When G-Cloud first burst onto the scene in 2012, it was boldly hailed by ministers as the beginning of a revolution. A wider range of suppliers - including significantly more SMBs - was encouraged to step up and bid for government business in an effort to loosen the iron grip large IT providers had on the public sector.
But despite the government's good intentions to spread government IT sales across a vast array of suppliers in its quest for better value and lower costs, analysis of G-Cloud's public sales data carried out by CRN shows that its core team of IT providers is more of a cosy club than a nationwide pool of suppliers.
CRN's research found that 50 per cent of G-Cloud's revenue to date went through just 25 suppliers. On top of that, of the near-1,300 IT providers that are or have been accredited on G-Cloud since its inception, two thirds have not earned a penny on the framework so far.
In total, 53 per cent of all G-Cloud sales have been awarded to smaller firms, a figure the government is keen to shout about. But while things seem to be improving for SMBs to an extent, it appears that the playing field the government wishes to level is perhaps a lot larger than it first expected.
A third of accredited suppliers have actually clocked up some cash through G-Cloud, but the vast majority of those sales have been relatively small: 10 per cent of suppliers who have made some sales through G-Cloud have earned less than £10,000 in total to date. Forty per cent of suppliers who have made money on G-Cloud have earned less than £100,000 on G-Cloud to date.
The top five G-Cloud suppliers - BJSS, Methods Consulting, IBM, PA Consulting and Equal Experts - collectively account for 18 per cent of the framework's total revenue to date. The amount spent with top supplier BJSS - £17m - is the same as the sum total of what was spent with the 238 firms transacting the least through G-Cloud.
Of the top 25 suppliers, which collectively racked up £173.4m of sales on G-Cloud since its launch, 60 per cent were large firms, which the government counts as suppliers with more than 250 staff and annual turnover which exceeds €50m (£39.5m).
CRM vendor Really Simple Systems is one of the once-accredited G-Cloud companies which struggled to make any money on the framework. It successfully got on the third iteration of G-Cloud, but after failing to ring up any sales, decided to give future versions a miss.
The firm's chief executive John Paterson said the complicated application process was not worth it in the end.
"We went through the process and applied and had zero interest, zero enquiries and therefore made zero sales," he said.
"It must have taken about a week to actually apply... if you're not used to dealing with government, it is a very confusing process, particularly because you cannot phone anyone up and say ‘is that OK? Have I filled it in correctly?' And the contractual terms of dealing with government are onerous - they want an awful lot of insurance and protecting. They want to pass all the risk to the supplier and not the purchaser. Covering their backsides and making sure they comply with the legal process is higher on the list than having a product that is value for money and actually works."
He said that about a decade ago, the systems his company sells would have carried a price of between £50,000 and £100,000 but that now, the offerings go for about £10 per user, per month. He said this, coupled with the high investment in applying for government business, means many smaller firms like his do not even bother to apply.
"It is far easier for us to sell to someone in New Zealand than it is to the UK government," he said. "The way all our customers find us is on Google. They sign up, put their credit card details in and off they go - that is zero cost of sale so we can price competitively. But you can't price your products dirt cheap if you have a high cost of sale, which, dealing with government, you generally get.
"In a strange convoluted logic, it means it is impossible for the government to buy anything cheap. It is like telling them they can only buy their groceries from Harrods or Fortnum & Mason because they don't have a car and they can't drive to Tesco."
Managed services and consultancy outfit Fordway is among the top 50 G-Cloud suppliers and to date has racked up sales of more than £2m. Its managing director Richard Blandford said persevering with the paperwork and training is worth it in the end.
"It's a common misunderstanding that by getting onto the framework, business will come to you," he said. "It doesn't. Getting on it is the first part of a lot of additional work you've got to do to be credible and able to transact and be useful to the government. Because it is comparatively easy to get on the framework, people don't understand it is just the first step."
He said that the government's stringent security measures meant his company coughed up a six-figure sum to train staff, gain various badges and have its facilities tested and accredited. But he added that the result was all worth it.
"It was a major undertaking and we were surprised by the additional work we needed to do, but we had good customer engagement and thought it was worthwhile to do it," he said.
Stick to what you know
Last year, research from Six Degrees Group found that three quarters of local councils had no idea what G-Cloud could be used for, leading the firm to slam the framework for "not doing its job" of marketing it correctly to the public sector.
Really Simple Systems' Paterson agreed that end-user reluctance was a problem his firm faced when it was on G-Cloud.
"In talking to people running G-Cloud - and I don't want to knock those people, I think they are doing a sterling job despite the environment they are working in - one of the problems was they had difficulty getting government people to use G-Cloud," he said.
"So the customers were not comfortable and didn't know how to use it. They are more comfortable dealing with their traditional suppliers."
Top G-Cloud suppliers BJSS and Methods Consulting clocked up respective G-Cloud sales of £17m and £13.6m over 562 and 993 individual transactions each between April 2012 and October 2014.
TechMarketView's research director Georgina O'Toole said getting your feet under the table with the government can be lucrative.
"The nature of government means that organisations love reference sites. Once a supplier wins one bit of business, they are much more likely to win the next similar piece of work," she said.
"A framework is a framework - it doesn't guarantee business. All suppliers know that. It doesn't eliminate the need for the usual business development activities such as networking, understanding your client, forming relationships, developing a strong offering and so on."
Advice Cloud - a firm which helps companies, particularly SMBs, win government business - defended the framework and said it is still very early days for the project.
"It's a long-term game," he said. "But it is really starting to gain traction out there. Tony Singleton [G-Cloud director] and the Crown Commercial Service are actively out in the market - they are talking to buyers and suppliers, they are organising events and webinars. There is an enormous amout of work going on. They are doing their best to get out there."
The Cabinet Office says:
"We have been working with regional communities to help connect suppliers to share their experiences. We are looking at more case studies to be able to help suppliers understand about buyers' needs. Now that the Digital Marketplace is in public beta we are also looking to provide suppliers with more detailed metrics such as how many times their service offerings have been viewed.
"The number of customers [on G-Cloud] continues to grow strongly - up 46 in October (bringing the total to 643). The number of suppliers is also growing - up 18 in October (bringing the total to 428). Our regional events have also helped to bring more buyers together and we are working on developing more online resources to help buyers build on their knowledge of technology and procurement."
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