Government should get tough over G-Cloud

Last week I wrote an article about the lack of take-up of G-Cloud services by county councils.

This followed the results of a Freedom of Information (FOI) request revealed that less than 1% of the £440m spent on IT by 26 county councils was invested in services on the G-Cloud.
After Tweeting the article there was a little debate about the issue. Quocirca analyst, Clive Longbottom, who was involved in this debate, agreed to write a blog post about why G-Cloud is struggling to get going and what could be done to change this.

Here it is. If anyone has strong view on this please send me you thoughts and I will out them in the blog.

I wandered lonely as a (G) Cloud…

By Clive Longbottom

“Public sector IT procurement has become a sore point amongst politicians and citizens alike.  With the immense purchasing power of the public sector, deals should beat anything that the commercial sector gets.  The public sector’s interminable discussions with Microsoft often lead to great headlines on what savings they have received against book pricing – yet the savings are often lost due to central procurement failing to live up to its side of the agreement and Microsoft then upping the actual prices that are paid.

Several years back, it was felt that a means of negotiating large deals in advance and then making them available to any public sector body in a self-service basis that got away from any need for a supplier to have jumped through too many hoops to be on the government’s preferred vendor list (what was called G-Cat) could help save large amounts of money.
So was born the G-Cloud – an easily accessible shop front where vendors of all sizes could make their wares available with highly transparent pricing.  It was a great idea – but it started off badly as politicians hamstrung those responsible for implementing it.  Finally, along came Francis Maude in his role of Cabinet Officer Minister, opening up the idea to be a less stringent environment.

At last, here was a way for the SMB vendor to take on the incumbents of the large players of the likes of IBM, Capita, CSC, HP/EDS, Microsoft, Oracle and so on: the small guys could undercut the big ones and make enough to thrive while saving the country lots of money.
In 2013, the public sector spent around £14bn on IT.  That’s around £250 for every person in the UK – which makes it sound reasonable, possibly.  However, we can all name a few projects that have gone pear shaped and wasted money – the NHS National Programme for IT ended up wasting around £10b; the current Universal Credits is running at a write off of at least £45m, the Libra courts project failed dramatically. Although the National Audit Office (NAO) and MP committees continue to identify that big projects tend not to provide any value for money, megaprojects still seem to rule the roost.

You would hope that the G-Cloud would get round all of this.  The easy availability of functional services from multiple vendors should allow departments and local government agencies to rapidly deal with high priority issues in a cost effective manner, without the need for a massive project.

To date, out of the £14bn per year spent on IT, G-Cloud has accounted for around £50m.  Not per year – in total.  County councils managed to spend, in total, £385,000 out of their £440,000,000 spend in 2013.

Not good, eh?  Why is the G-Cloud not being as successful as it should be? Are the services being offered not fit for purpose?  Hardly.

No, the real problems come down to two main issues – one of which should be reasonably easy to the fix; the other could be a real problem.

Problem number 1: the existing procurement process within the public sector.  Departments and groups may have their own people in place, and alongside this are central procurement groups who are meant to negotiate the big deals.  However, many local groups can find deals that often beat the central deals, so they go their own way.  This means that the volumes promised through the central group do not materialise, and vendors claw back money. 

However, the central groups want to be seen to be doing their job – G-Cloud bypasses them, and so they make it difficult for anyone coming through them to use it.  Local procurement groups cannot gain any additional discounts against G-Cloud, so they don’t want their groups using it, as it makes it very apparent how little value they are actually adding.

This problem can be cured by just making procurement “G-Cloud first”.  Anyone wanting a service must try G-Cloud first and can only get it elsewhere if it is a) not available on G-Cloud or b) they create a special case as to why they will get better value from an alternative point of supply.

Problem number 2: the incumbents are fighting G-Cloud.  The figures for payments to many of the large systems integrators are now in the public domain, and show that one large SI received just under £7m from DEFRA alone in April this year for invoices over £25k.  Imagine if a lot of what these vendors do could be obtained through a self-service, totally transparent front end?

Over their dead bodies.  Some of the smaller SIs have seen the writing on the wall and have actively participated in G-Cloud.  The larger ones first tried to hijack it (let us build it, populate it and run it for you, guv), then tried to bury it (you wouldn’t want to trust those small guys, guv) and then to pretend it wasn’t there.  This last approach seems to be working – if you essentially own the customer (which many SIs now do in the public sector), then you don’t need to consider G-Cloud; all you have to do is keep on running projects as you always have done.

Will someone like Maude be man enough to face these companies down?  Again, a G-Cloud first mandate that is fully policed would work in many cases.  However, all you need to do is look at the revolving door of public sector employees that end up working in these SIs to realise that clamping down on their practices is not seen as being in their best interests.
G-Cloud is a great idea, and it has been implemented reasonably well at a technology level.

However, as it stands, it is woefully underutilised, and the costs for all involved for the services actually being used are far too high.  In times of austerity, it is surely time to face down the big guys and let G-Cloud lead to the vast savings that it promises.”