What does the E in SME stand for?

This article was originally written for FutureScot

Tomorrow (21st November), hundreds of Scotland’s public sector technology professionals will gather at Digital Scotland, the annual conference organised by FutureScot. It will be a great opportunity for a wide range of organisations that make up the gov-tech eco-system to collaborate and share ideas.

A large proportion of the exhibitors and attendees will, no doubt, come from SMEs. SMEs, or 'small- to medium-sized enterprises', are usually defined as companies with fewer than 250 employees and a turnover of less than £50m – in other words, the vast majority of Scotland’s tech businesses.

As of March 2022, SMEs accounted for 99.4% of all private sector businesses in Scotland and provided an estimated 1.2 million jobs. Despite this, the public sector does not always take full advantage of the innovation, creativity, and economic benefits that often result from working with SMEs.

So, here are a few reasons why this should change.

Bigger is not necessarily better

In an article published in 2022, PDMS CEO Chris Gledhill said: 

"SME does not mean start-up, nor does it mean new or unproven and it certainly doesn’t mean financially insecure or inexperienced.  In fact, the opposite is often true. A well-established SME, and there are a great many of us, is probably just at an optimum size to deliver the services it offers, competitively.

Which leads me to the second point, size matters but bigger is not necessarily better.  In a competitive market with well-established companies, the E (in SME) doesn’t just stand for Enterprise, it could equally mean Efficiency, Economy or Expertise. SMEs are the backbone of that economy.  I would contend that for a great number of tech projects, which are not pure commodity procurements, the best supplier is almost certainly an SME.”

You will have heard it said before that SMEs are small enough to care but big enough to deliver and in many cases, that is exactly the case. 

Social and economic return on investment 

Given the increasing importance of social value to the UK public sector, it's easy for an SME to add it to the long list of challenges that could disadvantage them when it comes to competing against larger players, especially when it comes to competitive tenders. However, we believe that SMEs can compete effectively when it comes to social value. It's a case of quality and relevance over absolute quantity. 

If you consider positive social value contribution delivered per pound of turnover, I'm pretty sure that SMEs naturally outperform many of the significantly larger organisations in their sector. 

SMEs are often closer too and more in-tune with their local communities and it can be easier for their staff to have a greater influence and involvement.  At PDMS, our team use their volunteering days to support charities and initiatives which are close to their heart, and all of these have a direct positive benefit on our local communities.

How can Scotland's public sector ensure more engagement from SMEs?

In my opinion, it all starts with visibility and accessibility:

Visibility of opportunities – make sure you promote upcoming projects to give proactive SMEs the opportunity to engage with you well in advance of the tender process. The Scottish Government’s Supplier Development Programme organises regular meet the buyer sessions around Scotland and they are having a positive impact in this area.  

Even better, do a good job of pre-market engagement – this can help save time on both sides. It gives SMEs the opportunity to quickly determine if it’s worth their while bidding and if it is, they can get a better understanding of how to approach the project.

Accessibility to organisations – make sure tenders are genuinely accessible to SMEs and the tender process is easy to navigate. After all, we make up the majority of tech companies in Scotland and the chances of getting the best outcome for your project will be increased by having a bigger pool of interested bidders.

Find out more

To discuss how you can partner with local SMEs to achieve your goals, you can catch up with us at Digital Scotland where we are proud to be an exhibitor sponsor. Come and see us on Tuesday 21st or email us to set up a meeting.