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Simplifying the tender process with the Digital Marketplace Australia

Posted by GovInnovate Team on 24-Mar-2017 10:33:52

Simplifying the tender process with the Digital Marketplace Australia

Catherine Thompson was happy and fulfilled in her role at a promising start-up when the Digital Transformation Office (now Agency) approached her to head up the Digital Marketplace Australia.

While the decision was a tough one, Catherine just couldn’t bring herself to imagine someone else in the Digital Marketplace seat. It was just too intriguing an opportunity to pass up.

Thompson is now the Head of the Digital Marketplace, an initiative set up under the National Innovation and Science Agenda to help government agencies and businesses of all sizes to seek each other out.

Thompson speaks of the notion of ‘joyful collaboration’ within the Digital Marketplace ecosystem.  Her team works with agencies, and businesses as well as the UK digital marketplace to create opportunities to work together in new ways. To date, the Marketplace has done $AUD 13 million worth of business, and has 397 registered government buyers from 100 different agencies. Its next iteration - open for seller registration now - will roll out in mid April.

Ahead of CeBIT Australia 2017, we had a chat with Catherine to uncover how the Marketplace works, how it is evolving and what start-ups can do to make the most of the opportunities it presents.

Could you give us some background about the DM?

Catherine: The Digital Marketplace Australia is part of the Digital Transformation Agency (DTA). While the broader DTA looks at how ICT and digital business is conducted within government and how it can enable agencies to get better outcomes from their IT functions, the Marketplace was specifically set up under the National Innovation and Science Agenda. Its purpose: to help small and medium-sized organisations, who are not traditional suppliers to government, successfully interact with government buyers. And we’ve felt that the way to level the playing field is by making it easier for businesses of all sizes to have the opportunity to demonstrate their value.

How has the Digital Marketplace evolved since its launch (on 29 August 2016)?

Catherine: In late February, we released what we’ve termed internally as ‘Marketplace 2.0’. This enables sellers to onboard online to the Marketplace and to curate and maintain their own profile, which then effectively becomes their digital shopfront to government.

The first offering for the Marketplace was role rather than service-based, and we found that around 40% of the government buyers wanted digital outcomes rather than digital specialists. So we have moved rapidly away from a role-based marketplace to domains of expertise, like Data Science and Cybersecurity. This way, the marketplace was effectively opened up to a lot more sellers.

We originally had what government call a panel, a restricted list of 254 sellers, around 90 per cent of whom had done business with government before. This has now branched out to a much broader population of sellers. Just under a month later, we’ve had 857 sellers start applications. Some of these will just be people taking a look around, but we’ve been very encouraged by greater regional and expertise diversity in applications - each of which is represented by a sparkly unicorn icon on our team alerting platform.

The Digital Marketplace has been described as a 'game-changer' for start-ups. How has the process of applying for government work changed for them?

Catherine: It has evolved and will evolve even more when we roll out the next iteration! Remembering that we are on the journey from Minimum Viable to Minimum Loveable product, and still have a distance to travel. However, at present, there are several ways in which the Marketplace has changed the process for start-ups, SMEs and all businesses:

  1. The tender process is much quicker

One of our core philosophies is that you shouldn’t have to do more work than is warranted for each step of the process.

Panels are currently a preferred means of transacting for government buyers and we’ve found that panel applications can be lengthy and arduous - both for the seller and the buyer. This is why becoming an active participant (panellist) on the Marketplace is a two phase process.

The first step is for a seller to apply online to become a registered seller and takes around 3 hours to complete. This means that sellers who are perhaps not quite ready to work with government, can signal their presence - their digital shopfront.

When a registered seller for the first time sees an opportunity for which they feel qualified to apply, they ask for an assessment, which is performed on the detail that’s already part of their seller profile. No need to provide anything new! Effectively we’ve moved to agile assessments - only when a buyer has an opportunity, and only the sellers who elect to promote themselves.

And for all sellers - panellists, newbies, potential panellists alike - their profile, their shopfront - can be valuable real estate. It is fully searchable by logged-in buyers and available as a summary to site visitors. Sellers can at their own election opt to badge attributes that will distinguish them to buyers, such as whether they are a regional business, or a digital business or disability or indigenous business or a combination of all of those things. It allows a buyer coming into the marketplace to immediately see a summary of what that business does and what those businesses are authorised to supply.

  1. The process is much clearer

Another way in which the marketplace has streamlined proceedings is by ensuring that all documentation, including our master agreement, is in plain English. We’ve tried to keep the platform really simple. In the past, small businesses have had to rely on lawyers to ensure compliance and the fee for those lawyers were effectively prohibitive, making it difficult, if not impossible for a small business to compete with bigger businesses. Small businesses would either be overwhelmed and abandon the brief or worse, would close their eyes and sign up, hoping for the best.

Contractual documentation on the Marketplace is designed to be modular. So if there are more substantive requirements, they can sign up incremental clauses for individual pieces of work. A start-up owner can now  - we hope and believe, but will test! - understand what the contract means without the aid of a lawyer. Though of course, they still need to know what legal and regulatory frameworks mean for their business.

  1. We want to make sure small business flourishes

We’ve also tried to be really fair with the way we’ve approached issues like intellectual property. For example, if the government commissions something, we should be able to use it, but we don’t want necessarily commercialise the work that the small business has done. We acknowledge that some businesses might be better off to commercialise their ideas and use their work with government to build their value proposition. So we would retain the rights to use (and are granted a license to use), but not the rights to commercialise.

What is involved in the tender process?

Catherine: Back to our core philosophy that you shouldn’t have to do more work than is warranted for that process step. SMEs don’t have time to invest in heavy upfront time commitments. So the initial brief on the Marketplace functions more like an expression of interest.

A seller only needs:

  • a couple of hundred words on how the seller meets the essential and desirable criteria expressed by the buyer
  • the price of their services
  • when they would be able to start

Often, the buyer has nominated their budget and also how many sellers they are going to shortlist for a more serious dialogue. That dialogue currently occurs offline and is on our roadmap to support. Buyers then come back into the Marketplace to finalise the award of a contract. 

Government agencies are also finding that their talent pool has opened up and they can work with new, exciting businesses that have a lot of great ideas. What has been the view of agencies using the marketplace?

Catherine: One agency brief was offered to a selected list of familiar sellers. On this occasion,  they found that those sellers couldn’t respond to the work. They opened up the brief to all sellers on the Marketplace and are now working happily and successfully with a seller who previously would not have come to their attention.

As we start to broaden out the coverage of digital expertise domains, this will increasingly happen. The key challenge for us is making government agencies comfortable and confident with this approach.

As in the example above, government buyers have not been used to letting the universe provide and have in the past been used to performing their own research and inviting a selected few to respond to an opportunity.

Now we are seeing an average of fifteen sellers apply for every opportunity, giving the buyers a much broader range from which to choose. We’re conscious that we are going to need to support them not to find the choice overwhelming.

What are some of the challenges you see with technological change in government? What can agencies do to embrace opportunity?

Catherine: We need to make governments comfortable with contracting smaller sellers. Typically there are perceptions that you broaden your risk profile with a smaller provider, and justified concerns about managing larger pieces of work when you’ve got smaller sellers coordinating with each other.

Federal government has a historical reliance on systems integrators for this reason. But I think as digital moves more across government those perceptions are shifting. Digital businesses are more collaborative by nature, and digital products are more adaptive. One of the DTA’s broader responsibilities as an agency is to help agencies - especially smaller entities who mightn’t yet have in-house expertise - to understand what a digital future could look like for them.

In our team, we love to work collaboratively with users. Even though the Digital Marketplace was designed to be used without needing training, I think education is a key factor in making users comfortable with new procurement models. We also need to evolve the platform to the point where it is seamlessly integrated with processes and systems that buyers are already using.

Our next major feature set will be an ideation platform MVP. We have larger, more digitally advanced agencies telling us that they want to connect with smaller companies; to be more innovative, to bring a fresh perspective into their business, but they aren’t quite sure how to do that. We are keen to deliver something that helps not only connect buyer and seller, but potentially increase the collaboration potential between sellers to form consortia and collectives.

So, in addition to the ideation platform, what’s next for the DM?

Catherine: Our ambition is completely unbounded! We’re a small team, we sit together, we’re all involved in each other’s conversations, so we are always evolving ideas and whole organisation comes along. One of the ideas that really interests us is a notion I term ‘federated reputation,’ a way that buyers learn about sellers in a more holistic sense, from social media, from their online presence, from other work that they might have done. This way we can get a much more rounded idea of how buyers and sellers might interact in the future and how we can proactively foster those relationships. What we’re ultimately trying to explore in the Marketplace, isn’t just a better way of doing things, but looking at new ways of doing things, so that we can reach more intuitive, digitally enabled understandings.

If you would love to know more about the work of the Digital Marketplace and how government is fostering innovation you should consider attending CeBIT Australia 2017. You can register here.

­­This blog was originally published on CeBIT Australia. You can also read our post on public sector procurement here

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Topics: Digital Transformation

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