B2G: change of government brings opportunities
What opportunities does the change of government bring to improve the go-to-market for high value B2G services, and what does good look like anyway?
Armstrong use a maturity pyramid for assessing the attractiveness of a B2G services business and opportunities for value creation, as we discussed at our recent breakfast panel event, read our article here.
Each stage builds on the one before, breaking away from a procurement led approach (good for buying paperclips) towards outcomes focused, consultative selling, as a trusted advisor (the holy grail for high value service providers).
Last week’s change of government – and the change in personnel and political priorities it brings – presents opportunities for companies to move to higher stages of GTM maturity and build value. But it takes time and effort.
Opportunities at the base of the pyramid
Most midmarket B2G businesses that we see are at stage 1 or 2 of the pyramid. This involves getting listed on appropriate frameworks/DPS and proactively monitoring and responding to tenders. These are the basics for any B2G business.
Deeper analysis of procurement data (e.g. upcoming renewals) can help these businesses better understand where future demand will be, who they will be competing with, and position themselves appropriately ahead of time. But this only provides part of the story to move your business to maturity stage 3 – this is the point where businesses must invest hard in building deeper relationships with influencers and decision makers across their target departments and market segments.
These influential decision makers value the expertise that service providers can offer and are typically much more open outside of a formal procurement process. With long term engagement, B2G businesses can begin to understand the outcomes that departments are prioritising, their challenges and constraints and propose novel solutions to overcome them.
With this level of engagement, businesses can start to shape tenders before they are issued and can even generate new business opportunities proactively. These are the hallmarks of a trusted advisor and a GTM function that can be considered best in class.
Different maturity stages within one business
In many cases, we see that businesses have been able to move to a high level of maturity for one or two clients and/or departments but are viewed as stage 1 or 2 with others. This is the same for the range of services/products they offer. They may be viewed as a best in-class trusted advisor for one service, but lower down the pyramid for others.
Identifying the growth opportunity
There are some products/services (e.g. reselling products such as IT hardware & consumable goods or the basic outsourcing of commoditised services) that naturally limit how far up the pyramid you can go. For these businesses, the key question is can we add a consultative/transformational service wrap to our core offering that allows us to push up the chain?
The size of the niche at its highest value point determines whether it has enough headroom for a company to continue growing there or whether it needs to expand into other areas.
This is partly determined by what and where the niche is. For example, if the company is stage 4 or 5 for a particular NHS Trust, how can it build on these relationships to expand into other Trusts? How does it ‘jump the species’ into local authorities or higher education or into a devolved region? Or if the company is stage 4 or 5 for a horizontal specialism (network security), is there enough headroom there alone or are there opportunities to expand its offering?
In any case, there are plenty of opportunities for PE investment to help B2G businesses successfully grow and move its go-to-market strategy up the value chain.
Speak to the team
For more information on this, and to discuss potential investment opportunities for B2G businesses across our core sectors, please get in touch with a member of the team.
Ifan Dafydd
[email protected]om
+44 7792 158 738