Improving how the UK government works with technology startups is key to transforming public services, but requires both government and large corporate IT suppliers to find more agile ways of working, says Plexal CEO Andrew Roughan.
Operating from east London’s Olympic Park, technology innovation hub Plexal provides physical working space for startups, using its relationships with industry, academia, investors and government to help them develop and ultimately deploy their technologies throughout the public sector.
“Our North Star is pretty much government policy,” says Roughan, adding that Plexal’s focus is on “bringing people together, creating new ideas, orchestrating change, and then driving impact depending on what policy is”.
To this end, Plexal runs a variety of accelerator programmes for UK-based startups and scaleups, including Cyber Runway, which is designed to address some of the most pressing security challenges facing the UK; Greater Manchester’s Digital Security Hub (DiSH), which is designed to help commercialise early-stage security startups throughout the north-east; and Lorca Ignite, an intensive cyber security scaleup programme it runs with the London Office for Rapid Cybersecurity Advancement (Lorca).
It also runs an accelerator initiative in partnership with the National Cyber Security Centre (NCSC) – part of British signals intelligence agency GCHQ – known as NCSC for Startups, which is designed to help the UK government rapidly expand its cyber security capabilities.
More recently, Plexal has struck two separate partnerships with Amazon Web Services (AWS) and the Home Office’s Accelerated Capability Environment (ACE) initiative to help address the UK’s healthcare crisis and various threats to public safety respectively.
Roughan says it was critical that Plexal did not simply act as a landlord for early-stage tech companies, and that it actually contributed to the UK’s innovation ecosystem. “We create places for innovators, and then secondarily we’ve got our own innovation consulting practice that builds up these programmes where we bring together public sector and private sector, big companies and small companies, and we help cause progress,” he says.
At a high level, Roughan says Plexal focuses its innovation work around three central pillars: national security, which encompasses everything from bio and cyber security to police technology; emerging technologies such as artificial intelligence (AI), blockchain and quantum, with the specific goal of helping the UK government realise its science and technology agenda; and prosperity, which means looking at how “technology and innovation can make a difference to communities”.
He adds that changes over the past decade – including the growing maturity of open data, regulatory shifts, huge increases in venture capital (VC) deployment that have created a “standing army of capability”, and the move to cloud and virtualisation within the technology stack – have resulted in startups and scaleups being better placed to innovate than public sector bodies or large IT suppliers, each of which are now turning to smaller, agile firms for this purpose.
However, he also says despite the UK startup ecosystem’s progress over the past 10 years, a number of interlocking barriers remain to more effective startup-government collaboration, including the scalability of such partnerships, legacy IT issues, and the incumbency of large, cumbersome corporate IT suppliers.
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.
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