Closer, accountable, still there: the case for SMEs in public sector transformation
Government wants a quarter of procurement to go to small and medium-sized enterprises. Departments now report yearly against their own targets, and more than £7.4bn a year is meant to reach small businesses by 2028. That’s welcome. But a target for who gets paid doesn’t tell you what makes public service change work. SMEs can help answer that.
Perago has been doing public sector transformation for ten years, seven of them as a trusted partner to the Home Office. The clearest thing I’ve learned is that scale doesn’t make change stick. Being close to the work does.
What that looks like
The example I come back to most is Caerphilly County Borough Council. Over a two-year partnership we worked alongside the council on a £65m efficiency roadmap, with £20m of savings delivered in the first two years. What matters more is what happened after we left. The council’s 2025/26 year-end figures show a further £13.5m saved. First-point-of-contact resolution went from 38.8% to 76.1%. Lower sickness absence recovered more than 12,000 working days. A year after we’d gone, the benefits were still compounding.
That happened because our team was close enough to understand the problem, and the council’s own people came to own the answer. A weekly open stand-up started with a handful of Post-it notes and grew to around 150 people in the room and 170 online, with visitors from Welsh Government, Audit Wales and all 22 Welsh local authorities. It grew because it was useful, visible and run by the people it served.
Why smaller firms are good at this
Public sector digital transformation often gets framed as a technology problem. It’s just as much about operating models, ways of working and trust. Technology only creates value when the service around it changes too.
SMEs have three things going for them here. The people who win the work are usually the people who do it, so there’s very little gap between the pitch and what actually turns up. We have to earn the next contract on the strength of the last one. That’s how our relationship with the Home Office has lasted seven years, and it keeps us focused on whether change lasts, not whether a report got delivered. And we fit around an organisation’s team rather than asking it to fit around us.
What would help?
If government wants more of this, three practical changes would make a difference.
Make the routes in visible and easier to navigate. Multi-year framework cycles can leave smaller firms waiting years for a direct route in, or relying on subcontracting. Partnerships with larger suppliers can work well, but only when primes treat SMEs as genuine partners rather than a box to tick.
Measure what lasts. If transformation is only judged at the point of delivery, you reward firms that finish well, not the ones that leave things working. Asking what’s still delivering a year later would tell you far more.
Build in room to test and learn. Good public service change comes from teams who can try something, see what happens and adjust. That’s much easier with smaller, closer partners than inside long, fixed programmes.
The opportunity
This isn’t an argument against larger suppliers. Government needs their capability and capacity. It’s a case for a mixed market where smaller firms are valued for their ideas and delivery, not just counted as a share of spend. The public sector is under real pressure to do more with less, and at Perago we show what close, accountable partners can do: help organisations improve, and keep improving after the engagement ends.
The best test of a partner is what’s still working after they’ve gone.
