This blog is part two of a series discussing AI developments within the UK public sector. The information below was from a recent interview with Finbarr Murphy, CEO of Modular Data, which provides applied innovation and AI services, data governance, and digital transformation. Read part one here.

Background to Modular Data’s success

For the past five years, Modular Data has focused on working with the public sector, a space marked by unique challenges and long lead times. As a small-medium enterprise, Modular Data is positioned at the centre of AI activities led by start-ups and scaling companies in the UK.

One of the most significant hurdles has been competing with more prominent players on public sector frameworks. These frameworks often impose stringent turnover requirements and demand extensive documentation, which can be resource-intensive for SMEs.

Despite these barriers, Modular Data has focused on building relationships across the public sector, spanning both central and local government departments. 

They emphasised that relationship-building is vital but time-consuming, often requiring years of engagement before yielding results.

Advice for new suppliers: Start with strategy and partnerships

Finbarr’s advice for suppliers looking to enter the public sector market is clear: prioritise business development and market intelligence. For example:

1. Ensure your offering aligns with public sector needs.
2. Use platforms like Stotles to gain insights into available opportunities.
3. Collaborate with established players to enter the market, especially if you offer a niche service or product.
4. Understand that selling to the public sector fundamentally differs from selling to the private sector. A tailored business development strategy is crucial.

Starting small, building credibility, and understanding the market landscape is essential for success.

Delivering value through data: Modular Data’s success with public sector projects

Modular Data has collaborated with the Ministry of Justice (MoJ) and His Majesty's Prison and Probation Service (HMPPS). Their focus has been creating user-driven data products that enable better governance and data quality, which are key foundations for scaling AI initiatives.

Improving data governance and stewardship is the core of Modular Data's work with the public sector. These projects enable more transparent accountability and allow for AI-driven insights. 

HMPPS wants to ensure data quality and completeness, essential to establishing AI readiness. By addressing governance, quality, and alignment with business needs, Modular Data lays the groundwork for long-term innovation.

Finbarr highlighted various challenges his team encountered during these projects, particularly those related to systems, patchy data quality, and inconsistent governance. He noted that scaling AI applications remains a significant obstacle without these foundations.

Looking ahead: Trends and challenges in 2025

Looking ahead to emerging trends in 2025, Modular Data’s CEO is watching the hype around large language models (LLMs), retrieval-augmented generation (RAG), and agentic AI.

While these technologies hold promise, he cautions that many organisations are not ready to deploy them effectively due to insufficient governance and foundational infrastructure.

He advises organisations to focus on building user-driven, well-governed data foundations to ensure any AI initiatives deliver meaningful and ethical outcomes.

Similarly, the interest in agentic AI - AI systems with the autonomy to act independently - is premature. 

For now, organisations must focus on aligning AI capabilities with robust governance frameworks before diving into autonomous systems.

Now what?

Breaking into the public sector market requires persistence, strategy, and a focus on foundational elements. Modular Data’s experiences highlight the importance of relationship-building, market intelligence, and addressing governance and data quality to succeed.

As the sector prepares for 2025, organisations must prepare for innovation while ensuring the right structures are in place to support sustainable growth.