ASM Technologies has announced the launch of a new service to safeguard margins in the IT channel in light of government requirements to award significant portions of public sector IT contracts to SMEs. The ‘SME Access Service’ provides Systems Integrators (SIs) and Value-Added-Resellers (VARs) with direct and efficient access to one of the UK’s largest network of SME IT suppliers through ASM’s agile distribution network, allowing them to meet the government requirements while retaining margin.
Current government guidelines require public sector organisations to award a minimum of 25% of all contracts to SMEs by 2015. An SME is defined by the government as an organisation with less than €50 million turnover or fewer than 250 employees (as per the official EU definition). However, as indicated in a government review of the strategy on 8th August 2013, the government is expected to extend the scheme even further so that at least 50% of spend on new government IT flows to SMEs directly and in the supply chain.
This requirement results in higher costs for the IT channel as it must establish new supplier relationships with multiple SMEs in order to bid for contracts, reduced revenue as it must forego portions of some contracts to SME competitors in order to bid, or can result in the channel being excluded from certain contracts altogether as it is unable to meet the SME requirements.By acquiring products and services through ASM – itself an SME by the government’s own definition – SIs and VARs benefit from:
•The ability to meet government procurement requirements as simply and easily as possible by collaborating with a vast pool of SME suppliers directly through ASM – no need to spend the time and money establishing distribution agreements with multiple suppliers or establishing new commercial agreements
•Being able to pitch for government contracts that would have been otherwise unobtainable without the required SME representation
•Access to a wide range of innovative products from the likes of Forum Systems, Racktivity and Denso Group at more competitive prices than if they had formed a direct relationship with them (due to leveraging ASM’s buying power)
Iain Tomkinson, Sales Director at ASM Technologies comments, “A number of large resellers have considered adding SMEs to their supply chains in order to meet government requirements, however with contracts to draw up, terms agreed, credit lines to be established and distribution infrastructures to put in place, they are finding this to be a slow, painful and expensive process – especially when they’re trying to sign up a few hundred SMEs in one go. By taking advantage of our existing supplier relationships and agile channel infrastructure, the SME Access Service provides greater efficiencies for the IT channel through immediate access to over 1200 SMEs through just one supplier relationship, so they can continue to bid successfully for government contracts.”
At the same time as enabling the IT channel to meet the SME procurement requirements, ASM’s SME Access Service is also good news for SME IT suppliers and vendors. By providing a direct route-to-market to large SIs and VARs, the SME Access Service allows niche SME suppliers to reach public sector contracts that would have otherwise been out of reach, either because they are too small to compete on their own, or the commercial terms of government contracts (such as 30 day pass through terms) are economically unviable for smaller businesses with more sensitive cash flows.
According to recent research by Fujitsu, the three main barriers that SMEs face when bidding for government contracts is the complexity of the bidding process, the cost of bidding and the risks involved. The SME Access Service by ASM combats all three of these issues as the bidding process (and subsequently the costs and the risks involved) are handled by the distributor leading the bid.
“The SME Access Service is good news for young, ambitious UK businesses,” continues Tomkinson. “The UK has no shortage of innovative, world-leading products, but without significant buying power or marketing support, many of these firms will struggle to see the growth they deserve. By signing up as a supplier with ASM, these firms gain immediate access to the largest IT distributors in the country and can soon find themselves involved in some of the largest and most high profile of IT projects.”