Executive interview: Andrew Roughan, CEO, Plexal

Barriers to startup-government collaboration

On scalability, Roughan says the elephant in the room is procurement frameworks and the high barriers to entry they set for public sector supply chains – including lengthy procurement lifecycles, insurance and credit rating requirements, and the amount of investment needed to win a contract and get onboarded – which mean startups are not able to access government directly, and vice versa.

Instead, corporates such as IBM, AWS and others working on government contracts or challenges, which have the scale to deliver large projects, will find startups, integrate them into their products, and then sell that back to government.

“The current state of how government will avail of or benefit from the agility of startups is by influencing their tier one suppliers to engage much more readily in buying from startups and integrating startup capability into their traditional product sets,” he says, adding this is not necessarily negative, as it gives government the benefit of the large corporates’ scale as well as the startups’ agility, without the need for wholesale changes to entrenched procurement and contracting processes.

“When government, at scale, migrates into public and private cloud infrastructure, that marketplace for startups [will] really open up. That’s the real transformation moment”

Andrew Roughan, Plexal

However, Roughan says the flipside is that, while he does not see corporate incumbency an issue in and of itself, it can prevent public sector buyers from identifying other opportunities, and long contract cycles can mean the technology in use can become outdated in the space of just a few years.

He adds that while corporates see value in integrating startups so they do not lose their public sector income or incumbency, they are ultimately “fuelling the startup marketplace”, which will only become more important as hyperscale cloud infrastructure matures and startups are able to validate and integrate their products directly into the public sector with relative ease.

“When government, at scale, migrates into public and private cloud infrastructure, it starts to make that marketplace for startups really open up,” he says. “That’s the real transformation moment, in my opinion.”

However, the current situation, whereby large corporates act as middlemen between startups and government, is likely to be the reality for the foreseeable future, as without the involvement of large technology integrators, it is unlikely that small firms will have the resources to be able to overcome the public sector’s current legacy IT issues.

In the meantime, therefore, corporates should be leveraged by government for their resources, so that startups can use them to run pilots, build proof-of-concepts and generally support the development cycle of new tech.

Another remaining barrier is the UK public sector’s current approach to tech procurement, which is hindered by a lack of understanding and forward planning when it comes to purchasing new technologies.

Creating intelligent public sector buyers

Roughan says the sophistication of new technologies “often precedes the maturity of the buyer”, meaning public sector purchasers need to spend more time understanding exactly what they are buying, and whether it will work within the UK’s legal and regulatory framework to achieve the desired innovation outcomes.

For him, creating more “intelligent procurement” also means identifying what is being bought, from whom, and for what purposes.

This includes figuring out which technologies need to be a “sovereign capability” directly owned or controlled by the UK government, such as systems running critical infrastructure or vital to national security, those that are not as sensitive but still need to be delivered by “trusted partners”, and which ones they simply need access to, like electric vehicle components.

“Understanding that sovereignty perspective is really important, and that’s hit the news a lot in the past couple of years, around telecoms diversification and Huawei, and the general geopolitical position around accessing content,” he says.

In terms of ensuring technological development is ethical, Roughan says clearly defined demand signals from government at the beginning of the process are key: “What’s the functionality? What regulatory guardrails do we need to put in place? How are we going to use the data, commercially and from a legality perspective? What features do we need? And then, all of a sudden, you can start to build a framework that is responsible, but with agile outcomes.”

However, the borderless nature of how technology companies operate means this also needs to be an international effort to some extent as, for example, “that doesn’t stop a French company driving an unethical method or outcome that then can be accessed by the UK digital community. International relations and alliances become really, really important from that perspective”.

Regarding the incumbency of large technology suppliers, Roughan warns that public sector buyers need to be conscious of “incumbent lock-in” and identifying the context of that lock-in so it can be remedied.

“In some cases, it will be a technology lock-in, so they bought hardware and software (that has a long contract and licencing to suit) that there’s no commercial incentive to change, and as a result, you either suffer or benefit from the platform in question,” he says.

“In other cases, there’s a human lock in. That tends to be named individuals who are so critical to a system that … if that individual were to exit, by their own choice or otherwise, then all of a sudden there’s a capability risk, sometimes in critical infrastructure, other times in citizen processes.”

In either case, the government should be asking itself if incumbencies are stopping it from identifying new public sector innovation opportunities, so that it can either transition away, or otherwise figure out how to incentivise more agile, startup-esque ways of working with the large IT suppliers.