Scottish government spends £800m a year on ICT, 30% with SMEs

The Scottish government is spending approximately £811 million a year with ICT suppliers (2016/17), with 30% of the budget going to SMEs. This beats Whitehall’s SME spend, which accounts for approximately 27%.

This is according to a new report that has been commissioned by digital trade body, ScotlandIS, which has found that spend has increased by an average of 1.3% annually between 2010 and 2017.

It found that nearly half of this spend has been incurred with ICT services providers, whilst network providers account approximately for a further 30%. Local government (33%) and the NHS (28%) spend the majority of the budget, followed by central government (about a quarter) and £811m higher and further education institutions (12%).

The report also notes that with the Scotland 2016 Act, which will see more powers being devolved to the Scottish Government, which relates mainly to social security, systems will be implemented to administer the related benefits. This is likely to increase Scottish public sector spend and “represents a new market opportunity for digital technology providers”, according to ScotlandIS.

Commenting on the findings, Colin Cook, Director Digital of the Scottish Government, said:

My aim is to ensure that we take advantage of the opportunities that digital offers to reform our public services and generate inclusive economic growth throughout our country. The ways in which we work in partnership with Scotland’s digital businesses, encourage innovation in all sectors of the digital economy and procure digital products and services are critical in achieving these goals.

This report demonstrates the important role that the public sector plays within the digital economy. Our investment in networks, software and digital services provides opportunities to businesses of all sizes and underpins our efforts to create a national ecosystem of digital companies and talent that are able to compete successfully in increasingly international and competitive markets.

This requires us to be innovative in the ways in we engage with digital technology businesses. Our Dynamic Purchasing System aims to make it simpler for companies to connect and work with us. Our CivTech® programme is designed explicitly to enable entrepreneurial talent to address the challenges of the public sector and, I hope, demonstrates a willingness to think differently and take action. We share common challenges, particularly around our ability to attract, develop and retain sought after digital; talent and we want to work in partnership to develop sustainable and successful solutions.

Where is the spend going?

In terms of where the technology spend is going, the data showed a 40% rise in demand for enterprise mobility management software up until 2021, whilst growth in hybrid and private cloud services is expected to exceed 50%. Demand for platform-as-a-solutions are forecast to experience a similar rise (50%+), with “software and infrastrcture-as-a-service expenditure also increasing”.

Elsewhere, demand for content-filtering, anti-spam appliances and smart cards is expected to rise by around 20% until 2021. Similar growth is also expected for unified threat management solutions and web application firewalls.

Cook added:

The key trends of increased spending on cloud computing, mobile working and cyber security highlighted in this report reflect the focus and ambitions that are described in the Digital Strategy for Scotland, which we published earlier this year. We will continue to move public sector data hosting, where it is safe and secure to do so, to a cloud environment and introduce broader cloud-based collaboration.

We are determined to put users at the heart of the design and delivery of services and this will inevitably see a continuing focus on the technologies and infrastructure that support mobile working. Our ambition of making Scotland a world leader in cyber resilience will create new business opportunities for our innovative cyber security industry.

As it relates to the 30% SME spend, the Scottish Government has been making moves to improve its procurement practices, to make them more open to a broader supplier base.  In the middle of 2016, the Scottish Government began trying to find new approaches to public service procurement as part of its Digital Directorate program.

For example, the CivTech pilot phase is looking at the development of new digital solutions for services, using a procurement route that asks open questions rather than the traditional tenders approach of laying down technical specs.

Six service areas that were involved in the pilot, include:

• Help improve air quality (Scottish Environment Protection Agency).
• Make flood forecasting information better used by a wider audience (Scottish Environment Protection Agency).
• Get health and social care data and analysis to the widest possible audience (National Service Scotland).
• Make data publications more accessible and appealing (National Services Scotland).
• Promote tourist destinations along the A9 (Transport Scotland).
• Use technology to design smart roads (Transport Scotland).