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Opening of Government Business Workshop and launch of Selling ICT to government: a guide for SMEs.

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Opening of Government Business Workshop and Launch of Selling ICT to Government - A Guide for SMEs

Wednesday 23 July 2003

(Check against delivery)

Ladies and gentlemen.

May I add my warm welcome to Philip Allnutt's. I hope that by end the end of today all of you will be better equipped to secure a bigger share of the government ICT procurement pie.

This workshop is tailored to that end. And so is the new Selling ICT to Government -A Guide for SMEs, which I have the pleasure of launching this morning.

When you think of the amount governments at all levels in Australia spend on ICT-over $4 billion per annum at last count, with Commonwealth Departments and agencies accounting for almost half of that-the opportunities for SMEs with competitive products and services are certainly large.

By their very nature, SMEs have the capacity to compete with the bigger corporations. Successful SMEs have a competitive advantage when it comes to their capacity to tailor their goods and services to the client, and their capacity to be flexible in the kinds of services they provide.

That can mean value for money for agencies-and value for money is the core guiding principle for agencies under the new governance and investment framework relating to government use of ICT, issued by the Government in October 2002.

Of course, this doesn't mean business will fall into your laps. The trick is to know the ropes. That's where the Guide comes in.

From today the Guide will be available on the DCITA website. Each of you will also receive a copy of the printed document.

By then you will have had the advantage of digesting the views of the expert speakers who have been brought together today for your benefit-including the driving force behind the Guide and the Chair of today's proceedings, Loretta Johnson, from whom you will hear in a few moments. Her views ought to be of particular interest since the company she represents-Lodestar-is itself an SME and has won government business using the very techniques described in the Guide.

I'm sure you've all had a look at today's program and know what's in store. The Selling Guide will complement the information you will receive over the course of today.

So, why is today necessary? Why is this Guide necessary?

There is no question that small and medium enterprises have enjoyed considerable involvement in the Commonwealth's IT Outsourcing Initiative. Of the five prime contractors, one was itself an SME-Ipex.

Significant commitments were also made by the five prime contractors to send business in the direction of SMEs over the life of the initiative. By June last year-about the halfway mark-local industry had already secured:

● $317 million worth of direct business, or in-scope work, against a target of $330 million;

● $202 million of exports against a commitment of $277 million; and

● new investment of $133m against a commitment of $92 million.

One excellent example of this collaboration is EDS's "Global Partner" program which pre-qualifies Australian SMEs to co-bid with EDS for contracts internationally - this helped local Canberra firm Tower Software to win a $30 million contract with the US Navy and Marine Corp.

There were issues with the IT Outsourcing initiative that involved local industry and every effort is being made to address outstanding concerns. Responsibility for purchasing ICT has now been devolved to individual agencies and I think it is important for SMEs to now focus their attention on the future opportunities that these new arrangements will provide . Following the introduction of new simplified ICT procurement arrangements in June last year minimum levels of SME participation have been set for contracts over $20 million - 10% for hardware and 20% for software and services. In addition, SMEs should be well placed to compete for smaller contracts under $20 million in the new 'selective sourcing' environment.

Recent successes such as Volante ($9.4m DoFA contract) and Matrium Technologies ($20m Centrelink contract) are examples of these opportunities.

It's also important to recognise the broader level of assistance that ICT SMEs have received from the Federal Government - for example in 2001-02 ICT SMEs represented:

● 28% of participants in R&D Tax Concession scheme;

● 30% of projects under the R&D Start Program;

● 42% of projects under the Innovation Investment Fund; and

● 51% or projects under the COMET Program.

In addition, since 1996 the Export market Development Grants program has provided $116.5 million assisting 2027 ICT SMEs into export markets - and the $78 million BITS incubator has seen over 200 ICT SMEs receive incubation while attracting $38 million in private funds.

Nevertheless, the Government recognises that the new purchasing environment makes it even more important that SMEs are able to get ready access to the kind of comprehensive information a business needs if it is to become a supplier to government.

This is important not just for SMEs but also for purchasing officers from the government agencies, who have had to deal with companies which are not fully conversant with government procedures and expectations.

We want everyone to speak the same language. This Guide will help them do it.

The Government is deeply committed to the million or so small and medium businesses in this country and I am especially keen to see the twenty thousand plus SMEs in the ICT sector flourish and reach their potential.

SMEs drive our robust economy. They are often the innovators. They provide the jobs that ensure our way of life and our standard of living. They deserve to share fully in the opportunities created by the ICT revolution.

The Government ICT market should be open to those SMEs that choose to invest and commit to it. There ought not be inhibitors to participation. SMEs should experience no more than the normal tough and demanding commercial conditions businesses expect in valuable competitive markets.

This Guide-and indeed, today's workshop-are part of a package of initiatives I announced a year ago, to encourage and drive greater involvement by Australian SMEs in this government ICT market.

A few years ago when the AIIA and the Government decided to take a good hard look at the rules governing the relationship between Multinational Corporations and SMEs, particularly the former Partnerships for Development and SPIDA programs, we quickly identified some problems and challenges: a mass of red tape and mountains of paperwork on the one hand and a dearth of practical information on the other.

In response we announced a new suite of measures which included:

● a dedicated SME information unit within my Department;

● a website that gives SMEs access to an array of information that will help them play a

greater role in the devolved ICT outsourcing environment; ● establishment of a tender management notification system as part of the Commonwealth

Electronic Tender System being developed by the National Office for the Information Economy; and ● the establishment of an industry-government working party to help implement the

package [Brand Hoff, the Chair of the working party should be with us today];

I would like to thank the working group members for their efforts to date including their assistance with the preparation of the Guide.

I would also like to acknowledge the important contribution made by the AIIA not just in organising and running important events such as this but also in developing innovative new services to assist SMEs in growing their business - their recently launched Mentor Portal and Software Legal Guide are two such examples.

The Selling Guide sets out what suppliers can expect when they deal with agencies on ICT procurement. It also sets out what the agencies ought to be able to expect in turn from SMEs.

And-importantly-it will enable suppliers to be realistic about their chances. No-one can expect to win-or even to be invited to bid for-every contract. The government marketplace is extremely competitive. No-one should approach it believing otherwise.

Being realistic is the key - along with proper preparation. That's why this practical Guide can help give SMEs the edge.

The Guide will help SMEs identify potential risks and offers tips on how to respond to government Requests For Tender, how to put together a professional bid, how to negotiate, and how to successfully deliver goods and services.

It also provides useful information on establishing partnerships-particularly partnerships with multinational corporations-with the object of tendering for government business.

The Guide has been pitched at SMEs with little or no experience in the Australian Government market, though I suspect it will have a wider audience with companies that are already selling successfully to the Government.

I trust you emerge from today's workshop better informed and better prepared to go after your ambitions and I hope that this Guide will build on and reinforce this.

It gives me great pleasure to officially launch Selling ICT to Government - A Guide for SMEs, and to officially open today's workshop.