How can SMEs take advantage of the revenue opportunities within government tenders?
Government tenders in Ireland are worth billions per annum, but only a tiny fraction of the country’s SMEs compete for this lucrative revenue stream.
The reasons for this low level of participation are myriad, but mainly centre around tenders being mired in bureaucracy and a perception that only large corporates win government contracts.
Machine learning, however, can overcome both of these (and other) obstacles by harnessing intelligence that provides SMEs with the same competitive advantages that large corporates with dedicated procurement teams enjoy.
Tony Corrigan, founder and CEO of TenderScout, a software-as-a-service (SaaS) tool that collates data on tenders from more than 100 different sources with customers, based in Ireland, the UK and the US, spoke to Siliconrepublic.com about how technology can be a major asset in tender procurement.
What, in your view, is keeping the country’s SMEs from competing for lucrative government tenders?
The majority of SMEs don’t compete for government tenders because they find the process of sourcing and qualifying opportunities, and then putting the proposal documentation together, to be extremely challenging.
SMEs don’t typically have in-house resources trained in proposal writing, competitive analysis or bid management. Recently, a client in the brand-design business asked me why would they bother investing in bid writers or managers when all their revenue comes from resources skilled in brand positioning and digital marketing? Given that proposal writing requires specialist expertise, how can this business, and tens of thousands like them, expect to win government tenders?
The upside of government tendering is that, for those in the know, it’s a very straightforward (if tedious) process that is replicated across the 7,000-plus tenders published in Ireland annually. More than that, the same process is used right across the EU, where as many as 300,000 tenders are published each year.
In 2018, we are working with more than 100 SMEs who have decided that they want a piece of the pie. They are putting in place the structures that overcome the reasons not to participate, and they are winning new business.
How does TenderScout’s machine-learning platform benefit SMEs?
The single most common reason why an SME will fail at government tendering is by treating each tender as a one-off. SMEs that win consistently systemise the knowledge they gain through participation in tender competitions and apply it to improve future submissions. A client received feedback from a public relations tender that their response time to urgent issues was slower than the winners. They took that feedback on board, and in the next tender offered an improved response time – and they won.
TenderScout’s machine-learning platform learns from SMEs’ tendering successes and failures. This enables TenderScout to assess the pros and cons of each tender, enabling SMEs to gather intelligence about a tender opportunity and figure out whether they should submit an application for it or not. Not competing for tenders that the SME has no chance of winning is part of a smart business-to-government strategy, too.
How does TenderScout work on a technological level?
The machine-learning algorithms are designed to provide decision-making information and make predictions as to an SME’s likelihood of success in a given competition, as a function of their performance in other competitions.
To feed the machine-learning algorithms, we:
- Trawl 120-plus different public data sources for tenders and award notices, cleansing and standardising the data as we go
- Capture behavioural data as SMEs engage with our platform to understand which tenders are of interest to them and which they discard as inappropriate
- Capture user data as it relates to their decision-making (eg bid or no bid), tender award criteria and, importantly, the outcome of competitions
Our BidSense tool is used by SMEs to automatically analyse new tenders. Using the data already in the system, BidSense presents your compatibility with the new tender alongside various easy-to-understand vectors such as geographical appropriateness, tender budget, buyer transparency, supplier diversity and so on.
As SMEs add more data to the system, the machine-learning algorithms generate even greater insights relating to competitive positioning within a tender, and accurate predictions of success.
What strategies are good to employ in order to boost a company’s chances of securing a tender?
Over the past two years, we have worked with more than 300 SMEs on more than 2,000 tenders. This has given us a unique opportunity to study the strategies that winners employ.
Why has the tender application process historically been so arduous?
We don’t claim that tenders are easy, or that government procurement is faultless, but the application process is simpler than most people think. There is a learning curve for SMEs at the start but once they engage with tenders, they realise they have a scalable process to implement as many times as they wish.
How does TenderScout manage global clients?
We’ve built a customer success team knowledgeable in tendering systems around the world, in line with our expansion into US, UK and mainland European markets. Our clients submit queries around particular tenders directly onto the platform and have access to a wealth of proposal templates, best-practice guides, FAQs and video content.
Many SMEs require an end-to-end outsourced solution, which we facilitate through our Bid Consultant Marketplace. This marketplace comprises tendering experts drawn from around the world, who we curate and who operate under our strict quality guidelines.
If a client wants to compete for a contract in Denmark, for example, our Danish consultants who have key market knowledge will be assigned to the task. The big advantage for our business is that it allows us to scale all aspects of the service.
In response to the challenges smaller business have in meeting the turnover and resourcing requirements for some tenders, we have built an SME marketplace. SMEs use the marketplace to find partners and collaborators for specific opportunities. This is proving very impactful as it enables smaller businesses to come together and win larger contracts. We recently had a technology company and a recruitment agency come together in exactly this fashion.
What do you see as the future for applications of machine-learning technologies?
Vast repositories of social and business data are exponentially increasing the variety of applications and use cases for machine learning. At TenderScout, we’ve started using our repository of 3.5m historical tenders to predict the likely value of current tenders, where that value is unavailable.
In the future, we will be able to assess the relative importance of data points in isolation or in conjunction with each other to answer questions like, ‘What are the three most significant factors impacting the likelihood of a particular SME winning a particular tender?’ Ultimately, there will be enough data to accurately predict for any contract and the relative likelihood of any SME winning it, which will mean that SMEs will only compete for contracts they are pretty sure of winning.
A winning strategy
Corrigan offered some key tips for SMEs thinking of applying for government tenders.
- Commit to it: You’re not likely to be the best tenderer in the world straight away. It takes maybe three to six months to get all the building blocks for success in place. Winners commit the time and resources to build long-term success.
- Address weaknesses: The best way of knowing where you need to up your game is to actually do a tender. Your proposals are critically assessed and evaluators provide feedback (formally and through the debrief process) showing you where you fell down. Take action on the feedback and you’ll see improvements in the scores you achieve.
- Meet buyers: Winners maintain a list of buyers, easily obtained from tender notices. Buyers are generally happy to meet with SMEs when there isn’t a tender in progress. It’s an opportunity for them to learn who you are and to share their challenges and tender plans. SMEs that do this are better prepared for the tenders when they arrive.
- Use tools: The tendering process is similar all over the world, so it makes sense to use technologies that simplify finding or qualifying tendering opportunities, or that can simplify proposal compilation. Winners typically use a range of tools to maintain their documentation (tender library) and streamline decision-making. By eliminating administrative tasks, they focus on more strategic responses that typically halve the cost of competing for tenders and deliver more consistent results.
- Get help: It’s hard to compete when you don’t know what you don’t know. You probably know someone who’s won a tender – ask them if you can see what a winning proposal looks like. You can also get help. TenderScout runs free workshops and webinars, sharing insights and demystify tendering.