Digital Decision Maker: Denise McDonagh

SUMMARY:

As G-Cloud programme director within the UK Cabinet Office, McDonagh is pushing through a paradigm shift in public sector ICT procurement and deployment. But can she get the Luddites into digital champions?

denise2At first sight, Denise McDonagh seems an unlikely digital revolutionary.

But in reality as G-Cloud programme director within the UK Cabinet Office, she’s pushing through a fundamental paradigm shift in public sector ICT procurement and deployment that simultaneously:

  • benefits the hard-pressed UK taxpayer
  • holds the ICT supplier community to far greater account
  • holds out the possibility of public sector organisations actually begin able to tap into technology enablers fit for purpose in a digital age.

The G-Cloud programme is the UK government’s national cloud computing strategy. It’s been brewing in the wings for a good number of years, with initial thinking getting underway in the previous New Labour administration.

But it was under the Coalition government of Conservative and Liberal Democrats that it finally saw the light of day – and it has to be said, the delay was worth the wait.

Perilously private

Early thinking around the cloud strategy nearly went up a perilously blind alley, centring around notions of private clouds, built and owned by government by government organisations, with lots of emphasis on server consolidation and virtualisation. It was a vision that would have well suited a good many of the traditional providers to government.

Salesforce.com CEO Marc Benioff was first to break ranks on all this, publicly berating the thinking that was taking shape. Benioff told me at a meeting in London the day after he had met with Cabinet Office Minister Francis Maude:

“The UK is way behind in this – and way too much into virtualisation and the G-Cloud, which is a big virtual machine that has not been executed well. Too much cost has gone into running too many data centres.”

I’m well used to Benioff’s candour on most topics, but I was somewhat surprised at just how indignant he was ready to be on this subject. We’ll never know of course just how much impact his words had, but within a few months, the UK strategy had shifted markedly with the emphasis now very much on the public cloud.

Digital agenda

But other things had changed as well of course. Fired up by the austerity regime, Maude’s reforming agenda had seen him calling ICT suppliers to government to account, personally overseeing sessions with providers where he demanded they tear up existing contracts and renegotiate on better terms.

McDonagh points to the Digital by Default strategy across government also supports a re-evaluation of the approach to the cloud – looking at everything through the customer lens, as she puts it.

“The G-Cloud programme has been delivering affordable IT that meets the needs of the citizens. At first we did think about building our own government Cloud and that was followed by a year of analysis paralysis.

“There was also a groundswell of opinion about the way that IT was currently being delivered with the so-called oligopoly which meant 80% of the IT to government was being delivered by 8-10 suppliers in central government. The services were just not fit for purpose. We couldn’t change things quickly.

“Then my predecessor Chris Chant gave a speech about how unacceptable this was which gave us a great platform for how to change.”

(It’s a great speech -and still bears a re-read today!)

Bad ‘best’ practice

Part of the problem of course has always been the established practices across the public sector that have led to ICT debacle after debacle over the decades. Public sector ICT has a lamentable reputation. Despite many smaller successes, the horrendous negativity generated by high-profile, multi-billion pound failures – such the NHS National Programme for IT – has cast a long, dark shadow.

There needed to be a change in the ICT was procured, says McDonagh, and that mean rethinking a lot of ‘best practice’ which was far from best:

“I have done lots of large scale procurements in the past. In fact I’m probably responsible for some of the legacy contracts that we have in place.We’d have a huge procurement piece, we have a huge requirements piece, then by the time we get to actually buy something it ends up being completely out of date.

“We had to look at new ways to buy in a more agile way. When you bought things you always bought on the basis of the peak use so you ended up with things being underused. We needed to have truly consumption-based pricing and more agile and flexible delivery of IT.”

That all demands new ways of thinking of course and a push to overcome inherent ludditism across the public sector:

“The G-Cloud is a novel way of doing business with a much wider set of suppliers, but there is still a culture change that needs to take place around how to buy. We need to step and educate people, go around telling people how to buy in this way. And we need feedback where things are not going as well as they should be.”

I know of many difficult conversations that have taken place between customers who’d bought outside the G-Cloud framework and want now to know why they’ve been paying through the nose. What goes around, comes around.

Hence, the G-Cloud and the Cloudstore – an online shopfront where public sector sellers can display their wares in a totally transparent manner – including transparency of pricing which led to some embarrassing exposes of how different providers were offering monstrously higher prices for essentially the same services under old procurement practices.

Buying through the Cloudstore means procurement officers and IT decision makers can make purchases of goods and services with a contract value of up to £200 million and know that what they’re buying has been pre-certified as is ‘good to go’ without having to engage in a long evaluation process.

Third generation

The third iteration of the framework opened for business on Sunday 5th May and saw the total number of providers on its rise to over 700 – including a number of the oligopoly, some of whom had previously dragged their heels in a ‘maybe it will go away’ sort of mind set.

But it hasn’t. In fact, it’s grown and grown rapidly. To date some £18 million of business has been done via the Cloudstore with the rate of spend increasing month on month.

Now let’s be blunt: that’s still absolute peanuts in terms of the total public sector ICT spend in the UK, a fact that cynics and critics – including those who were rather keen on the private cloud thinking from the early days – have grabbed onto.

But the UK public sector is still in lock-in mode with multi-year contracts put in place by the oligopoly and blindly signed up to by civil servants in the past. So a lot of ICT spend has been committed already and remains so.

Those contracts are rapidly coming to an end. A majority of them will wind down in 2014/2015 and at that point we can expect to see Cloud adoption rates ramp up rapidly.

McDonagh is confident enough to predict that there will be a significant increase in cloud spend:

“I estimate there are 29,000 buying organisations that can use the G-Cloud – central government, local government, NHS, Bank of England. BBC, charities, education, anything that could have a public sector tag on it…we’ve done £18 million of business so far, but I’d add that to my mind £1 spent in the cloud is worth £10 spent with the current suppliers.”

But she’s (rightly) more cautious about the much-quoted government ambition to have 50% of new ICT spend in the cloud by 2015:

“I wouldn’t like to predict what the new ICT spend is year on year. Overall we continue to reduce expenditure on ICT year on year. Whether we are on track to make 50% of that spend is hard to predict. Certainly all the enablers are in place to push people towards that. All the stars are aligned and if all those stars comes out, then I’m confident that we’ll do it.”

My view

I think it’s highly unlikely that we’ll get to 50% of new spend that quickly, but the only way is up and there will be a significant momentum that starts to be seen more visibly as the oligopoly grip starts to slacken.

On the sell side, I’ve been seeing a grim awakening on the part of many of the traditional public sector providers. This isn’t going away and even those who hoped that it would be a passing fancy on the part of government are having to adjust their thinking. That’s all to the good.

The critical question will remain one of cultural change within the public sector however. The buy side old guard needs to get its collective head around the new model and shake off the embrace of bad practice from the past.

The new Cloud First mandate will help in central government circles – although there will undoubtedly be a lot of ‘well it’s OK for everyone else, but not for us of course’ thinking that takes place at first.

But as I’ve said elsewhere, we need that mandate reaching beyond Whitehall to be truly effective.