Government spending through the G-Cloud framework hit the £500m mark in under three years, and G-Cloud sales quadrupled from £129m in February 2014 to £516m in March 2015.
This rapid increase in sales will no doubt have the government toasting the success of G-Cloud as one of the initial platforms that support the goal of government-as-a-platform.
The total figures paint a positive picture for government spending on the cloud, but digging a little deeper reveals the rapid cloud adoption is perhaps not as comprehensive as it first appears.
The vast majority of G-Cloud spending has gone on specialist cloud services. Spending on these services in March contributed £28.5m of the £39.2m total for the month and has consistently the biggest type of service sold on the framework.
However, Neville Cannon, public sector research director at Gartner, told V3 these specialist sales are predominantly consultancy and services that revolve around supporting cloud adoption, rather than supplying cloud-hosted software and platforms.
"I think the only note of caution is the need to look behind the numbers and make sure what out of that £500m is actually cloud spend," he added. "There is a fair degree of spend on there that isn't necessarily directly to buy cloud services."
Massimiliano Claps, research director at IDC, echoed Cannon's views but added that the spending on consultancy is an indication of positive public sector interest in cloud adoption.
"It's a big, big milestone, and it puts the UK in a much better position to leverage the benefits of cloud," he said. "The direction of travel is very positive."
Big challenges for small businesses
Since its incorporation into the Digital Marketplace, over 80 percent of the suppliers on G-Cloud have been SMEs.
However, they contribute only half of the value of sales, and a little more in terms of sales volume. This has prompted concerns that larger enterprises are encroaching on SME territory.
Kate Craig-Wood, managing director at G-Cloud supplier Memset, told V3 that such concerns exist, despite denials by G-Cloud director Tony Singleton.
"One slightly worrying trend over the last few months is that the percentage of business going to SMEs has been falling," she said.
"Historically it has been a steady 50/50 split, but it has slowly been trending downwards. This might be a blip but might also be a sign that the larger companies are wising up, forcing them to become more competitive.
"However, overall this is not a good thing as SMEs bring agility, quality of services and focused niches to government business."
Cannon from Gartner suggested that the government should also do more to help SMEs.
"There is still a level of complaint coming from SMEs about the time it takes to pay them, and I think the Cabinet Office was cited recently as still being one of the worst payers for SMEs. That's a direct risk to SMEs," he said.
He also said the government needs to remove some of the onerous terms and conditions that are not suitable for contracts with SMEs.
On the other hand, Cannon said that SMEs need to "do their homework" and understand the diverse and particular needs of the public sector.
He added that some government departments have long-established relationships with suppliers that can make it difficult for new suppliers to win business.
Craig-Wood from Memset also threw up another challenge facing SMEs that may not be so easy to solve when they lack the resources of major and established IT enterprises.
"There is still a misconception that you can just put your products onto the framework and that is enough for SMEs to secure contracts via the G-Cloud's digital marketplace," she said.
"However, in reality you still have to do traditional marketing. We've learned that people buy from people, and you still need people out in the marketplace having the conversations long before they look for products and services in the Digital Marketplace.
"Although we are doing OK via G-Cloud, our competitors are doing better as they can afford to put 50 people into the field to sell, which is frustrating because this was not what G-Cloud was meant to be about."
Craig-Wood added that the best way around this is for smaller companies to partner with larger firms that have established government relationships. "The only way to get through the door is to buddy up with an incumbent," he said.
Claps from IDC noted that, despite these concerns, the procurement framework offered by G-Cloud is a more competitive marketplace than traditional procurement methods, where a few incumbent enterprises dominated with hefty contracts.
Future of G-Cloud
G-Cloud has been undergoing incremental updates under the Government Digital Service (GDS) policy of agile development ever since GDS took control of G-Cloud in 2013.
Cannon predicts little change in G-Cloud's future. Instead, he forecasts a continuation in the regular updates and continued growth in sales as the public sector adopts cloud services.
But as more services from SMEs gain G-Cloud accreditation, the Digital Marketplace will become increasingly crowded and potentially confusing for government buyers.
Cannon said GDS will need to take G-Cloud beyond a mere procurement framework and shape it into a service to help government departments make sense of the diverse range of cloud products available.
"What G-Cloud needs to do to move forward is to help the various agencies using it to differentiate between the thousands of different services and packages that are on it," he said.
"It needs to help people make some of those buying decisions, as opposed to simply provide the contractual tool."
He said that simply adding more services onto G-Cloud risks turning the platform into an encyclopaedia of cloud products rather than a helpful tool for government users.
"It just has to develop its ability to help the buyers discern the correct services for them," said Cannon.
The government's agile development plans mean creating digital services using components from multiple suppliers, rather than relying on one major supplier.
This is good news for the multitude of SMEs on G-Cloud, but it presents a challenge for public sector organisations.
Claps said that government IT managers are predominantly used to dealing with large, long-term contracts with big companies, and the government risks not having the skills to deal with multiple small suppliers and short-term contracts.
This poses the biggest challenge to the ongoing success of G-Cloud, according to Claps, but it can be overcome with time and industry assistance.
"They will do it through attrition. As people leave the new people who come in will have to be recruited to respond to these requirements. At the same time there's a new industry and market opening up for vendors capable of filling that gap," he said.
Claps explained that G-Cloud suppliers are more likely to offer service integration and management to complement their cloud offerings.
Success so far
G-Cloud appears to have been a success for the government, despite some of the highlighted challenges.
No doubt it will be touted by the Conservatives and the Liberal Democrats as a success of the coalition government as political debates over public sector IT rage ahead of May's General Election.
But until the next government is in place with a functioning digital agenda, it remains to be seen exactly what lies ahead for G-Cloud.
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