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Barriers to adoption: Why are local councils holding back on G-Cloud?

Is outsourcing, the dominance of incumbent providers, or a lack of central government guidance to blame for the low number of councils using G-Cloud?

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The G-Cloud framework made its debut in 2012 as part of a government-wide push to reform IT procurement procedures and put a stop to lengthy, high-value public-sector contracts being awarded to the same oligopoly of enterprise suppliers.

With an average of £36m of business now being transacted through the framework each month and SME suppliers playing a part in nearly 60% of all deals, the positive impact G-Cloud has had on the way central government approaches IT procurement cannot be denied. 

But, with the seventh iteration of the framework due to go live later this year, adoption of it at a local government level has been markedly slower, with data from the Government Digital Service (GDS) showing that two-thirds (64%) of local councils have still never used it.

Also, the most recent set of G-Cloud spending data shows that about 80% of sales made through the framework are from central government departments, and just 6% from local councils.

The reasons for this are not hard to fathom, says Roger Newman, a senior partner at G-Cloud consultancy DeNové. They can be traced back to the fact that central government departments are mandated to use the framework, but the wider public sector is not.

“Adoption within central government would have been just as slow if it had not been mandated,” says Newman.

John Glover, sales and marketing director at SME cloud-based collaboration firm Kahootz, agrees that the ‘cloud-first’ procurement policy has made it easier to sell his firm’s services to central government, particularly when combined with the government pledge to award more public-sector deals to SMEs.

“Central government has the governance models in place to make sure those targets are met, but the opportunities [deal sizes] within it are much bigger in size,” he says.  

To date, Glover's company has closed about 100 deals with central government departments via G-Cloud, compared with 22 deals with six local councils across southern England.

“While we do have some success stories in local government, the other thing to bear in mind is that a lot of central government departments work together,” he adds. “Whitehall is a much smaller place, and that’s had an almost viral effect on how our technology has been adopted.” 

Going cloud-first in local government

When the central government cloud-first mandate was announced in May 2013, adopting a similar approach to procurement was merely “strongly recommended” to the wider public sector, and that has remained the case ever since.

However, DeNové’s Newman says the recently introduced Small Business Enterprise and Employment Bill could give central government a greater say in how local authorities spend their money.

For example, section 40 of the bill gives the Cabinet Office’s Mystery Shopper department the right to inspect and demand redress within local authority procurements if a supplier makes a complaint about how a procurement is being conducted.

“Everybody in procurement is up in arms about this because they don't think central government should be able to dictate how local authorities buy,” says Newman. 

“They haven’t mandated cloud-first to local authorities yet, but legislation exists – because of this bill – that they could if they had the will to do so.”

Another clause of note is section 39, which effectively empowers the government to introduce new regulations governing how contracting authorities embark on procurements. Newman says this could pave the way for a cloud-first mandate to be introduced at local government level further down the line.

“If you were in government and in charge of making sure local authorities spent less money on their back-office systems, one of the easiest ways to do it would be to say it is cloud-first for local authorities as well,” he says.

Government devolution and G-Cloud

This newly-introduced piece of legislation is slightly at odds with the anticipated contents of Chancellor George Osborne’s forthcoming Comprehensive Spending Review.

The review is expected to make a case for local authorities taking control of a variety of services from central government, as Whitehall looks to reduce public spending by a further £20bn.

For this reason, both Newman and Glover think central government is unlikely to exercise its rights to influence local authority spending for some time yet.

“Because of their nature, local government units are a lot more autonomous than central government,” says Glover. “There are different flavours of politics within each one, and much of what they do is driven by different agendas.

“Central government doesn’t want to be seen to be controlling local government, and the message at the moment [from Osborne] is around devolution, so they won’t want to come in and be heavy-handed in that way.”

Even without a cloud-first mandate in place, there are other factors that could lead to local government's use of G-Cloud growing organically, says Newman.

To this end, he says it is worth noting that two major local authority procurement frameworks, used to acquire a mix of software and services, are coming to an end within months of each other in 2016.

These are the RM1059 Local Authority Software Applications Framework, which ends on 3 August 2016, and the RM1042 Corporate Software Solutions Framework, which concludes on 5 October 2016.

Central government can, in theory, buy IT services and software through the latter, but the cloud-first mandate makes this hard to do in practice.

Read more about G-Cloud

For this reason, both frameworks are being pushed heavily within local government by “incumbent providers” whose own offerings might not fit the G-Cloud bill, Newman claims.

“If you want a revenue and benefits system, for example, you’ve got a framework that exists where all the incumbents are listed, and all those incumbents are pushing RM1059 very heavily,” he says.

At the time of writing, there was no word on what RM1059 and RM1042 will be replaced with, but Newman hopes these “old-fashioned frameworks” will be canned completely.

“It is such an old-fashioned framework and is just dedicated to the incumbent providers,” he says. “Logically, why do you need one? If it wasn’t there, the adoption of G-Cloud by local authorities would already be a lot stronger.

“This time next year, when RM1059 ends, I think we will see some interesting stuff start to happen around local authority cloud use.”

Making an effort

When it comes to winning over local authorities, the G-Cloud supplier community could do more to help itself, says Chris Farthing, founder of public-sector procurement advisory firm Advice Cloud, because there is a common misconception that simply being listed on the framework is enough to win business.

But the most successful suppliers know they need to make an effort to understand local authorities' specific needs if they want them to buy their technology, he says.

“When a supplier has done some market research, attended some local government events and has a firm grasp of how its technology can actually benefit a specific department within a council, it really makes a difference.

“Someone who does that marks themselves out as someone who understands the market and the pressures local government is under, and how they can change that.”

This is a view shared by Glover, who says G-Cloud suppliers can't just sit back and expect local authority deals to roll in, which is why his firm has taken steps to pre-empt some of the questions councils may have about using cloud.

His team has created resources that set out how its technology squares with the Cabinet Office’s own advice about how public-sector organisations should address the cloud security conundrum.   

“We have been extremely proactive,” says Glover. “If you look at our website, we’ve created references and resources for local authorities because, for a lot of our prospects, it’s about the art of the possible.

“They may not have used cloud before and they don’t know quite yet what they can do, but we’ve made sure there are case studies available and blogs, so they can find out.”

Another common misconception is that local councils do not know what G-Cloud is or how to use it, but that is not strictly true, says Newman.

“I've yet to find a single strategy for a local authority that doesn't talk extensively about cloud and how it could benefit it,” he says. “Local councils employ some exceptionally good IT staff and you would have to be living under a rock for the last two years not to have heard about G-Cloud.

“But the buying mechanism of G-Cloud is totally alien and, whereas central government has got to grips with how to buy from G-Cloud, I bet you would find hardly anyone working in a procurement department in a local authority who knows how to buy from it." 

Managing G-Cloud expectations

Either way, says Newman, G-Cloud's detractors and suppliers have to accept that there will always be a proportion of councils that never use it because they have already outsourced most of their IT.

“Many local authorities have completely outsourced their ICT and back-office systems and are never going to buy from G-Cloud,” he says. “That strips out a portion of the market, so you’re never going to get 100% penetration in local authorities.”

Advice Cloud’s Farthing says it is also worth remembering that just because local councils are not using G-Cloud, that does not mean they are shunning off-premise technologies altogether.

“My experience is that virtually all public-sector organisations and local authorities are using cloud and have been using it for some time, in some cases well before G-cloud even came along,” he says.

“And it’s proper cloud, too. It’s not just something hosted or put in a private cloud. It’s public cloud, it’s consumption-based and people are using it in the right way.”

This was last published in August 2015

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