Sometime in the next few weeks, spend through the G-Cloud framework
will cross £1 billion. Yep, a cool billion. A billion here and a
billion there and pretty soon you’re talking real money.
Does
that mean G-Cloud has been successful? Has it achieved what it was set
up for? Has it broken the mould? I guess we could say this is a story in four lots.
Well, that depends:
1) The Trend
Let’s start with this chart showing the monthly spend since inception.
It
shows 400 fold growth since day one, but spend looks pretty flat over
the last year or so, despite that peak 3 months ago. Given that this
framework had a standing start, for both customers and suppliers, it
looks pretty good. It took time for potential customers (and suppliers)
to get their heads round it. Some still haven’t. And perhaps that’s
why things seem to have stalled?
Total spend to
date is a little over £903m. At roughly £40m a month (based on the
November figures), £1bn should be reached before the end of February,
maybe sooner. And then the bollard budget might swing into action and
we’ll see a year end boost (contrary to the principles of pay as you go
cloud services though that would be).
Government no
longer publishes total IT spend figures but, in the past, it’s been
estimated to be somewhere between £10bn and £16bn per year. G-Cloud’s
annual spend, then, is a tiny part of that overall spend. G-Cloud fans
have, though, suggested that £1 spent on G-Cloud is equivalent to £10 or
even £50 spent the old way – that may be the case for hosting costs, it
certainly isn’t the case for Lot 4 costs (though I am quite sure there
has been some reduction in rates simply from the real innovation that
G-Cloud brought – transparency on prices).
2) The Overall Composition
Up
until 18 months ago, I used to publish regular analysis showing where
G-Cloud spend was going. The headline observation then was that some
80% was being spent in Lot 4 – Specialist Cloud Services, or perhaps
Specialist Counsultancy Services. To date, of our £903m, some £715m, or
79%, has been spent through Lot 4 (the red bars on the chart above).
That’s a lot of cloud consultancy.
(post updated 19th Jan 2016 with the above graph to show more clearly the percentage that is spent on Lot 4).
With all that spent
on cloud consultancy, surely we would see an increase in spend in the
other lots? Lot 4 was created to give customers a vehicle to buy
expertise that would explain to them how to migrate from their stale,
high capital, high cost legacy services to sleek, shiny, pay as you go
cloud services.
Well, maybe. Spend on IaaS (the blue
bars), or Lot 1, is hovering around £4m-£5m a month, though has increased substantially from the early days. Let’s call it
£60m/year at the current run rate (we’re at £47m now) – if it hits that
number it will be double the spend last year, good growth for sure, and
that IaaS spend has helped created some new businesses from scratch.
But they probably aren’t coining it just yet.
Perhaps the Crown Hosting Service has, ummm, stolen the crown and taken all of the easy business. Government apparently spends £1.6bn per year on hosting,
with £700m of that on facilities and infrastructure, and the CHS was
predicted to save some £530m of that once it was running (that looks to
be a save through the end of 2017/18 rather than an annual save). But
CHS is not designed for cloud hosting, it’s designed for legacy systems –
call it the Marie Celeste, or the Ship of the Doomed. You send your
legacy apps there and never have to move them again – though, ideally,
you migrate them to cloud at some point. We had a similar idea to CHS
back in 2002, called True North, it ended badly.
A
more positive way to look at this is that Government’s hosting costs
would have increased if G-Cloud wasn’t there – so the £47m spent this
year would actually have been £470m or £2.5bn if the money had been
spent the old way. There is no way of knowing of course – it could be
that much of this money is being spent on servers that are idling
because people spin them up but don’t spin them down, it could be that
more projects are underway at the same than previously possible because
the cost of hosting is so much lower.
But really, G-Cloud
is all about Lot 4. A persistent and consistent 80% of the monthly
spend is going on people, not on servers, software or platforms. PaaS
may well be People As A Service as far as Lot 4 is concerned.
3) Lot 4 Specifically
Let’s
narrow Lot 4 down to this year only, so that we are not looking at old
data. We have £356m of spend to look at, 80% of which is made by
central government. There’s a roughly 50/50 split between small and
large companies – though I suspect one or two previously small companies
have now become very much larger since G-Cloud arrived (though on these
revenues, they have not yet become “large”).
If we
knew which projects that spend had been committed to – we would soon
know what kind of cloud work government was doing if we could see that,
right?
Sadly, £160m is recorded as against “Project
Null”. Let’s hope it’s successful, there’s a lot of cash riding on it
not becoming void too.
Here are the Top 10 Lot 4 spenders (for this calendar year to date only):
And the Top 10 suppliers:
Cloud
companies? Well, possibly. Or perhaps, more likely, companies with
available (and, obviously, agile) resource for development projects that
might, or might not, be deployed to the cloud. It’s also possible that
all of these companies are breaking down the legacy systems into
components that can be deployed into the cloud starting as soon as this
new financial year; we will soon see if that’s the case.
To
help understand what is most likely, here’s another way of looking at
the same data. This plots the length of an engagement (along the
X-axis) against the total spend (Y-axis) and shows a dot with the
customer and supplier name.
A
cloud-related contract under G-Cloud might be expected to be short and
sharp – a few months, perhaps, to understand the need, develop the
strategy and then ready it for implementation. With G-Cloud contracts
lasting a maximum of two years, you might expect to see no relationship
last longer than twenty four months.
But there are some
big contracts here that appear to have been running for far longer than
twenty four months. And, whilst it’s very clear that G-Cloud has
enabled far greater access to SME capability than any previous
framework, there are some old familiar names here.
4) Conclusions
G-Cloud
without Lot 4 would look far less impressive, even if the spend it is
replacing was 10x higher. It’s clear that we need:
– Transparency. What is the Lot 4 spend going to?
– Telegraphing of need. What will government entities come to market for over the next 6-12 months?
–
Targets. The old target was that 50% of new IT spend would be on
cloud. Little has been said about that in a long time. Little has, in
fact, been said about plans. What are the new targets?
Most of those points are not new – I’ve said them before, for instance in a previous post about G-Cloud as a Hobby and also here about how to take G-Cloud Further Forward.
In
short, Lot 4 needs to be looked at hard – and government needs to get
serious about the opportunity that this framework (which broke new
ground at inception but has been allowed to fester somewhat) presents
for restructuring how IT is delivered.
Acknowledgements
I’m
indebted, as ever, to Dan Harrison for taking the raw G-Cloud data and
producing these far simpler to follow graphs and tables. I maintain
that GDS should long ago have hired him to do their data analysis. I’m
all for open data, but without presentation, the consequences of the
data go unremarked.
