Low-hanging fruit all gone on G-Cloud - analyst

G-Cloud experts weigh in on how the initiative can break through the sales growth plateau

G-Cloud suppliers must help public sector customers adopt more complex solutions if the framework is going to smash through the plateau that its sales appear have hit, according to analyst Kable.

Last week, analysis of G-Cloud figures carried out by CRN found that sales growth through the framework has slowed down, and in February, revenue was down year on year for only the second time ever.

In the framework's early days, annual monthly sales growth stood at 1,000-plus, and in later months it stayed in triple digits. But in the past 12 months, monthly sales growth failed to surpass 60 per cent year on year, and were down annually twice (November and February).

Jessica Figueras, chief analyst at Kable, said that the future of the framework requires suppliers to sell more complex kit.

"The real strength [of G-Cloud] is it is a really quick and easy way for buyers to get this stuff going - they didn't have to put out a big long tender," she told CRN. "What happened was G-Cloud has mopped up the latent demand for small projects and services. It was all low-hanging fruit. Anything that could move to cloud was moved.

"What we're not seeing [yet] is the next wave - it has to come from more complicated solutions. Departments are looking to do more complex things and tackle some really tough legacy problems."

Last November, some G-Cloud suppliers vented at the arrival of a new clause which makes it harder for clients to scale up the services they buy in the form of a 20 per cent cap.

Suraj Kika, chief executive of G-Cloud supplier Jadu, said this could be another reason behind the apparent plateau.

"I know for a fact some customers are just not interested in a framework where they don't have the flexibility to grow," he said. "G-Cloud is great because it allows organisation to start small and grow but... what G-Cloud does with these limitations is increase the work for procurement. I would say the 20 per cent [cap] is the culprit and that needs to be looked at."

Kika was cautiously optimistic about the future of the framework.

"Even though sales have plateaued, it is good they haven't dropped," he said. "But what they now need to be careful of - like any business - is that they don't drop. Because then you're working behind the curve and it's remedial action, not proactive. G-Cloud is under the public gaze and as soon as the sales figures start to drop, the bad publicity follows it and it becomes a self-fulfilling prophecy."

Chris Proctor, chief executive of G-Cloud OneServe, said that although sales appear to have plateaued through G-Cloud, he is optimistic things will pick up soon.

"I don't necessarily think [the plateau will continue or sales will decline] because the spending has been largely concentrated on consultancy and actually that consultancy should [lead to them saying] 'we recommend you've done business processes, here are where your efficiencies [can be made], now go and buy the software."