicing was down for the new combined program—reaching just £6.7 million ($10 million). That’s less than 20 percent of the £40 million (almost $60 million) that was estimated for the same nine-month period.

A frequent criticism of Digital Marketplace is the cumbersome supplier application process. Some suppliers complain of not fully understanding all of the aspects of the framework before the application deadline and not having the necessary time before the application period closed to prepare their materials.

This pain point is an area the team responsible for the program is attempting to address by exploring dynamic purchasing. The more fluid process would allow new suppliers to join the marketplace and offer services at anytime. Past and existing versions of the framework required suppliers interested in joining to submit bids during a formal submission period. Suppliers want more flexible options. They are also interested in finding pathways for joint ventures according to their feedback.

Other jurisdictions, particularly the European Union, look to the success of the U.K. to model aspects of their own marketplaces. Perhaps the secret to success is using the insights of suppliers and buyers to inform future Digital Marketplace updates. Dynamic purchasing will only add to the agility of the program in responding to ever-changing business needs.