What does G-Cloud want for Christmas?

OVUM VIEW

Summary

Cloud delivery and procurement is still a central plank in global public sector procurement. The G-Cloud Framework has been running for the best part of a year, having launched in April 2012, so now is a good time to revisit the UK government’s flagship procurement initiative, CloudStore. At a recent event, Ovum heard that the UK’s CloudStore was a great success. We heard that the second iteration of the G-Cloud Framework included 71 new suppliers, bringing the total to 462, of which 75% are SMEs. With 2,814 new services being offered through the four lots, there are now 3,185 services on offer. The problem with this story is that total sales amount to less than £4m for the year. In fact, the top-10 buyers only spent £2.6m. The new UK government CTO, Liam Maxwell, quotes the public sector spend on IT as £26bn, or 2% of the UK’s GDP, so there is some way to go. That said, the most important metric is growth, and that is heading in the right direction.

What is holding back CloudStore?

The first thing holding back CloudStore is the public sector procurement process. Public sector procurement staff have a vested interest in not making public sector procurement easy. They need a complicated process that only they can run, or they would be like turkeys voting for Christmas. Many are still briefing against the CloudStore internally, and questioning the legality of the process. We have seen examples where this has allowed them to justify using the CloudStore and then going through an internal procurement system, doubling the time and cost of procurement.

The second challenge is that the major public sector vendors have not really bought into the process. They have placed a number of services on the store, but only because they feel they must be seen to be supporting current government policy. Often, they have not thought through what it means to the field sales teams, and how to incentivize them. We are aware of one large enterprise customer that was going to buy from CloudStore, only to be offered a better deal from the sales lead of the global supplier to buy the service directly, as the sales lead was not incentivized for CloudStore sales. This practice may be much more prevalent than we are currently aware.

The risks inherent in the politics of inclusivity pose another set of challenges to successful adoption. The UK government is determined to break the hegemony of a small group of public sector suppliers, and CloudStore is one of their tools. Therefore, the barriers to entry for CloudStore are kept low, as is the due diligence done on the services offered. We are aware of services being offered as “available” when they are still, in fact, under development. One or two examples of poor delivery would play into the hands of those who want CloudStore to fail.

The biggest challenge to CloudStore comes from the inability of the UK Cabinet Office to mandate a “cloud-first” policy. Given the choice, the default position in the public sector is to do what it has always done, in the way that it has always done it. However, we are not yet ready for a “cloud-first” mandate. We need an iterative process, whereby we understand how and what to procure, and we build on the best examples.

Where are the cloud leaders?

As a corollary to the above, G-Cloud 1 did not tempt global pure-play cloud operations such as Salesforce.com (SFDC), Amazon Web Services (AWS), and Google. There has been much diplomatic effort made behind the scenes to get these three to join the cause, and landing SFDC for CloudStore 2 has been a major success for the Cabinet Office. Ovum understands that the decision by SFDC to sign up for CloudStore 2 was more an indication that it intends to take a strong position in public sector enterprise sales and a show of support for government policy than about the business that it will gain from being in the store. Both AWS and Google have once again disappeared from the picture. When Denise McDonagh, the G-Cloud lead, was asked at the event why AWS was not joining CloudStore 2, she deflected the question by saying that other companies on the store offered similar services to AWS at better prices. Google has not joined CloudStore 2, but no one has a clear idea about Google’s plans for the public sector. The company’s enthusiasm for the public sector arena appears to vary, and it has yet to reveal a coherent public sector strategy, so its absence from CloudStore 2 should be no surprise.

What is the G-Cloud team’s plan for CloudStore?

The G-Cloud team is already in the process of preparing for the G-Cloud Framework 3. In the absence of a “cloud-first” mandate, it is still relying on persuasion, and has given itself the primary task of removing the barriers to adoption. It considers that the way to do this is to explain how to use the cloud while making the selection of services easier, challenging “red tape” and the skills gap, and targeting C-level decision-makers. It will clarify policy and standards, and encourage officials to start looking at service as a commodity. The view of the G-Cloud team is that you can have the same “commodity” and concomitant price-saving regardless of whether it is in a public or private cloud.

What should it also consider doing?

It should first lobby for a “cloud-first” mandate while exposing any obfuscation it encounters from procurement teams. It should create a basic FAQ that handles the most common objections, such as the legality of the process, and run a marketing campaign aimed at the business leaders and elected officials. Finally, it needs some big contracts through the store, as this will convince the major vendors that CloudStore is commercially interesting and here to stay.

APPENDIX

Author

Joe Dignan, Chief Analyst, Public Sector Technology

joe.dignan@ovum.com

Further reading

“Government cloud: agencies need shopping skills, not just cloud stores,” IT007-000678 (December 2012)

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