The crucial role of SMEs in the UK’s defence and security landscape
Jayne Planitzer, Procurement Director, SME Champion
| Thales UK
Driving innovation, resilience and economic growth, SMEs are vital to the UK’s defence and security landscape but face persistent barriers to entry and success
Small and medium-sized enterprises (SMEs) are essential players in the UK economy, bringing unique capabilities and innovative approaches that are vital for enhancing supply chain resilience, agility, and innovation.
Their contribution is particularly significant in the defence, security and critical national infrastructure sectors, where building a robust supply base can enhance the UK’s ability to operate effectively, aligning with the UK’s goal of strengthening capabilities and response readiness.
Despite their importance, SMEs face considerable barriers that hinder their growth and competitiveness.
Navigating the complex regulatory environment, as well as the bidding and procurement processes, can be daunting. Compliance requirements are resource-intensive and costly, often overwhelming SMEs and diverting resources away from core business activities.
Access to funding is another significant challenge. Traditional investors hesitate to back defence and security initiatives due to the high entry costs and perceived risks. SMEs need up-front investment to support innovation, research and development costs. Furthermore, demand is often unstable, characterised by cycles of feast and famine, which can drive SMEs out of business due to a lack of long-term demand visibility.
The difficulty in connecting with established prime contractors and competition from larger firms can make it difficult for SMEs to differentiate themselves. This hampers their ability to secure contracts and reduces growth potential.
Additionally, attracting and retaining skilled talent and achieving high environmental, social and governance (ESG) maturity prove to be ongoing challenges in a competitive landscape.
As an industry, we must do more to support SMEs in overcoming these obstacles, and recommend the strategies below:
- Mentorship and support: Providing guidance to help navigate the complex environment in which we operate, helping upskill SMEs in key areas.
- Proportional frameworks: Utilising frameworks with common terms and conditions tailored to SMEs to ease the administrative burden.
- Transparent forecasting: Sharing visibility into future
programmes and demand forecasts to enable planning
and ease financial strain.
- Collaborative funding: Partnering with SMEs to offer funding opportunities or facilitate access to financial resources.
- Increased accessibility: Supporting face-to-face networking events and digital solutions to enhance collaboration.
- Talent attraction and retention: Helping SMEs to attract school leavers and leveraging companies’ apprenticeship levy to help simplify the process for SMEs to incorporate apprentices into their workforce.
To address these issues, Thales is focusing on the SME journey, from initial market engagement through to the establishment of long-term relationships, to provide focused and tailored support.
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By actively expanding partnerships with SMEs in key technological areas, including autonomy, artificial intelligence, quantum, connectivity, and human-machine teaming, we are working to develop SME ecosystems to meet future capability requirements.
We are launching a Strategic SME Partnering Programme designed to empower SMEs through initiatives such as co-innovation, tailored training and development, digital transformation services, networking and community building, ESG assessment, and funding support.
Our footprint across all four nations of the UK creates opportunities to collaborate with local SMEs, ensuring that innovation and economic benefits are shared in these communities and yield social benefits, including job creation and skills development.
In essence, the strategy to create an empowered UK SME ecosystem is not merely a business endeavour but a commitment to the country, community, and individuals. By building stable relationships with SMEs, we can unlock innovative potential, drive sustainable growth and provide resilience to meet the security needs of the UK and its allies.
