Public sector officials have been urged not to be “afraid” of opening up data from their organisations to allow innovators and entrepreneurs to help them solve key government transformation challenges through the use of technology.

Derek Mackay, the Scottish Government’s Cabinet Secretary for Finance, Economy and Fair Work, said public sector organisations need an “open approach” in order to deliver better services and deliver greater value for taxpayers.

Mr Mackay said the traditional way of doing government procurement was “changing” and that it was having to do so in order to avoid the costly process of going out to tender, drawing up contracts and consulting with lawyers “in darkened rooms”, only for those projects not to go ahead or end up in some sort of “contractual dispute”.

Mr Mackay was speaking at the third round of CivTech – a government-backed scheme which came into being following a conversation in 2015 between Colin Cook, Director of Digital at the Scottish Government and Alexander Holt, who is now Head of the CivTech programme; the CivTech 3.0 Demo Day was held on Wednesday at the Edinburgh International Conference Centre, attracting a record 500 attendees.

He said: “The power of technology is so important and for me the traditional ways of doing government and public sector procurement is changing and has to change to maximise the benefits that we can get from the public pound.

“The reason CivTech inspires me so is the way it brings people together – the way we normally do public sector procurement is we think of an issue we’re trying to resolve in a darkened room with lawyers and our officials maybe draw up contracts and we put it out to tender and private sector or third sector maybe bids for it. We then design it and take it forward and sometimes it doesn’t always to plan. What’s really different about CivTech is that at the outset it brings together in an open and transparent way the information, the data, the potential, the challenges that we have and share together.”

The idea behind CivTech was to appeal to public sector organisations to provide key business challenges that they could then put out to the technology market via the programme, in the hope that innovative young companies and SMEs would come in and ‘solve’ them, attracted by the chance of winning a contract for up to £250,000 . Since inception in 2016, the programme has hosted 26 challenges, many of which have gone on to be ‘incubated’ through an accelerator programme located at Edinburgh’s tech hub, CodeBase.

Mr Holt, who provided a platform for the latest 11 companies to showcase their products at the event, said: “We’ve had some smash-out past successes, we’ve had some [that are] too-soon-to-say, we’ve had a challenge that didn’t work. And that is ok.”

Some of the products showcased at this year’s event an app that helps young people connect better with nature, from challenge sponsor Scottish Natural Heritage, which has worked with software company Oxido to design the ‘Zapto’ app; the Scottish Anti-Illict Trade Group, which worked with Get Market Fit to crack down on online counterfeit goods; and YoungScot/Stirling Council which got young people involved on a task to design an AI-based mental health app with Voxsio.

Mr Holt said once many of the solutions have passed a ‘minimum viable product’ (MVP) stage, the opportunities are for them not only to transform government services in Scotland and the UK but also to be exported globally.

One company he credited with having done just that was Edinburgh-based Symphonic, which worked with NHS National Services Scotland in the Challenge 2.0 round on a project to allow clinicians to access data from multiple sources; that company has now gone on to secure “major international contracts” and are doing “blisteringly well”, said Mr Holt.

Mr Mackay, who arrived at CivTech following Scottish Parliament scrutiny over his latest £42.5bn public spending budget for the next financial year, reaffirmed his commitment to the programme, which currently has its own budget of a £1.2m. That level of spend is expected to remain in the next financial year and will support the launch of CivTech 4.0 in September, which will have an increased capacity with 15 challenge sponsors.

There is no denying that the profile of CivTech within the public sector is rising, and Mr Mackay spoke of his hope that its ethos could actually be spread more widely to the way government does business. That was highlighted by the fact that Nicola Sturgeon, who had been due to appear, provided a video message at the beginning of the event to congratulate CivTech on its achievements, saying it had “pushed boundaries in procurement.”

“But I want to go further,” Mr Mackay said: “I want to make sure that the philosophy and the energy and the engagement – and it’s the way that we design better approaches – filters right into how we do business in government.”

He added: “As I say, moving away from the old-style, design the contract, put it out to tender, assess it and then end up in some sort of contractual dispute; there is genuinely something inspirational around the collaborative approach, the partnership working and the ability to take a problem right through to solution which is so inspiring for me as finance minister.

“To the public sector in the room, don’t be afraid of it. Because some parts of government are maybe a wee bit more reticent to share data or information or some of the challenges that we face. But feel free to be open and welcoming to this.”