The seed for this article was sown by Sarah Lacy when she stated she was not writing enough about “admittedly boring infrastructure or enterprise software names.” Boring? How can anyone think that about data centre energy management software! Then Mark Goldenson discovered that “only 2% of TechCrunch stories are about enterprise companies.” And that did it – time for action. So, this is for enterprise software and some other boring sectors, too!
There are so many great technology companies out there that get no exposure because most of the mainstream media ignores them. It seems to me sometimes that the word “technology” has been hijacked by journalists to refer almost exclusively to consumer-oriented tech – ecommerce, mobile, apps and social media and so on. Exciting though these are, what about the rest – the unknown technology innovators out there who are trying to create great solutions for business or for medicine or whatever? Perhaps they don’t even come from Silicon Valley or Silicon Roundabout. Perhaps, shock horror, they don’t have VC-backing nor a pre-revenue $1 billion valuation. (Perhaps they should but that is another story). What they do, though, is address $billion markets – such as data centre energy management.
Let me illustrate with a specific set of examples drawn from an even more unlikely scenario – a government-backed initiative. Often the kiss of death for entrepreneurship, this one from the British government could buck the trend. I am referring to the Cabinet Office’s Innovation Launch Pad (ILP). Set up in April 2011, its aim is to increase the percentage of public sector contracts being awarded to SMEs from the current low, low level of 17% towards 25%. Given that the government spends around £700 billion per year in total, the scale of the market is self-evident. Francis Maude, Minister for Cabinet Office, kicked off proceedings saying that it is about investing to save. He expressed a firm belief that UK SMEs can deliver innovative solutions that deliver real savings to government at lower cost representing outstanding value to taxpayers.
From 351 initial proposals submitted to the web-site after a month, around 30 were called in to pitch to up to 4 selection panels each; the panels were drawn from different parts of the Civil Service, enhanced by involvement from successful entrepreneurs. 9 companies were shortlisted to present at the ILP Product Surgery on 19th July following voting across the Civil Service (12,500 votes cast). The top SMEs received mentoring from leading entrepreneurs including Sherry Coutu, Jon Moulton, Andy Phillipps, and Sara Murray, as well as senior commercial directors from across the Civil Service. My company, AdInfa, was one of those selected. Our focus is the 250,000 data centres and countless server rooms in the world which consume around 2% of global electricity and tend to be poorly, if at all, monitored and managed when it comes to energy usage and environmental factors. (The UK public sector utilises perhaps 1000 data centres according to this document.)
The audience for the surgery comprised around 100 of the top commercial and procurement executives from government – possibly the biggest collective spending power to be gathered together in one room anywhere. Each of us had 10 minutes to present and 10 minutes of Q&A from a panel of 3 Civil Servants and 1 entrepreneur. This was followed by a networking reception at Downing Street. We nine SMEs made pitches that in aggregate would save the Government £1.7 billion p.a. – not bad going for companies which neither the procurement chiefs nor you have probably ever heard of. So here they are:-
AdInfa has not tried to do business with government before having assumed that it would be too hard, too time consuming, too bureaucratic, and with too little chance of success. Our view was: leave it to the big boys who have teams of people they can throw at it but start-ups don’t have the time or resources to compete. To be clear, there was no prize up for grabs at the Product Surgery, no guaranteed contract for any of us. However, we have now had conversations with the chief procurement officers of several principal government departments, we have some meetings set up to discuss ideas and we have at least one introduction to a leading systems integrator.
We are not so naïve as to assume deals will just flow – we will need to work hard to build momentum, identify projects and close sales. But we have a toe in the door and we have their attention. The process so far has been run efficiently and the people we have worked with have been helpful, friendly and appear genuinely committed and open to the ideas presented to them. This is critical because entrepreneurs and SMEs are the wellspring of UK innovation and the Government can benefit hugely from engaging with them. It just needs to take the plunge because the risks are low and the rewards for the UK are potentially huge.
On the day it proved difficult to get much news coverage – the Murdochs were sitting across the road giving a full account of themselves to a Parliamentary enquiry! (Coincidentally, my Q&A session was led by Mike Lynch who, knowing what we do now, was possibly distracted somewhat by thoughts of HP!) That is a shame because there is some great news here – really innovative, ambitious UK technology companies delivering great business and societal benefits combined with huge economic wins. And many are addressing global markets. Perhaps boring is the hot new tech!