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Over half of G-Cloud SaaS vendors are “disqualifying themselves by inept submissions”

Derek du Preez Profile picture for user ddpreez May 30, 2016
Summary:
A new report released by cloud vendor consultancy GCloudSales.UK points the finger of blame for failure to sell at the vendors themselves, not GDS or CCS.

ostrich-head-in-sand

Last month I wrote a fairly critical article about buyers in government driving complexity into the procurement of cloud services via the G-Cloud framework (or the Digital Marketplace, if you want to take on the new branding).

That article stated that old habits were dying hard with those procuring technology, where buyers were limiting the future success of the framework by introducing practices that were unnecessary in the modern world of cloud services.

However, according to some new research, there are plenty of vendors on the G-Cloud framework that are also causing problems for themselves by not fully understanding what it takes to make a successful sale.

Although there is over £1 billion of sales now going through the G-Cloud on an annual basis, according to some new research by cloud vendor consultancy GCloudSales.UK, over 90% of SaaS vendors are not getting a positive return from their participation.

And by “not getting a positive return”, this means that only about 8% of SaaS vendors earned more than £100,000 in the last 12 months, making their involvement in the framework financially worthwhile.

But this is the fault of the vendors themselves, not the Government Digital Service (GDS) or the Crown Commercial Service (CCS), according to the research. Author of the report Lindsay Smith analysed sales data, Digital Marketplace data, as well as unstructured data within the vendor submissions, and found that 50% of G-Cloud SaaS suppliers are “effectively disqualifying themselves by inept submissions”.

Failings

Smith found that for the 12 months to January 2016, over three quarters of the 787 SaaS vendors recorded no sales whatsoever. Using a sample, the report estimates that over 50% have fatal flaws in their catalogue entries that will eliminate them from any selection process.

The full report highlights six fatal defects that are preventing an estimated 400 vendors from getting to a shortlist, thus preventing them from ever making a sale, as well as 16 characteristics that are significantly more frequent in the offerings of successful vendors than those with less than £100,000 sales (see below for examples). Smith said:

We set out looking for answers thinking it would be nuances of evidence in the margins of the figures. But instead we found a smoking-gun. Over 4 years the marketplace has evolved and 8% of participants seem to have ‘got it’.

Catastrophic misunderstanding of the procurement process is blindly carried forward, copying the fatal flaw from G-Cloud (n) to G-Cloud (n+1). These are some very successful companies who are selling well elsewhere. Where is the CEO? Why is the CEO accepting failure on this, the biggest unified Cloud marketplace in Europe? What story is the CEO accepting as justification for failure?

Competition across the vast spectrum of Cloud services will be compromised, savings and efficiencies will not be realised. Our deep concern is that with so many vendors being rejected public sector consumers will become frustrated and walk away from G-Cloud as a procurement market.

Successful vendors ‘blame’ GDS or CCS for allowing failures to get onto the framework. I do not. If a vendor, successful in other markets, is on a £1billion marketplace and selling nothing – any CEO has got to ask why. If they are not on the list, maybe there’s no point in finding out why.

Some examples

g-cloud digital marketplace
Smith said that from his analysis, he estimates that of the vendors that are fatally flawed, around 80% could get their submissions fixed in a morning or within a couple of hours. I had a conversation with Smith to get some examples of where SaaS vendors are going wrong.

For instance, he said that vendors need to make sure that the pricing listed on the framework and submission is adequate enough so that when a buyer is browsing and doing their comparisons, they’ve got a firm idea of what the total cost of ownership will be for procuring that service. And yet, there are “hundreds” of examples where that is not being done sufficiently well.

One company in particular, Smith said, had got so close to an excellent pricing submission, and yet because of their lack of understanding of the G-Cloud’s contract terms, had fallen at the last hurdle. He said:

A company put together a beautiful pricing package, really thorough. Easy to understand. Even without really understanding what the product was and how it was built up, you could tell how much it was going to cost.

But then in the small print, at the back of the pricing table it said that prices shown are for a standard 36 month contract. They say that they can do shorter periods, but they would have to provide you with a special price.

However, G-Cloud only allows a maximum contract of 24 months. So what they have done is completely trashed their entire pricing. When the guy is sitting down at his desk and he’s got a product he really likes the look of, he’s not going to be able to know what the price is and he’s not allowed to pick up the phone and ask what the price will be. He cannot go ahead. This company also has two other fatal errors on their listing.

By doing this, the company has essentially written themselves off from ever getting picked, despite having gone through the effort of getting themselves listed.

Another area that Smith noticed made an impact is with companies that are ISO 27001 accredited - which is a popular security management certification in the public sector. Smith said that every time the G-Cloud framework comes up for renewal (we are now on the seventh iteration), companies ask if it is compulsory to be ISO 27001 certified - to which CCS and GDS say no, it’s not mandatory to get the accreditation. However, this doesn’t mean it’s not important. Smith said:

I’ve gone and looked at the data and successful companies are far more likely to be accredited than those with no sales. Ut’s about 50% more likely you’ve got ISO accreditation in the successful sales companies (those with over £100,000 worth of sales).

Equally, because there are hundreds of SaaS vendors listed on the G-Cloud framework, the Digital Marketplace’s search engine plays a critical role in the buyer’s discovery and selection process. And yet vendors fail to understand how important it is to give themselves the best opportunity to get picked up by the search engine. Smith said:

There is only 150 words that are targeted by the search engine. And people are being so dim about search. One of the most experienced marketers I know, I read his submission, and he’s repeated himself seven times using the same buzzword phrase. The search engine needs to only find it once and then you’re on the shortlist. He should be using similar words, or the buzzwords that the police force would use, or buzzwords that health would use.

Another thing that marketing people are very good at is thinking up weird expressions to make it sound like their product is slightly differentiated. The way that CRM became XRM. Well, nobody is going to know that expression. So they’re not going to put it into a search engine.

And finally, Smith said that SaaS companies are even failing to effectively sum up their service proposition for the buyer. This comes down to the fact that a lot of the companies listed have never dealt with government before and as a result don’t know what the buyers need to see when first searching. But

White coat and hand holding cloud on technology background © twobee - Fotolia.com
again, this is destroying their chances of progressing. Smith said:

The service definition is so poor, it has to stand up by itself. It’s the old problem of people being unable to articulate their value proposition. And it’s a maturity issue. G-Cloud has only been there four years. We are bringing SMEs that have never worked with government into a new marketplace. They’ve got to get mature much more quickly.

They’re used to standing at a booth at a trade fair, giving out a little brochure. The little brochure is only there as a teaser so that the people get in touch with the sales person, they then do their selling. This is not a teaser, this catalogue has to be the full product. You can’t under describe the product you are selling and hope people go off to your website and look around to see if there is something nice to buy.

My take

For years now people have been speculating about why some companies are more successful than others and why certain companies tend to win business time and time again through the G-Cloud. It’s always been said that getting your company listed is the easy part, but making sales regularly requires a more nuanced understanding about the marketplace, the buyers and what’s required from the G-Cloud.

Smith’s research seems to provide some tangible evidence, for the first time, about why some companies that are successful outside of the G-Cloud are failing to make it work on the framework.

Pay attention.

Image credit - White coat and hand holding cloud on technology background © twobee - Fotolia.com, Screenshot of Digital Marketplace

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