Q&A: Memset Co-Founder Kate Craig-Wood on the Pitfalls of G-Cloud

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The G-Cloud Framework in the UK is an agreement between the government and suppliers who provide cloud-based services. The services are divided into four different categories: IaaS, PaaS, SaaS, and Specialist Cloud Services (SCS), which are defined as services that support the transition to cloud, such as cloud strategy or managed services.

Since its launch in 2012, sales on G-Cloud’s Digital Marketplace have grown considerably. Formerly known as CloudStore, the Digital Marketplace is essentially an app store where public sector agencies can look for cloud services. In 2013, sales were recorded at £18.2 million. By March 2016, that number had surpassed £1 billion.

Fast forward to today: the latest framework, G-Cloud 8 (G8) is accepting submissions from service providers until Thursday to submit an application to be considered for inclusion in the Digital Marketplace.

So with the deadline looming, cloud services providers may consider applying to sell services through Digital Marketplace. But at least one G-Cloud provider is cautioning would-be participants about some of the frustrations of providing cloud services to government agencies through the G-Cloud framework.

Memset co-founder and managing director Kate Craig-Wood wrote a blog post recently sharing her experience with the program, and the WHIR caught up with her over email to learn more about her thoughts on G-Cloud.

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Kate Craig-Wood, co-founder and managing director, Memset

The WHIR: You’ve been involved with G-Cloud since 2009, and been a vocal supporter of the initiative. What was the last straw so to speak that led to you to write this blog post suggesting that the “dream is dying”?

Kate Craig-Wood: The deadline for GCloud 8 is looming and preparing the entries and also forecasting pricing for the next 8-9 months together with speccing up products that we think the government might like to buy (due to the way the reiteration process works) involves a lot of resource. This prompted me to review where we are at in terms of the amount of ROI, and as I said in the blog post, I had been pondering for some time why we weren’t doing so well in government.

WHIR: How realistic is it that the UK, or other governments for that matter, will ever truly abide by a cloud-first mandate?

Craig-Wood: If they were enforced and monitored then government departments would need to truly abide by the mandates.

Look at the open standards mandate, first published back in 2012. It underlined the government’s commitment to the wider use of open standards across government, yet here we are four years later and most G-Cloud sales have gone through just 30 suppliers, and the majority of infrastructure spend has been on proprietary systems, despite the ‘open standard’ mandate.

AWS is already overwhelmingly dominant in private sector IaaS and within just two years being on GCloud they have secured over £800K in revenue. If we want to avoid a situation where government is having to do all this (G-Cloud) again in 10 years time to break away from a new oligopoly (potentially AWS), suppliers and the public sector, actually need to get together as a community. We need to start truly collaborating around open standards and open source technology.

Its also worth noting while OpenStack’s adoption and maturity grows by the day, it will become increasingly hard for government to justify defying the mandate.

WHIR: What impact does the slow growth of G-Cloud have on service providers like Memset? In the blog you mention that the ROI has been disappointing to say the least.

Craig-Wood: We have made massive investments in pursuit of government business via the G-Cloud Framework:

  • £2m on a high-security data center, originally specced out to IL4 in preparation for “data aggregation” – a subsequently abandoned requirement.
  • £300k + £200k/year enhancing and upgrading our security and compliance stance for IL3, again a requirement subsequently relaxed.
  • £250k + £120k/year on a PSN-Protected connection, which has only just started working and nobody seems to actually use.

These investments, while affordable, have stolen investment from other areas of our business. 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.

WHIR: Recent research has suggested that cost isn’t as much a factor when choosing a cloud provider as it once was. Do you think the same is true when we talk about the public sector?

Craig-Wood: To an extent, yes. Consider AWS. They are actually very expensive compared to their competition, especially when you factor in having to pay for storage, bandwidth and even disk IOps with some solutions. That has not stopped them securing a dominant position.

For most government buyers the potential saving offered by an IaaS provider is likely huge whichever they choose, because of being so over-charged for IT in the past, so price is probably a smaller factor. However, the G-Cloud buyer’s guide clearly states that price should be a major factor in the decision making. Just because the difference between choosing a “you won’t get fired for buying” supplier like AWS or a SME is an 80 percent saving or an 85 percent saving doesn’t mean you should squander the extra 5 percent of taxpayer’s money.

WHIR: You mention Memset’s sales approach as a possible factor that may have contributed to some of the issues. Can you elaborate on that?

Craig-Wood: We come from a web hosting background, addressing a mass-market. Everything from our highly-automated systems to our pricing to our sales approach has been driven by that pedigree. We spend money on marketing (raising awareness) and our sales team mostly just do education, lead conversion and account management. We don’t do “little black book” type selling.

Although we were aware that government selling used to be all about who you knew our expectation was that G-Cloud would change it to make it more appropriate for mass-market suppliers. That was the stated desire by the Cabinet Office; that they wanted buyers to be able to procure IT services at the sorts of prices available in the private sector.

Instead we have found that we are at a huge disadvantage in G-Cloud because we don’t have a “proactive”/network-based sales approach. We don’t have a small army of Rolex-toting salesmen to schmooze government buyers, and nor can we afford one. We price on a strict cost-plus model which does not allow for such overheads, which is exactly what we were told we should keep doing – ie. that government didn’t want to be funding the aforementioned Rolexes anymore.

WHIR: It seems that part of the issue is that the buyers on the government-side may not have the proper training or education and may be relying on the old-way of IT procurement into the new way (you suggest some buyers already know who they’re going to buy from before they even get to the App Store). Do you have some suggestions for improving this model?

Craig-Wood: In the buyer’s guide there was a requirement to give feedback to suppliers that were shortlisted but didn’t win business. [GDS] never actually did that, but it’s really important for us as a supplier to find out why we’ve lost out.

There is also a lack of transparency about G-Cloud call off contracts – suppliers do not know when opportunities arise, or when contracts have been let (figures published are for suppliers and customers, not individual contracts).

By contrast, information about individual OJEU contracts is published on the Contracts Finder website – G-Cloud call-off contracts should also be published on Contracts Finder.

Read Craig-Wood’s blog post.

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