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Based on data from GovMind.
GovTech in Europe
THe GovTEch OPPORTUNITY.
For a digital and sustainable future.
The increased use of GovTech benefits both society and the economy: a modern digital public sector delivers faster and more convenient services, reduces administrative burdens, and fosters trust and accountability. Embracing GovTech further stimulates entrepreneurship and economic growth, creating a more competitive technology ecosystem.
GovTech commonly refers to technological, predominantly digital products tailored for the public sector, generally provided by external actors, particularly startups and small to medium-sized companies (SMEs).
Why GovTech,
why now?
GovTech commonly refers to technological, predominantly digital products tailored for the public sector, generally provided by external actors – particularly startups and small to medium-sized companies (SMEs).
The increased use of GovTech benefits both society and the economy: A modern digital public sector delivers faster and more convenient services, reduces administrative burdens, and fosters trust and accountability. Embracing GovTech further stimulates entrepreneurship and economic growth, creating a more competitive technology ecosystem.
The primary beneficiary of GovTech is the public sector itself. Through GovTech, it gains access to market-ready products, whose technology has undergone rigorous testing, validation, and commercialization. Embracing GovTech is essential for effectively digitizing and modernizing its activities, and achieving ambitious sustainability goals set on European and national levels alike.
Most importantly, public procurement is a powerful tool that gives the public sector the opportunity to use GovTech on a large scale due to its significant volume. This publication sheds light on the current status of GovTech in public procurement and highlights the great potential it holds.
This element represents five bln euro procurement volume.
The public sector in Europe procures goods and services worth 2,745 bln euro per year.
The public sector in Europe procures goods and services worth 2,745 billion Euro per year (Here we provide a detailed and transparent explanation of our and assumptions, including a geographical definition of Europe).
Only 6.4 bln euro (0.23%) are currently
used for GovTech.
How much of this is utilized to procure GovTech?
To answer this question, we have aggregated the revenues of European GovTech startups and SMEs. We arrived at 6.4 billion Euro that were used by the European public sector to procure GovTech products last year. This corresponds to only a quarter percent of the total procurement volume.
How much GovTech could the public sector potentially buy if it shifted its spending from traditional products and services to GovTech products wherever possible?
The potential for GovTech in procurement ranges between 206 to 247 bln euro.
The full potential for GovTech lies at 7.5 to 9 percent of total public procurement, giving the European GovTech market a potential of 206 to 247 bln euro.
WHY IS THIS
RELEVANT?
There is a gap of almost 200 bln euro between current GovTech procurement of 6.4 bln euro and the lower end of the GovTech market potential of 206 bln euro.
GovTech is a European phenomenon
When considering the European market potential of GovTech, examining the provider landscape is insightful. This is because the presence of GovTech across Europe is crucial for the development of a European GovTech market.
This European presence is indeed the case: Although there are GovTech hubs commonly found in major cities, particularly capital cities, GovTech providers are also distributed across the continent, reflecting the diverse economic structure of Europe.
WHY IS THIS
RELEVANT?
The diverse regional distribution of GovTech providers across the continent can pose a challenge for public clients, yet it serves as the foundation for establishing a genuinely European GovTech market.
Providers have nearly quadrupled in one decade
The course of time shows: Across seven key thematic areas for GovTech, the European provider landscape is significantly larger and more diverse than it was five or ten years ago. Between 2011 and 2021, the number of providers has almost quadrupled.
And the figures for recent years could still rise, as the analysis only includes providers with a marketable product. However, there are certainly providers that have been founded in recent years but have not yet entered the GovTech market with a clear product offering.
WHY IS THIS
RELEVANT?
In their procurement decisions, public sector clients can now draw on a completely different GovTech provider landscape than they could just a few years ago. At the same time, this requires a much better knowledge of the market.
GovTech fits the way procurement flows
When examining general government procurement spending by function, it becomes evident that these primary functions closely align with the seven thematic areas of GovTech, which structure the provider landscape.
For every function, there is a distinct set of GovTech products tailored to optimize operations and public service delivery in that specific function. As a result, the technologies and offerings may vary significantly to address the distinct requirements of each function.
WHY IS THIS
RELEVANT?
GovTech is thematically aligned with typical procurement spend by function, which underscores its relevance and applicability across various sectors and government departments.
There are more than 5,000 GovTech products ready for use
To better grasp the potential of GovTech, we utilized GovMind’s database to categorize the product portfolios of European GovTech providers based on seven thematic areas and sub-themes. This comprehensive process revealed a total of 5,114 available products, offering valuable insights into the specific areas where GovTech can have an impact.
These products are readily accessible to the public sector for immediate implementation and use, offering significant advantages over in-house and customized developments — which can be costly, time-consuming, and entail inherent risks.
WHY THIS IS
RELEVANT?
The untapped potential of GovTech is unlikely to be explained by a lack of available products. The challenge lies within procurement, which needs solid market knowledge and technical expertise to better realize GovTech’s potential.
Darius Selke
Head of Ventures Germany Sopra Steria
Darius Selke
Head of SoPRA STERIA
VENTURES DEUTSCHLAND
What we need to do now to unlock this potential is to use public procurement more strategically. As European tech company Sopra Steria is the strong partner for the public sector as well as for the GovTech ecosystem. A GovTech potential of around 200 billion means that Europe has the chance to build a home market for government technologies, adding a new chapter to the success story of European integration:
From coal and steel, via goods and services and a common currency, toward a full-fledged technology market. With our Venture Client approach, we support these efforts for a digital and sovereign Europe.
Manuel Kilian
CEO GovMind
Manuel Kilian
FOUNDER & CEO GovMind
Europe is facing a whole range of internal and external challenges. Against this backdrop, it is surprising that the potential of GovTech to help solve a wide range of those challenges is so underutilised.
There is now a window of opportunity of a few years to convert the large GovTech offer into actual demand in order to sustainably strengthen Europe as a GovTech location.
A very important building block for better exploiting the potential of GovTech in procurement is comprehensive market knowledge of the more than 5,000 GovTech products. This is exactly what our research platform MIRA provides.
- Vergabestellen systematisch Wissen rund um GovTech-Lösungen bereitstellen – dies ist mit unserer Rechercheplattform MIRA bereits heute möglich und wird immer häufiger genutzt.
- Öffentliche Vergabeordnungen innovationsoffener gestalten, wie jüngst im Bundesland Hamburg geschehen.
- Öffentliche Beschaffung strategischer auf die Themen Innovation und Nachhaltigkeit ausrichten, um GovTech-Lösungen stärker in den Fokus zu rücken.
Ron de Jonge
Ron de Jonge Operating Officer Sopra Steria
Ron de Jonge
Partner und Operating Officer Sopra Steria
These results illustrate the untapped potential of over 200 billion euros per year, which can be harnessed through GovTech-open and forward-looking public procurement. The success seen in industry can be replicated in administration. External innovators provide impulses and solutions for long-term innovations.
With over 5,000 GovTech solutions in Europe, the proven Venture Clienting model is the most efficient method to scout, evaluate, and match these ventures with existing challenges of administration. It would be unrealistic to expect public procurement and municipalities to independently manage such Europe-wide scouting.
Venture Insights
Up To Date
This publication is part of the Venture Insights series — a new format introduced by Sopra Steria Ventures Germany.
We recognize the power of diverse discussions as drivers of progress and innovation. With our innovation partners, we explore various industries—analyzing relevant findings through co-creation. Always aiming to shed light on the most pressing topics. These are the Sopra Steria Venture Insights.