Ian Brown on cloud-based procurement in the public sector

European Voices4 minutes readFeb 26th, 2013

Unisys’ Director of IT Automation, David Howard, recently sat down with Ovum’s Ian Brown to discuss cloud-based procurement in the public sector. Ian offers his thoughts on the subject below.

Ian Brown, senior analyst in the IT Services practice at OvumWhat are some key factors that will encourage more public sector organisations to invest in cloud-based services?

I think it’s important to distinguish between investments in private cloud solutions and investments in hosted cloud solutions, as exemplified by many of the G-Cloud services. Government departments are already investing quite heavily in private clouds, as are many other public sector organisations. Some enlightened local public sector organisations are also considering how they can deliver their private clouds as a shared service to other public sector organisations in their localities or elsewhere in the UK.

I think many public sector organisations see the benefits of cloud-based services, but are frustrated by:

  • “Opaque” procurement processes or lack of appropriate processes for procuring cloud “on-demand”
  • Poor information about the actual cost of cloud services and how they compare both with internal IT costs and different suppliers’ costs
  • Misgivings about the security and compliance status of some cloud offerings both as part of the G-Cloud and “outside” the G-Cloud

In your opinion, will cloud-based procurement ever replace traditional procurement processes, and if so, how far off are we from seeing this?

I think it’s unlikely to entirely replace traditional procurement processes. Long, fixed-term outsourcing deals that involve a large element of IT transformation and need to have firm milestones and SLAs in place will always need the appropriate due diligence and negotiation implicit in traditional procurement processes. That doesn’t mean that such contracts won’t include cloud delivery and even transaction- or usage-based pricing elements, but realistically on-demand procurement processes aren’t appropriate for all business needs.

That said, for smaller, ad hoc and non-critical IT requirements, cloud procurement is likely to become the norm. Ultimately, I can’t imagine that public sector organisations will want to buy or deploy software, for example, through traditional licences and maintenance agreements, even with the supposed benefits of enterprise licence agreements.

What are the key benefits for public sector organisations who are procuring new services through the cloud?

Essentially the same as they are for any organisation, large or small, public or private: agility, flexibility, potential cost reduction, transfer of capex to opex, and the opportunity to share risk with suppliers.

Do you think that the adoption of cloud-based services will encourage public sector organisations to share resources and collaborate with one another more frequently?

I don’t think the adoption of cloud services alone and the establishment of a cloud marketplace such as G-Cloud will result in some wonderful public sector love-in, where public sector ICT organisations will all agree to share and collaborate freely. In my opinion, sharing and collaboration are more likely to result from organisational budget cuts, the amalgamation of government departments, public sector organisations, and their various buying centres, and, of course, people:  the buyers and suppliers who see the opportunities enabled by cloud services and push to improve ICT services both in their own organisations and in their peers’.

How does the UK public sector compare to the UK private sector in terms of its openness to procure services through the cloud?

I think that the UK public sector is as open to procuring services through the cloud as the private sector and is being actively encouraged to do so. It seems to me that the difference is that there are inevitably many more bureaucratic hoops to jump through, a variety of paymasters to deal with, many more stakeholders, and consequently less freedom to take the initiative. Building the business case for cloud in the public sector seems to me to be a more complicated process than for the private sector. That seems to be the brake on the uptake of cloud by the public sector.

Tags-   Cloud G-Cloud Government Procurement Public Sector