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The problems with G-Cloud

G-Cloud has the ability to split opinions with Billy MacInnes finding that some argue it is a great thing with others taking the opposite view

Its supporters argue G-Cloud “opened the door to the UK public sector for UK SMEs” but has the price of admission been too much for most small companies? Some SMEs have grown their business with G-Cloud but others complain the investment required has not generated the returns to justify it.

Memset managing director Kate Craig-Wood set the cat among the pigeons in a recent blog post by writing: “I have been a vocal supporter ever since [2009], even in the face of depressingly slow progress, but today I have finally had enough. The dream is dying.” In her blog, she outlines the reasons for her disenchantment. Despite only having a turnover of less than £10m a year, Memset had “made massive investments in pursuit of government business” via G-Cloud amounting to £2.55m and a further £320,000 a year.

“These investments, while affordable, have stolen investment from other areas of our business,” she admits. “Our growth over the last few years has slowed as a result. Our faith in the G-Cloud dream has caused us to innovate less and create fewer jobs.” The return from G-Cloud had been “utterly pitiful” at around £100,000 a year.

Craig-Wood suggests the reason for Memset’s poor return is that as a technically-oriented, cost-focused cloud/hosting business it was not engaged in pro-active selling, “just lead conversion”. This should have been enough as G-Cloud was intended to remove the need for an onerous, expensive sales/procurement process “in favour of buyers able to self-service with minimal interaction because we’re all basically selling the same stuff”.

Memset did not have the “padding” in its prices, she adds, “to afford armies of salespeople running around, nor deep-pocketed backers willing to allow us to make losses”. It had tried hiring “traditional” salespeople, “but their tactics were incompatible with our high integrity and our technical, introverted culture was at odds with their own”. G-Cloud required “buyers to change their behaviour in order for the new model to work. They haven’t, and hence it doesn’t”.

A number of other SMEs involved in G-Cloud agree that it is not living up to expectations. Commenting on Craig-Wood’s post, Kaly Tudor thanks her “for saying what many true SMEs are thinking”, adding: ”There are a number of apparent SMEs that are actually large organisations getting repeat business. they have more resources and time to spend on hours of reading docs, filling in applications forms etc. Our resources are out meeting customers and delivering. I don’t believe it’s increasing competitiveness at all.”

John Paterson, CEO and founder of Really Simple Systems, writes that he “couldn’t agree more. We gave up on G-Cloud ages ago”. Until government customers learned how to make buying decisions by themselves, the cost of sale to government would make the eventual sale price higher than for the private sector, he adds. “Until they change this mindset, the public sector will never be able to take advantage of the radically lower costs of self-service applications,” Paterson argues, “meanwhile, the taxpayer pays for their laziness”.

Alex Rabbetts, CEO of UK data centre operator MIGSOLV, is another sceptic. “When it was launched, G-Cloud was marketed by the government as being the way of the future,” he says. The government’s “stated aim was for at least 25% of all future public sector business to be spent with UK SMEs”. Many SMEs invested heavily in preparing their services for G-Cloud, “only to be told in every subsequent year they had to reapply”. The actual spend on G-Cloud has been a small fraction of what was announced when it was launched, he adds.

“Incredibly, the biggest government spend on cloud services has been with Amazon Web Services - that well known UK SME, with annual revenues approaching $10billion and no UK data centres until its recent announcement because of the collapse of Safe Harbour,” Rabbetts remarks. “When we asked for an example of where G-Cloud had seen a significant spend with an SME, the answer we were given was Dimension Data – a £5.4 billion turnover company.”

In his view, “very few SMEs have had any success in delivering services through G-Cloud. Many have tried, invested hugely and failed”. MIGSOLV is trying to help SMEs deliver services more securely, faster and in a safe environment with its Janet connection to make delivering a secure G-Cloud service easier. “But even with this,” he warns, “the big question is whether the government keep its promise and places business with SMEs instead of huge corporations - some of which don’t even bother paying tax in the UK, let alone storing data here?  That remains to be seen.”

Nicky Stewart, commercial director at Skyscape Cloud Services, is far more positive about the G-Cloud experience. Craig-Wood highlights Skyscape’s success in her blog, saying the company had been “powering ahead with stunning revenue growth”. Skycape had recognised the reality that in government the difference was not what you sell but who you know by having “a lot of ex-civil servants on the payroll”.

Stewart says G-Cloud has “opened the door to the UK public sector for Memset, as it opened the door for Skyscape and thousands of other UK SMEs, when there was no other door”. It has allowed buyers to access suppliers and services they would never have dealt with before, saved the tax-payer millions of pounds and its sales, which exceed £1bn, are growing month on month. “Skyscape grew with G-Cloud and has created over 130 jobs,” she reveals. “Many other UK SMEs have reported growth that can be directly attributed to G-Cloud.”

She accepts G-Cloud “isn’t perfect, and never will be” but it would be “a disservice to G-Cloud, its buyers and suppliers, to suggest that G-Cloud is a fundamentally broken model”. While there always be winners and losers, nobody should “lose sight of where we all were in 2009, when government started to think about cloud. The world is very different now”. She adds that “Skyscape won’t be giving up on G-Cloud any time soon”.

Siobhan Hafferty., head of public sector at CenturyLink, is another G-Cloud enthusiast, describing it as “a fantastic success” and “a great enabler for SMES to sell to the UK government; a short-cut past the cumbersome SI-focused framework agreements which have previously deterred SMEs from working with government bodies”.

But he points out that G-Cloud is “an enabling agreement and not a right to earn business”. The key to success, he argues, is building up relationships and being proactive about sales, “letting prospects know that you’re on G-Cloud and, as a result, just how easy it will be to deal with you”.

Varcoe says there is more to come. “I don’t believe that G-Cloud’s success has peaked yet: there are still great undiscovered opportunities,” he states. Many local councils or NHS trusts are unaware they can buy through the portal, which represents “a considerable untapped market for regionally focused SMEs. When you add this to the existing pool of new and recurring deals which government bodies are making with suppliers, it quickly becomes clear that G-Cloud’s future is very bright indeed”. 

Tamas Kramer, EMEA head of public sector at Huddle, agrees with Stewart that G-Cloud has opened the door for SMEs to have access to the public sector. “It also helped smaller public organisations to directly award contracts without the need to run lengthy, complicated and resource intensive public procurement tenders,” he adds.

In the time Huddle has been on G-Cloud, “we have had the opportunity to negotiate and close deals within a reasonably short timeframe – something that would not have been possible without the government programme. G-Cloud also sets out all commercial and contractual conditions, creating a transparent system to make public procurement faster and easier for both buyer and seller”.

But is it really as simple as that? Anne Stokes, CEO at Streamwire, says there are problems in the fact it takes time and effort to get onto G-Cloud and to search for anything an SME could bid for. “If you then consider that there are occasions when the opportunity data is out of date, bids are either closed or the process paused - the system does not make it easy for the SME to be part of it,” he observes. SMEs are “time poor”, so these barriers to entry“could be considered too high, not to mention the additional compliance responsibilities required, which often prevent smaller organisations from bidding in the first place”.

Stokes agrees that the principle of opening networks to enable others to bid “is laudable and should drive competition” but she warns that “old buying habits die hard and familiar ways of working stick”. It doesn’t help that there are no SME requirements to use G-Cloud for local government, impeding the initiative's potential. 

“We need to be realistic here,” she says, “most SMEs are already facing an uphill battle to keep on top of administration, finance and general day-to-day business challenges such as sales, cash flow and funding. Expecting these companies to also find time to scour every page and  know of every bid, and which search engine to be able to bid for business, is possibly a step too far for the progression of G-Cloud.”

Monica Brink, EMEA marketing director at iland, accepts it has been difficult to gain traction, but “G-Cloud is helping organisations understand the potential of cloud and match solutions to ever-evolving problems and business strategies”. 

She notes that many organisations, vendors as well as customers, “are struggling with the sheer volume of cloud providers” that are part of G-Cloud. It is up to cloud providers to ensure public sector IT departments understand their options and that they “no longer have to settle for big box vendors that don’t address specific requirements, such as support, advanced security and ongoing management”. Brink believes the diversity in the G-Cloud marketplace “helps open the door for these conversations, particularly as entities seek out turnkey solutions for initiatives like business continuity, disaster recovery and secure/compliant hosting that can support Official Sensitive and Secret data”.

She reveals that iland has always viewed G-Cloud “as a first step towards engagement with the public sector” and recognises a consultative approach is needed to ease cloud adoption. “The ‘build and they will come’ strategy taken by some cloud providers does not work, and cloud customers deserve better,” Brink warns.

Dominic List, CEO and founder of Aurora365, says the company has had initial success with G-Cloud primarily in the healthcare services sector, and believes it is “working well” as a mechanism by “providing a more competitive procurement environment and also encouraging larger, less flexible suppliers to look again at their engagement models”.

But he admits G-Cloud would improve if it could encourage government buyers to make the leap. Too many still don’t understand the procurement flexibility it provides, “and that inevitably is leading to less competitive contracts and ROI”.

The fact opinion is so divided over the worth of G-Cloud to SMEs shows that Craig-Wood’s disillusionment with it has some merit. “I bear full responsibility for Memset’s government journey to date,” she writes in her blog. “Not only did I have a hand in creating the Kool-Aid but I made us drink it. We passionately believed in the dream of G-Cloud and kept doing so despite the goal posts being repeatedly moved, the marketplace continuing not to function properly and buyers continuing to behave in the same old ways.”

She concludes: “I’m tired of chasing a vision that nobody else seems to be committed to. I have dreamed a dream, but now that dream is gone from me.”

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