's shift to AWS: It's squeezy-bum time for small cloud pushers

But do they really need to worry?

Analysis is investing more and more taxpayer cash on Amazon Web Services, with spend through the G-Cloud digital marketplace growing eight fold year-on-year to £16m in 2017.

The government has forked out £19m with AWS over the past five years – and this is the figure from the G-Cloud framework alone. The vast majority of this occurred in 2017, with the Home Office splashing the most (£11m), according to figures compiled by expert data cruncher Dan Harrison.

That increase has not gone unnoticed, prompting concerns by some that UK small businesses are being squeezed out in favour of an American firm with questionable tax practices. But how well-founded are these fears?

Labour MP Jon Tickett told The Register: "It's about time the government took a close look at the way it is handling contracts for information technology and computing.

"Some of these firms don't pay a lot of tax in Britain and don't treat their employees very well. There are plenty of excellent companies locally who could do this work, but they don't often get a look-in."

In October, The Register revealed that cloud player DataCentred went under after HMRC – its largest customer – pulled the plug on a services contract in favour of a deal with Amazon.

Where's the money going?

Conservative MP James Gray also appears to be concerned, having recently asked each department how many and what proportion of cloud-hosting contracts have been awarded to hyperscale cloud providers and UK SMEs and what the value of those contracts was in each of the last three years.

Unsurprisingly, answers have varied (with many departments failing to answer the question).

The Cabinet Office said that of the £9.7m it spent on cloud hosting in the past three years, £3.8m went to SMEs. Meanwhile, the Department for Environment, Farming and Rural Affairs splashed £35,561.96 with AWS in 2017/2018, and none with small businesses.

The Foreign and Commonwealth Office (FCO) said it has placed one contract with local outfit UK Cloud, which is considered an SME, and no hyperscale contracts. It spent £231,012 last year with the business.

UKCloud has been the biggest SME success story of the G-Cloud. According to Harrison's data, it is the fourth-largest recipient of the framework, having won a total of £72m in contracts over the last five years. Although its growth appears to be slowing, with around £21m going through the framework last year, as opposed to £26m in 2016.

It's noteworthy that the firm recently joined forces with Microsoft to sell Redmond's Azure stack, indicating a change in strategy from purely selling its own hosting services (and possibly an acknowledgement of the way the wind is blowing).

Cloud still a (condensed) drop in the bucket

However, cloud take-up in government is still extremely low – and pales in comparison to the £16bn per year dropped on public sector IT.

A total of £272m was spent on cloud services via the G-Cloud in 2017, with around half going to large suppliers and half to SMEs. That was out of a total grand spend of £1bn for the year on the framework.

Looking at the top three G-Cloud suppliers suggests cloud services isn't the main focus of the framework. Consultancy firm EqualExperts has made £106m to date, followed by outsourcer Capgemini (£83m) and accountancy firm Deloitte (£82m).

"The real story is public sector is still toe-in-the-water in cloud – little in the way of production systems, not much at scale, no real integration," commented one observer.

"We need to see more wholesale moves to true cloud email and directory." He noted that the Home Office still hasn't moved to Office 365 four years after the strategy was laid out.

Hosting contracts with existing system integrators are largely being extended, he said. "People are afraid to move existing systems because no one knows really how they work and it's easier to go for 'no change' and argue with the spend controls people than it is to take a risk."

Perhaps we should be less concerned with which firms the government is spending taxpayer money on, and instead ask what it is spending our money on – and what we are getting in return. ®

Sponsored: Learn how to transform your data into a strategic asset for your business by using the cloud to accelerate innovation with NetApp

Biting the hand that feeds IT © 1998–2018