Is G-Cloud changing the behaviour of the big IT suppliers?

The government’s G-Cloud has its critics, who like to cite the relatively few millions of pounds of spending put through the programme as being tiny compared to the annual £16bn government IT spend.

But – putting aside the obvious counter argument that such change takes time and plenty of Whitehall buyers remain locked into costly outsourcing deals – there are significant signs that G-Cloud is having an even more important impact.

The initiative was intended to open up the market to SME suppliers, to reduce lock-in to long-term contracts, and create transparency of pricing. It’s doing all those things. For example, one smaller supplier, Memset, says it has seen its G-Cloud revenue grow 38% in just six months.

To reiterate the importance of G-Cloud, the government now has a cloud-first buying policy.

However, when G-Cloud really makes its mark is when it makes the big suppliers change their behaviour.

At the start of this month, announced plans for its first UK-based datacentre – effectively a condition of being able to win business through G-Cloud due to data protection regulations around government data.

Now, Oracle has announced it is building a new UK datacentre specifically to deliver government IT services through G-Cloud. Oracle considered this so important that it brought its president, Mark Hurd, to the UK to make the announcement.

Do not underestimate how significant a move this is.

If suppliers of the size and influence of Oracle are seeing the writing on the wall saying they have to conform to the requirements of G-Cloud to continue their business with Whitehall, that is a major power shift in that relationship.

Oracle was identified as holding 70% of all government software licences, receiving more than £200m in revenue from Whitehall every year.

The Cabinet Office told Computer Weekly last year that Oracle was one of the worst culprits for price inconsistency – charging up to three times more to some departments for the same products.

And there was a furore earlier this year after the publication of an official notice for a £750m Oracle framework agreement – a deal that seemed entirely at odds with the Whitehall IT reforms of which G-Cloud is a central component.

I was told that agreement would be quietly shelved – a case of cock-up not conspiracy, said insiders – but it demonstrated the prevailing mood that Oracle for too long had the government over a barrel.

The fact that the software giant is now investing in a new datacentre, apparently as a direct response to the growth of G-Cloud, is a sign that the balance of power between government IT buyers and their suppliers may finally be shifting in the right direction.

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