Large suppliers rake in majority of G-Cloud spending

Figures published today show that large suppliers have taken 53 per cent of all spending through G-Cloud

Larger suppliers now account for the lion's share of spend through G-Cloud, despite it being touted as an SME-friendly framework.

Some 53 per cent of the £2.4bn spending through G-Cloud since its inception in 2012 has been conducted by large suppliers, according to figures from Crown Commercial Service (CCS) released today.

That is a significant jump on the 44 per cent of spend large suppliers accounted for when CCS released data in January, when the overall sales figure stood at £1.7bn.

The increase has prompted speculation that some larger suppliers initially held off advertising their best prices on the framework for fear of upsetting legacy customers.

However, in a statement, a Cabinet Office spokesperson suggested that at least some of the difference could be explained by the fact that some SME suppliers on G-Cloud have been reclassified following their expansion.

"Percentage figures can change for a variety of reasons," the spokesperson said. "For example, we have made improvements to the way we manage our data and we know that a number of suppliers have grown beyond SME status over the reporting period.

"Today we published figures that show SMEs have delivered over £1.2bn of cloud and digital services for government and the public sector since 2012. This means that almost half of digital spend, or £1.39 in every £3, is going to SMEs - giving a major boost to the technology SME sector."

Reacting to the latest G-Cloud figures, one boss at a consultancy firm that helps suppliers win spots on frameworks said that larger suppliers are now beginning to take the government's frameworks more seriously.

He said they may have been reluctant to use the frameworks because they didn't want their prices to be in the public domain, for fear of jeopardising other relationships.

However, these contracts will now be ending, making frameworks the primary driver for new public sector business, he claimed.

"A couple of years ago larger organisations hadn't managed to make a single sale on G-Cloud, even though they had something like 40-odd listings, and we couldn't for the life of us work out why that was the case," said the source, who wished to remain anonymous.

"We came to the conclusion that the larger companies weren't doing business through G-Cloud because they didn't want to publish their best possible rates and subsequently the SMEs were cleaning up.

"My thinking is that their legacy contracts have come to a close and they've realised there's a new price point in the market, so they have no choice. It's not going to cannibalise their existing business anymore because those contracts have closed.

"If I look at G-Cloud 6 and 7, we worked exclusive with SMEs. If I look at G-Cloud 9, the SMEs have bled off because there aren't any SMEs that haven't got onto it yet. Instead we've been used by some really large companies to help them reposition their listings. I don't think it's a bad thing because as long as G-Cloud remains vibrant that's all that matters."