What can technology companies do to create positive social value?
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There are many ways the public sector's technology suppliers can produce benefits that enhance society and support the tech sector across the UK. As the UK Government unveils its new Digital Strategy, we're looking at what technology companies can do to create social value — and sharing ideas for procurers about the benefits and outcomes their technology suppliers could deliver.
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Why is it so important to get social value in technology contracts right?
Technology has dominated how we work, live, and function for the past twenty years, but Covid-19 speeded the adoption of digital technologies dramatically - and many of these changes are here to stay. At least 80% of business interactions with customers now occur in the digital arena, which is three times higher than before the pandemic, whilst a survey by McKinsey in 2020, found that companies have accelerated the digitisation of their customer and supply-chain interactions and their internal operations by three to four years. In the public sector, COVID-19 forced the provision of virtually all public services to move online and whilst some of these provisions have reverted to 'real world' delivery, a significant percentage remain virtual.
Digital technology is undoubtedly transforming our lives, but it also brings many challenges. From ensuring the poorest in our society don't get left behind to protecting our cyber security and equipping the population with the skills needed to maintain a strong economy.
So, what kind of positive outcomes for society can technology suppliers deliver?
Social value is a mechanism which allows public sector procurers to differentiate between suppliers based on the value they offer society. Social Value refers to the additional social, economic and environmental outcomes procurers can achieve by spending money with a particular supplier.
Across the UK, social value comes in many shapes and sizes, but whether you are a UK Central Government, Local Government, Welsh or Scottish contracting authority, the top-level outcomes you seek to be associated with your procurement are likely to be very similar [see box].
The UK Government spent £10.2bn on IT & communications in 2021, whilst Local Government spending on IT is estimated at around £2 billion per annum, with £1 billion spent on sourcing and supporting software applications alone). That's a lot of public sector money. So what kind of social value can technology suppliers deliver?
It's not necessarily about jobs and supply chain.
High-value contracts in other categories (such as construction, healthcare or transportation) can offer many job creation opportunities and direct economic benefits for the procurer's region; local firms can be embedded in the supply chain and job opportunities can be targeted at those with barriers to employment. Technology contracts are different; although the sums of money being spent are often eye watering, generating direct economic benefits from these contracts can often be difficult for two main reasons:
1. The infrastructure and labour force required to deliver IT contracts is often relatively small to the size of the contract. Unless you are procuring something bespoke, most of the code will already be written, meaning that the investment required by the supplier for implementation is relatively low. Therefore, even if you're letting a contract worth millions of pounds, the company you buy the software from may not be creating any new roles directly. That doesn't mean they aren't recruiting; it just means that they are recruiting a new workforce to deliver your contract.
2. The work probably requires skills and experience, which take years to obtain – so even if jobs are created, they will need people who already have the expertise. This makes it difficult, if not impossible, for a technology company to promise to fill any roles created by your contract from within a specific geographical area or socio-economic group.
This does not mean that the public sector shouldn't hold its technology suppliers to account. There is an enormous amount the tech sector can, and should, be doing. With vast sums of money involved and social value now a significant commercial differentiator, technology suppliers have a solid incentive to get this right.
[Do not be] prescriptive about social value within a specification, but [set] out areas where IT suppliers might help the council to deliver outcomes.
Local Government Association , National Technological and Digital Procurement Category Strategy
Photo by: ThisisEngineering on Unsplash7 things technology companies can do to create social value
1. Help to reduce the digital skills gap
The digital skills gap is estimated to cost the UK economy £63 billion per year in lost potential gross domestic product (GDP). The UK Government expects this gap to widen, leaving the UK with a workforce inadequately equipped to meet the demands of the digital age. Many technology companies, like Oracle (see below), already have programmes to address skills shortages. Ask potential suppliers what they can do to help strengthen the digital education pipeline, increase the digital skills base and upskill people living in your communities.
The Oracle Academy offers secondary schools, technical/vocational schools, two- and four-year colleges, universities, and educators a wide range of free learning resources. Curricula and tools to allow them to deliver Java, cloud and database learning to their students. It's free to join, and resources are available for children aged from around ten years to university level.
2. Help increase awareness about pathways into digital careers
Demand for AI, cloud and robotics skills is soaring. However, a 2021 study by the Learning and Work Institute highlighted. Whilst young people seem to recognise digital skills' importance, participation in digital skills training has declined significantly. For example, The number of people taking IT subjects at GCSE level has dropped since 2015 by 40 per cent. There are also stark gender inequalities in IT training and employment in the digital sector. Ask potential suppliers what they might be able to do to help raise awareness and encourage young people in your region into careers in the technology sector. This could mean targeted engagement initiatives or actively inspiring young people to get into tech by sending ambassadors into schools and colleges.
IBM's Apprenticeship programme offers apprenticeships ranging from Level 3 to Level 6 in Software Development, Test Engineer, Technology Sales and Management Consultancy. You don't need to have A-Levels and opportunities are available throughout the UK, and salaries start from £21,000.
3. Advance diversity and remove barriers to ensure greater access to their workforces
The technology sector has one of the poorest records for diversity in all forms, especially gender. Although they make up 49% of the workforce, only 19% of tech workers are women. Underrepresentation in the workplace is caused by various factors, including discrimination, skills mismatch, and lack of qualifications and networks. For this to change, employers must be more aware of the problem.
Ask suppliers to evidence what they are doing to level the playing field. This might include apprenticeship schemes. Broadening their recruitment pathways to source candidates from non-traditional routes, creating employment and training opportunities for those with barriers to employment, upskilling workers later in their careers, kick-starter schemes, and equality-focused hiring policies.
Design Lab3 is a programme run by the Mayor of London to help improve the representation of young black men within the tech industry in London. Eight technology companies are taking part: Dell Technologies, Informa Tech, Cloudreach, Ford Motor Company, Profusion, Cognizant, Panaseer, and Talent Technology Services.
Young Black men currently make up only 5% of London's growing, 590,000-strong technology workforce in a sector worth £56 billion to the economy. Yet, across the capital, Black men aged 16-24 are among the most likely to be out of work – with almost one in three unemployed compared to just 15% of young white men. Design Lab3 creates a space for businesses to come together, critique existing practices and explore the causes of underrepresentation in their workforces and the sector as a whole. During the 12-month programme, companies are supported to build an action plan to recruit, retain and progress more young Black men in their businesses. It also includes a programme of workshops, one-to-one sessions, data collection, supply chain assessments, introductions to suppliers and networking and recruitment opportunities delivered by the Equal Group in partnership with City Hall.
4. Take action to minimise their impact on the environment
While tech has done much for sustainability, the industry still falls short in many areas. For example, the IT industry could use an estimated 20% of all electricity produced by 2025 and emit 5.5% of the world's carbon emissions. From E-waste to energy consumption and unsustainable materials used for hardware, many tech companies still have a long way to go to become sustainable.
Request evidence that the supplier has evaluated the environmental impact of their current processes and systems. Highlighting areas where they could be more sustainable; ask them to detail their' problem areas and outline what action they're taking to address them. Examples include:
Data centres. They are extremely energy intensive because of the cooling demand required to maintain them. The Department for Environment, Food & Rural Affairs (DEFRA) has identified several ways in which data centre design and operation can be made more sustainable. These include utilising renewable energy, smart facilities management (including remote energy and water consumption monitoring devices), sustainable data centre certification (e.g., BREEAM/LEED) and training. Choose suppliers who use data centres which incorporate all of them.
Responsibly sourced hardware. Where will the hardware used on the contract come from, and how well are suppliers audited? Do they opt for recycled or recyclable hardware that can be responsibly sourced and disposed of? How do they dispose of their IT equipment, and is end-of-life tracked to ensure the hardware is cleaned of data, reused and recycled where possible
5. Offer Gold Standard Cyber Security
Although there are legal requirements regarding cyber security, there's still a massive difference between gold standard cyber security and legally mandated provision. Lapses in cyber security could put employees, products, and tender outcomes at risk. The 'CIA Triad' of cyber security – Confidentiality, Integrity, and Availability – can all have a damaging impact if tech companies don't address them.
Confidentiality: lapses in confidentiality allow hackers to access staff members' and customers' personal and financial data. Leaks of sensitive information are likely to have a devastating impact on their lives.
Integrity: if data becomes compromised due to a cyber-attack, reputational, financial, and social value is put at risk for the company and the government agency that has procured the services.
Availability: Ransomware attacks on web services can result in breaches of operating agreements and impact customer-facing services.
When reviewing a tender application from a tech company, you should ask for evidence that tells you they are fully cyber-security certified. Companies can achieve certification through Cyber Essentials (CE), a government and industry-backed scheme designed by the National Cyber Security Centre (NCSC).
6. Take real action against modern slavery and ensure an ethical supply chain
Modern slavery disproportionally affects millions of (often overseas) poor, vulnerable, and low-skilled workers. Moreover, exploitation is often hidden within dispersed supply chains, spanning producers, manufacturers, distributors and retailers across the globe.
Ask your suppliers to detail the measures they take to minimise these risks. For example, can they provide a contract signed by all supply chain parties that guarantees they have met specific standards? Ask for details of the supply chain used in the contract delivery and evidence that they've conducted a supply chain risk assessment. You could also ask for more information about the company's policies to prevent forced or trafficked labour.
Procurers could also consider joining an organisation such as Electronics Watch, which offers public sector procurers independent monitoring of supply chains.
7. Actively work to reduce the digital divide
The Digital Divide refers to the gap between those with access to digital technology and those without access. Being online is an integral part of participating in society, and people unable to engage effectively with the digital world are at risk of being left behind.
Suppose you are procuring a contract that involves digitising and moving public services online. Asking potential suppliers what action they will take to minimise digital exclusion and ensure nobody is left behind should be a critical social value requirement. Of course, what they can do will depend on the contract. Whether it's partnering with charities such as Citizens Online, which tackles digital exclusion, providing training for service users or supporting third-sector organisations that lack digital skills, there will be something.
There are many ways to ensure that you award contracts to a technology company promoting social value through all these avenues. Each of these seven pillars has the potential to make a massive impact on the environment, local communities, equality and wellbeing. If you'd like to know more about how to evaluate businesses regarding social value, get in touch with Samtaler today.
Further Reading
Exploring the UK’s Digital Divide March 2019, Office for National Statistics
How Covid-19 has pushed companies over the technology tipping point and transformed business forever Oct 2020, McKinsey & Company
Public Sector must accelerate digital transformation or risk losing sovereignty and trust May 2022, World Economic Forum
UK Digital Strategy July 2022, UK Government
National Technological and Digital Procurement Category Strategy 2017, Local Government Association
A changing nation: How Scotland will thrive in a digital world March 2021, Scottish Government
Digital Strategy for Wales March 2021, Welsh Government
How we can help
At Samtaler, we know what to look for regarding social value. We specialise in helping businesses and procurers assess social value effectively and improve their social value offerings. We firmly believe that companies who have a positive impact are the ones who should be and will be winning important contracts. So, we want to help you find the right company for the job every time.
To find out how we can help, send an email to hello@samtaler.co.uk
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