It’s been nearly two years since I last looked at G-Cloud expenditure – when the total spend crossed £1bn at the end of 2015. Well, as of July 2017, spend reached a little under £2.5bn, so I figured it was time to look again. I am, as always, indebted to Dan Harrison for his data analysis – his Tableau work is second to none and it, really, should be taken up by GDS and used as their default reporting tool (obviously they should hire Dan to do this for them).
As an aside, the raw data has been persistently poor and is not improving. Date formats are mixed up, fields are missing, the recent change to combine lots means that there are some mixed up numbers and, interestingly, the project field has been removed – I’d looked at this before and queried whether many projects were actually cloud related (along with the fact that something like 20% of projects were listed as “null” – I can understand that it’s embarrassing having empty data, but removing the field doesn’t make the data qualitatively better, it just makes me think something is being hidden).
Recall this, from June 2014, for instance:
Scanning through the sales by line item, there are far too many descriptions that say simply “project manager”, “tester”, “IT project manager” etc. There are even line items (not in Lot 4) that say “expenses – 4gb memory stick” – a whole new meaning to the phrase “cloud storage” perhaps.
Here’s the graph of spend over the 5 1/2 years that G-Cloud has been around:
The main conclusions I reach are much the same as before:
– 77% of spend continues to be in “Cloud Support” (previously known as “Specialist Services”). It’s actually a little higher than that – now that PaaS and SaaS have been merged (to create a category of “Cloud Software”, Lot 4 has become Lot 3 but both categories are reported in the data. It’s early days for Cloud Software – it would be good if GDS cleaned up the data so that historic lots reflected current lots.
– 2017 spend looks like it will be slightly higher than 2016, but not by much. If the idea was to move work from “People As a Service”, i.e. Cloud Support, to other frameworks, it’s not obvious that it’s happened in a meaningful way, but it may be damping spend a little.
– IaaS spend, now known as Cloud Hosting, has reached £205m. I seem to remember from the early days of the Crown Hosting Service business case that there were estimates that government spent some £400m annually on addressable hosting charges (i.e. systems that could be moved to the cloud). At the moment Cloud Hosting is a reasonably flat £6m/month, or £70m/year. It’s very possible that there’s a 1:10 saving in cloud versus legacy, but everything in me says that much of this cloud hosting is new spend, not reduced spend following migration to the cloud. That’s good in that it avoids a much higher old-style asset rich infrastructure, but I don’t think it shows much of a true migration to the cloud.
28% of spend by the top 5 customers.
In the past I’ve looked at the top spending customers and top earning suppliers, specifically in Lot 4 (now a combination of Lot 4 and the new Lot 3). There are a couple of changes here:
– Back then, for customers … Home Office, MoJ, DVLA, DSA and HMRC were the highest spending departments with around £150m between them. Today … Home Office, MoJ, HMRC, Cabinet Office and DSA (DVLA dropped to 7th place) have spent nearly £800m (total spend across all lots by the top 5 customers is only £100m higher at £925m which shows the true dominance of support services at the top end). £925m out of £2.5bn in just 5 customers. £1.25bn (51%) is from the top 10 customers.
– And for suppliers, Mastek, Deloitte, Cap Gemini, ValTech and Methods were the top 5 with a combined revenue (again in Lot 4) of £67m. Today it’s Equal Experts, Deloitte, Cap Gemini, BJSS and PA Consulting with revenue of £335m (total spend across all lots for the top 5 suppliers is £348m – that makes sense given few of the top suppliers are active across multiple lots – maybe Cap Gemini is the odd one out, getting some revenue for hosting or SaaS). It takes the top 10 suppliers to make for 25% of the spend. I don’t think that was the intention of G-Cloud – that it would be dominated by a small number of suppliers, though, at the same time, some of those companies – UKCloud (£64m) for instance – are still small companies and, without G-Cloud, might not exist or have reached such revenues if they did exist.
A couple of years ago I offered the observation that
“once a customer starts spending money with G-Cloud, they are more likely to continue than not. And one a supplier starts seeing revenue, they are more likely to continue to see it than not.”
That seems to be exactly the case, here’s a picture showing the departments who have contracts that have run for more than 24 months (and up to 50 months – nearly as long as G-Cloud has been around):
- Should there be spend control review of “Cloud Support” contracts to determine what they’re aiming to achieve and then assess whether there really has been a reduction in costs, a migration to the cloud, a change in the contracting model for the service? If we were to do a show of hands across departmental CIOs now and ask how many were running their email in the cloud (the true cloud, not one they’ve made up and badged as cloud that morning), what would the response be? If we were to make it harder and ask about directory services (such as Active Directory), what would the answer be? If we were to look at historic Lot 4 and test how much had been spent in pursuit of such migrations, what would the answer be?
- What incentives could we put in place to encourage departments to make the move to cloud? Departments have control over their budgets, of course, and lots of other things to spend the money on, but could we create a true central capability (key people drawn from departments and suppliers with a brief to build a cloud transition plan) that was architecture agnostic and delivery focused that would support departments in the transition – and that would be accountable (and quite literally held to account) for delivering on the promise of cloud transition? If that was in place, could departments focus on their legacy systems and how to move those to more flexible platforms, in readiness for future cloud moves (or future enhancements to cope with Brexit)?
- What more could we do to encourage UK based cloud companies (as opposed to overseas companies with UK bases) to excel? Plainly they have to compete in a global market – and I were a UK hosting company, I would be watching Amazon very closely and wondering whether I will have a business in a few months – but that doesn’t mean to say we don’t want to encourage a local capability across all lots? What would they need to know to encourage them to invest in the services that will be needed in the future? How could that information be made available so that a level playing field was maintained? Do we want to encourage such a capability in the UK, or should we publish the overall plans and transition maps and let the chips fall where they may?
- Are there changes that need to be made to the procurement model so that every supplier can see what every department is looking for rather than the somewhat peculiar approach now where suppliers may not even know a department is looking to make a purchase? What would that add to the timeline? Would it result in better competition? Would customers benefit as well as suppliers? Could we try it and see – you know that whole alpha, beta, A/B testing thing?
- I’ve been on the record for a long time as saying government should recognise that it doesn’t collaborate with itself – having collaboration services inside the department’s own firewall isn’t collaboration, it’s talking to yourself. I believe that I even once suggested using a clone of Facebook for such collaboration. Government doesn’t need lots of collaboration tools – it needs one or two where everyone, including suppliers and even customers, can get to with appropriate segregation and reviews to make sure people can only see what they’re supposed to see. Whatever happened to Civil Pages I wonder?