New G-Cloud rules will “slam the brakes” on uptake of cloud in government

Profile picture for user ddpreez By Derek du Preez November 2, 2015
Summary:
Will new changes introduced into the G-Cloud framework put off buyers and suppliers? EuroCloud has some fierce criticisms about the latest iteration.

g-cloud-concept-370x229
The G-Cloud is one of the government’s digital success stories, when compared to a lot of what else has happened in the past few years. Whilst it hasn’t been the ‘killer app’ that some may have liked it to be, there is no denying the challenges that the framework has brought to traditional procurement in the public sector.

Equally, it can’t be denied that the framework, which sits on the government’s Digital Marketplace, has helped buyers in the public sector to see ‘cloud’ as a serious alternative. It has also given SME suppliers easier access to government buyers.

Since the G-Cloud’s first iteration opened for business in February 2012, just three and a half years ago, public sector buyers have spent over £800m on services via the framework (according to the latest figures).

That being said, the G-Cloud has also had its fair share of criticism and controversy. If you breakdown the spend in the public sector, a significant chunk has gone on ‘agile’ or consulting fees, which isn’t exactly the commodity dream that its founders once had in mind.

Equally, we have been involved in campaigning for the Cabinet Office to better communicate the benefits of the G-Cloud and to better articulate the success stories. At some points we have felt that the Cabinet Office hasn’t done a good enough job of sending the right message out to buyers across Whitehall departments and the broader public sector.

And it seems that the latest iteration of the G-Cloud - now on its 7th round (as it goes through a refresh every six months or so) - is set to spark some lively debate amongst buyers and sellers in the government IT community.

20% restriction

EuroCloud has released a new statement fiercely criticising some of the latest clauses that have been introduced into G-Cloud 7, following the formation of its own G-Cloud working group in March this year. The working group is formed of 16 cloud vendors that are involved in the G-Cloud and is chaired by Dave Denton and Peter Middleton, former members of the G-Cloud team.

The primary criticism coming from EuroCloud this week relates to concerns with new rules that limit the ability of buyers to expand their adoption of a particular solution by more than a fifth of the original contract value.

EuroCloud argues that these changes are not compatible with the pay-as-you-go model of cloud subscription and are counter to the founding principles of G-Cloud. Neil Bacon of Global Introductions, a member of EuroCloud’s G-Cloud working group, said:

The Crown Commercial Service has imposed a 20% restriction on how much a cloud consumer may scale their service. Any increase in scale beyond the 20% limit would require consumers to re-tender via G-Cloud. It is inevitable this will deter buyers from using the G-Cloud framework, because it actively discourages a pay-for-what-you-use principle and will prevent buyers from achieving economies of scale as they roll out new cloud services.

Buyers are perfectly capable of assessing pricing for their potential needs when they make their initial G-Cloud evaluation. If a buyer has assessed best value across their expected demand parameters, whatever the scale increase, why force them to re-tender? This 20% rule is just bringing back time-wasting procurement bureaucracy that G-Cloud aims to banish.

EuroCloud also pointed to a separate change that allows for the introduction of time-limited discounts. Bacon said:

The introduction of time limited discounts undermines the concept of a published catalogue with price transparency, which is fundamental to the G-Cloud framework. This kind of discounting is a throwback to the old days of one-off deals negotiated in private, which have led to such poor value for money in public sector IT procurement.

It allows a handful of suppliers to tighten their grip on the market and disadvantages the SME suppliers that have been brought so successfully into the government’s Digital Marketplace.

My take

It will be interesting to see the response to this story to see if there is concern beyond EuroCloud’s G-Cloud working group. The Cabinet Office has made mistakes in the past when it comes to digital tenders - see our work on the Digital Services Framework - but also has a track record of correcting these when it comes under a bit of pressure from the community. So if you are worried about these changes, or any other changes for that matter, do let me know and I’ll follow up.

The 20% cap does seem a bit bizarre to me. I’m assuming that this is some sort of control that is being put

g-cloud-big-ben-government-westminster-crop
in place to limit any sort of spiralling out of control on cloud spend, which I understand. However, what if a department wanted to start small with a limited pilot, which proved successful, and then it wanted to scale up quickly? Normal cloud buying would allow that, but it seems that this would put limits on that situation. Not good for a framework that was meant to make the buying of commodity IT easier.

The promotions concerns I’m a bit more open minded about. I’m assuming that the Cabinet Office is hoping that this will spur more competition within the marketplace, allow for more dynamic pricing and drive down costs for buyers. But equally I can see that if promotions are only possible for the larger suppliers, squeezed smaller suppliers may be pushed even further away. Which is hardly what was promised from the original G-Cloud frameworks.

Do get in touch if you have more to add.