Why SME partnerships are the blueprint for government AI success

How can SMEs fill critical gaps in AI skills, strategy, and implementation for public sector organisations?

That was the key thread from a recent government panel discussion, Smarter partnerships: Why SMEs are key to government’s AI success, featuring the National Crime Agency (NCA), the Department for Science, Innovation and Technology’s Incubator for Artificial Intelligence (i.AI), and Zaizi, a specialist SME that provides secure digital services.

The panel discussed how SMEs provide the speed, agility, and specialist knowledge that some of the larger organisations can’t match.

SMEs faster, more agile

Paul Edmonds, chief AI officer at the NCA, spoke candidly about previous failed attempts with large consultancies and how that led him to re-evaluate his strategy.

“When I was setting up my department, I took the traditional route," he said. "I went to one of the big five consultancy firms... And to be frank, it was an utter disaster.

“They had less knowledge of AI than my staff. [They] were looking at implementing outmoded models based on generic consultancy approaches, which mostly seemed to lead to more consultancy work!”

It made him realise that “building a supply chain with more SMEs” was critical to preparing the organisation for AI. He believes there is more “specialist knowledge in the SME marketplace” than in the traditional supplier base.

“So we really had to reconfigure the way that we were working to get the kind of speed that we want,” he added.

Chad Bond, Zaizi’s director of strategy and innovation, highlighted the speed issue with an example. Using rapid approaches similar to the Department for Science, Innovation and Technology scan-pilot-scale approach, he said Zaizi has deployed live services “in a matter of weeks” and then continued to iterate.

He emphasised the importance of trust in this fast and agile environment, especially when it comes to building ethical and explainable AI. “Trust is non-negotiable in national security and other areas of government – particularly in our work," he said.

New procurement flexibility

New legislation is turbo-charging the transition to smarter partnerships and allowing government organisations to be more flexible.

Michael Padfield, head of strategy at i.AI, agreed that speed is critical in a rapidly changing market. “The frontier of technology is moving even faster, and so for us to keep pace, we need to partner with SMEs in a much smarter way," said Padfield.

“We now have new powers from the Procurement Act that are available to us from this year, which allow us to do what's called Competitive Flexible Procedure and Dynamic Markets – meaning that we can run procurement processes much more quickly.

“Instead of structuring it around reams and reams of paper documents, we can get providers to offer us demos of the tools that they’ve built, we can run evaluations, we can go over to offices and see presentations. It's a much more dynamic process,” he adds.

This shift gives civil servants a greater sense of agency. Padfield’s ambition is for i.AI to be one of the first organisations to "really push these new powers to their limits, to show the rest of government that you can now engage in SMEs in a much smarter way".

He recommends that other departments explore this approach to engage with suppliers in a different way.

Edmonds highlighted the real-world effects of the new Procurement Act, which “does really change the landscape for the way that we can do things.”

He added: “We tend not to do a large procurement, where we'll spend eight months doing a requirement, which will go to tender. We're looking at having cycles of turning things around in two or three weeks. And actually, our more traditional supplier base couldn't actually do that.”

Collaborating better: The Ukraine example

Ukraine cropped up a few times as a standout example of SME involvement.

In a war-torn environment, where speed, security and improvisation are essential, SMEs find new ways to deliver services quickly and securely – and the Ukrainian government has helped by creating flexible procurement processes.

“SMEs have been pivotal in providing that infrastructure to the Ukrainian government,” said Bond.

When the debate turned to learning and collaborating with countries like Ukraine and Estonia, Bond pointed out that legacy systems and outdated processes made collaboration and sharing data difficult in the UK – even between departments within the same government, let alone with international partners. 

“We've said it before in previous panels that you can't build AI on creaky legacy systems," Bond said. He added that the state of the data reflects the departmental structures and emphasised that departments need to focus on leveraging communities of practice and other opportunities to work effectively across that data landscape.

Likewise, Padfield pointed to the structural barriers, like manual and paper processes: “Other countries have maybe not had those long historic issues, which means it's easier to move to that digital-first system."

He also attributed the success of those countries to their open source community. I.AI works with open source “as much as possible", both to build public trust and share code and tools with other departments, agencies, and external innovators to build upon. “That's thinking about partnerships outside of the procurement framework, " said Padfield.

Ideal partnerships

So what does the ideal partnership look like, especially when it comes to AI?

Edmonds said AI requires a different type of partnership – one that allows rapid development. "It's very much about having civil servants work with partner staff in a more interactive way,” he adds.

Padfield stressed the importance of having “a shared understanding of what the end goal is” and remaining agnostic about the solution.

But he emphasised that doesn’t mean leaving the technical experts out of the room. He explained the value in bringing in people who understand tech and know what can and cannot be done.

Bond explained how Zaizi undertakes rapid Transformation Day workshops to help achieve that understanding of a shared goal and get important specialist tech input from the start. The workshops involve a variety of stakeholders from the client/user community, as well as Zaizi’s technical experts.

“How we love to work is getting people into a workshop and helping them write the requirements and the business case. As opposed to both those things being lobbed over the wall, which stifles innovation" said Bond.

Bond also stressed the importance of the human-centred approach: “That partnership piece to work effectively between SMEs and government includes working really well with the end user as well."

By designing solutions around real user needs, organisations can overcome resistance, build trust, and create a resilient partnership essential for developing the right AI ecosystem.

Watch the full panel discussion: Smarter partnerships: Why SMEs are key to government's AI success

And if you’re seeking practical insights on how to integrate AI in your organisation, check our white paper: Unlocking government efficiency – An AI readiness roadmap for decision makers