Written evidence submitted by Vertice (DTS0003)

Introduction

1. Vertice is the spend optimisation platform enabling businesses to simplify their procurement workflows, gain granular control and visibility of their spend, and realise cost savings of as much as 30%. Backed by a savings guarantee,[1] Vertice manages $3.4 billion in spend worldwide for hundreds of enterprise customers in over 30 countries. Vertice is headquartered in London with additional offices in New York, Sydney, Brno and Johannesburg.
2. We welcome the Committee’s inquiry into the government's relationship with digital technology suppliers. We particularly welcome the focus on longstanding issues, the government's strategic approach to suppliers, and departments’ digital expertise.
3. Overall, we agree with the Committee’s 2021 report and the National Audit Office’s 2025 findings that slow progress in improving interaction with digital technology suppliers has hindered government’s digital transformation efforts. We also agree that effective engagement with digital suppliers is essential to the success of the government's ambitions for digital transformation and economic growth.
4. We believe NAO’s report comprehensively sets out the problems and challenges. To further support the Committee, we have focused our response on areas where our procurement expertise can cast additional light on the report’s findings, or where our experience working with large and complex organisations enables us to offer tangible suggestions for taking its recommendations forward.
5. Ultimately, we believe the government can save significant time and money by improving how it engages with technology suppliers. We submit our evidence, illustrated by examples from our work, in pursuit of that goal.

Longstanding issues in government’s digital procurement

Lack of access to benchmarking data

6. NAO states that the government lacks basic data on how much is being spent on digital procurement, making it difficult to make informed decisions and fully use its buying power.[2] This mirrors our assessment of the many complex organisations we work with, where a lack of access to real-time, accurate and comprehensive benchmarking data is often the primary cause of wasted expenditure and poor outcomes.
7. We also, however, understand the challenges the government faces. Knowing a ‘fair’ or ‘common’ price for digital products such as software can at times seem impossible. Not only are there significant variations in contract terms, pricing models and features, but very few digital vendors make their pricing models public, making it difficult for procurement teams to know where to start.
8. This is where benchmarking data comes in, providing invaluable insights that enable more informed and cost-effective decision-making. Vertice uses a continuously updated database of over 16,000 digital vendors worldwide to provide peer-benchmarking and automated insights across our client base - showing them where and how they compare to other, similar-profile organisations. The database provides real-time, comprehensive and accurate information that guides procurement teams’ decision-making and maximises their buying-power with suppliers. 
9. We would argue that without access to this kind of dynamic data, government departments are essentially operating in the dark, making wasted expenditure and poor outcomes somewhat inevitable. We support NAO’s recommendation that government should set up the capability needed to improve data to inform decision-making,[3] and suggest that this setup could be cost-effectively supported by digital procurement specialists backed by a savings guarantee. 

Lack of market intelligence

10. A second issue contributing to wasted expenditure and poor outcomes is the government’s limited market intelligence. As previous reports have shown, lack of capability to act as an ‘intelligent client’ has been a significant reason for the government’s poor track record in delivering digital change programmes.[4] But, as we know from our work, without up-to-date market intelligence in three critical areas - leverage, timing, and usage - it is difficult for the government to develop the strategic negotiating power it requires.
11. In terms of leverage, understanding which negotiation levers to pull at particular moments or with particular suppliers is critical to the success of any procurement negotiation. For example, does the supplier in question prioritise contract length, or are they more focused on which features are included in the contract? Are the salespeople currently working under a particular performance incentive? Without the insights to understand the background motivations at play with each supplier, the government will always be at a disadvantage.
12. Understanding the strategic timelines of digital procurement processes is equally important. Not only can early engagement in procurement negotiations facilitate upfront cost savings, it can also mitigate unforeseen costs throughout a project lifespan. For example, our data shows that companies that begin negotiations 90+ days before a contract renewal date achieve significantly higher savings - on average securing a 49% greater discount than the suppliers’ standard offer.[5] However, in our experience working with hundreds of businesses, almost all have historically begun negotiations at too late a stage - dramatically reducing their leverage with suppliers. We have found this problem to be especially prevalent for larger and more complex organisations.
13. Strong usage analytics are the third essential component to acting as an intelligent client. Without detailed analytics of how digital products and services are being used, the government remains at risk of financial overcommitment and unfavourable results. However, by analysing real-time usage data and comparing usage patterns against historical deals, departments can avoid over-investing in unnecessary digital features or committing to inflexible contracts which, as NAO points out, often result in poor outcomes for both the department and the supplier.[6]
14. At Vertice, we frequently come across organisations unaware that they are using multiple digital tools that overlap in functionality. Not only does this duplication lead to overspend and waste, but it can also introduce security and compliance risks. In these scenarios, we rely on detailed, real-time usage analytics to provide a comprehensive view of digital activity and ensure that any procurement decisions are taking place from an informed and strategic position.
15. For example, digital experience platform Piano was looking to achieve cost savings by creating more structure and control in its digital procurement. By providing real-time visibility of their requirements and usage, Vertice could identify and address functionality overlaps. Our support provided clarity and predictability across Piano’s procurement activity, while helping it plan for future growth and delivering a 600% return on initial investment.[7]
16. Maintaining up-to-date market intelligence around leverage, timing, and usage is essential to developing strategic negotiating power. To support improved market intelligence in government, we support NAO’s recommendation for improved collaboration between policymakers, technical specialists and procurement specialists to establish government as an intelligent client.[8]
17. We also support the recommendation for greater guidance on negotiating digital procurement contract options,[9] and would further recommend the government prioritises data-driven procurement workflows to enable strategic navigation of procurement process timelines.

Lack of procurement expertise

18. Another factor contributing to wasted expenditure and poor outcomes is insufficient digital procurement expertise - particularly in relation to software as a service (SaaS) and cloud infrastructure, which require a depth of specialist knowledge.[10] As NAO points out, lack of expertise in digital procurement means that the government has often entered into digital contracts without fully understanding project requirements or the vendor landscape, leading to delays, cost increases and compromised relationships with suppliers.[11]
19. From our experience, this challenge is not unique to the government. Across sectors, we frequently come across suppliers who are quick to exploit gaps in procurement teams’ knowledge and understanding. Numerous digital technology initiatives incur unnecessary and avoidable costs because teams with limited digital procurement expertise (often due to the infrequency of their procurement activities) over-purchase or commit to services they never fully utilise. Unfortunately, some vendors exploit customers further by quoting higher prices to those with limited market knowledge, inflating costs across the whole ecosystem.
20. In contrast, our expert procurement managers are building their knowledge of contracts, suppliers and costs on a daily basis, creating a rich and nuanced understanding of the evolving procurement landscape from which to engage in negotiations. Procurement specialists are often able to identify negotiation levers that may not be immediately obvious to less experienced procurement teams, such as the option to include onboarding ramps at the beginning of a contract to limit financial exposure, stagger feature access, improve immediate user uptake and ensure value for money. Deep expertise also equips specialists to structure contracts in ways that accommodate anticipated business growth or shrinkage, helping to avoid unexpected financial implications in the future.
21. To give one example, we supported New Zealand’s leading rural insurer, FMG, to reduce overall spend and ensure contract terms were aligned with needs, usage and likely future growth. Drawing on their knowledge of the procurement landscape, Vertice’s specialists were able to provide a tailored strategy for each stage of FMG’s procurement process. We achieved a 10x return on investment in just ten months and unlocked significant cost-savings - results which would have been unachievable had we not been deeply rooted in the digital procurement landscape.[12]
22. NAO notes that commercial teams within government do not currently make sufficient use of available internal digital expertise, which creates risks throughout the procurement process.[13] We would suggest the government is also underutilising the wealth of external digital procurement expertise available, particularly in regard to major software vendors, as outlined in more detail below (paragraphs 27-29).

Government’s strategic approach to dealing with suppliers

Lack of centralised approach

23. NAO points out that different parts of government interact differently with suppliers, leading to inconsistent or even counterproductive cross-departmental decision- and policy-making.[14]
24. Based on our work with multi-divisional businesses, the government’s current department-by-department approach to digital procurement is also highly ineffective from a financial perspective, as it risks significant price discrepancies for the same product between departments. For example, we come across countless examples of departments, divisions or regions paying a premium price for a particular digital tool, while another has successfully negotiated a better rate for exactly the same product.
25. We recognise that within government, as with any other large organisation, some teams contain experienced and highly-skilled experts who are well-equipped to create and nurture supplier relationships, while others do not. The inconsistency in approach leads to wildly varying contract terms, inflated costs and ineffective or sometimes negative supplier relationships, and contributes to unsatisfactory results.
26. Without a centralised approach and strategy, the same procurement mistakes repeat themselves again and again across departments and hinder progress towards the organisation’s overall goals and, in the government’s case, towards the wider mission of economic growth. We therefore echo NAO’s overarching recommendation for a more strategic approach to dealing with suppliers.[15]

Engaging with ‘Big Tech’

27. We also support NAO’s assessment that the government lacks a coordinated approach to negotiating with dominant technology providers, specifically.[16]
28. Again, however, we understand the challenges the government faces. We know how difficult it can be for organisations to ‘match up’ to the dominant global tech companies in the three areas we’ve outlined above - access to data (paragraphs 6-9), market intelligence (10-17) and procurement expertise (18-22).
29. But, we’ve also seen first-hand that by collaborating with external procurement specialists who negotiate with major tech suppliers on a daily basis, organisations can dramatically strengthen their position, enhance supplier relationships, reduce expenditure and improve outcomes. Overall, we support the view that the government would benefit from a more strategic approach to working with ‘big tech’ and suggest that external expertise could meaningfully contribute to developing it. 

Opportunities for new digital centre of government 

30. We agree, too, with NAO’s conclusion that the new digital centre presents an opportunity to implement the necessary systemic changes to procurement.[17] Our view, drawn from our experience supporting hundreds of businesses to streamline and optimise their digital procurement, is that the establishment of the new digital centre provides a genuine opportunity to reset the government's approach to working with digital suppliers.
31. To do so, the digital centre should establish best practices for procurement, including benchmarking data and negotiation strategies, while also providing strategic direction on supplier relationship management and navigating the complexity of subscription-based models. Learning from successful workflow models within large, complex private sector organisations, the digital centre of government should also establish centralised procurement workflows that have the flexibility to be customised and applied to individual departments and agencies as necessary.
32. External procurement specialists could undoubtedly strengthen the work of the centre, and we recommend that the government engages externally as early as possible, particularly with companies that guarantee savings and only charge fees when savings are made. A collaborative approach with industry experts would align with NAO’s recommendations that the government would benefit from greater departmental and external input on the more complex issues in technologically-enabled business change, and also that the government needs to invest in capability to improve its understanding of digital markets.[18]

Departments’ digital expertise

Inefficient processes

33. In its report, NAO found that various departmental procurement processes do not align well with the fast-moving nature of digital projects.[19] This finding matches our own experiences with complex organisations, where inefficient and cumbersome internal processes often hold digital projects back. However, we have achieved significant impact in these situations by using intelligent procurement workflows, which streamline organisations’ decision-making processes and align multiple moving parts to enable more effective procurement decisions.
34. For example, Vertice’s procurement orchestration platform enabled Hercules Capital to streamline stakeholder approvals and consolidate contract-related documentation into a single platform, unlocking greater operational efficiency. Through our partnership, Hercules reduced internal emails related to contract negotiations by 25%, saved 8 hours on average per week, and created 30% faster approval workflows.[20]
35. In line with NAO’s recommendation to identify what actions need to be taken to secure improvement in governance, processes, guidelines and supplier engagement,[21] we reiterate our recommendation (paragraph 17) that the government should explore the adoption of data-driven workflows. Vertice is unique in that our procurement orchestration is underpinned by our extensive database - including the benchmarking data, usage analytics, negotiation playbooks and market intelligence outlined above (paragraphs 6-17), as we know procurement workflows must be supported by robust data to achieve significant time and resource savings.

Insufficient guidance

36. Existing procurement guidance is equally ill-equipped to address the complexities of digital procurement in today’s world.[22] From our perspective, a major problem is that much of the government’s existing guidance appears to be focused on traditional, one-off purchases, rather than the subscription-based models that increasingly underpin modern digital services.
37. A second shortcoming is that guidance seems to focus primarily on conducting the largest contract negotiations for major initiatives, somewhat ignoring the other, smaller negotiations, known as ‘tailspend’, which together comprise a large portion - sometimes the majority - of overall spend. Again, this oversight is by no means unique to the government. We have supported many enterprises who have previously focused their attention on only the biggest contracts and left their tailspend untended, creating significant inefficiencies and overspend issues as a result.
38. To address these problems, we echo NAO’s recommendation that while sector-specific ‘playbooks’ are a good start, the government would benefit from greater external input to generate guidance on the more complex and nuanced elements of modern digital procurement.[23] We would highlight that our expertise in subscription-based models enables us to support organisations to respond to these very challenges, oversee tailspend suppliers as diligently as major suppliers, and keep pace with significant changes that have taken place in the technology market in recent years.

Conclusion

39. In conclusion, we support the view that effective engagement with digital suppliers is essential to the success of the government's ambitions for digital transformation and economic growth.
40. Longstanding issues such as a lack of access to data, lack of market intelligence, and insufficient procurement expertise have contributed to inefficiencies, wasted expenditure, and poor outcomes in the government’s digital procurement.
41. Similarly, the absence of a centralised approach to dealing with suppliers, particularly ‘big tech’, along with insufficient procurement processes and guidance at a departmental level have hindered the success of digital initiatives to date.
42. However, these challenges are not unique to the government and can be addressed by proactively leveraging the wealth of external expertise that exists outside of government.
43. To improve its relationship with digital technology suppliers, government should prioritise:
1. Improving access to benchmarking data to enable more informed and cost-effective decision-making.
2. Strengthening its capability to act as an ‘intelligent client’, including through developing deeper market intelligence around leverage, timing, and usage.
3. Adopting data-driven procurement workflows with the flexibility to be customised and applied as necessary.
4. Leveraging the new digital centre to reset the government's approach to working with digital suppliers.
5. Enhancing collaboration between policymakers, technical specialists and procurement specialists.
6. Developing a more strategic approach to working with ‘big tech’.
7. Generating guidance on the more complex and nuanced elements of modern digital procurement, including navigating subscription-based models.
44. We welcome any further engagement with the Committee to provide additional insights and support towards optimising the government’s relationship with digital technology suppliers.

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