Councils 'wasting millions' ignoring government IT cloud

By Matthew Wall
Business reporter, BBC News

image copyrightThinkstock
image captionAre county councils wasting millions by not making more use of the government's digital marketplace?

UK county councils could be "wasting millions" on IT services they could buy more cheaply through the government's central digital marketplace, research suggests.

In the 2012-13 financial year, county councils spent nearly £440m in total on IT services, including staffing costs, but just £385,000 of that through the government's "G-Cloud" framework.

The G-Cloud initiative, launched in 2012, aims to shave £120m a year off the public sector IT bill by encouraging all public sector bodies to buy IT products and services through the government's CloudStore digital marketplace.

Cloud services are "quicker, cheaper and more competitive", according to Cabinet Office Minister Francis Maude, with some tech companies estimating that they can be 25% to 60% cheaper than traditional long-term IT contracts.

Despite this, G-Cloud is largely being ignored by county councils,

For example, Kent County Council, the biggest IT spender, committed £38.5m to IT services in 2012-13, but just £94,750 of that went through G-Cloud.

image captionCabinet Office Minister Francis Maude believes the government's G-Cloud could cut millions from the public sector IT bill

Similarly, Hampshire County Council spent £38m, but nothing through G-Cloud.

'Shocking' findings

The findings have emerged after IT services company Bull Information Systems carried out Freedom of Information requests on all 27 UK county councils - 26 responded.

"We think these findings are hugely disappointing and quite shocking," Andrew Carr, Bull's UK and Ireland chief executive, told the BBC.

"By sharing infrastructure costs and moving to the cloud, county councils could take 20% to 25% out of total IT costs - they're wasting millions not doing this."

Switching from long-term contacts with IT providers selling hardware and software to "pay as you go" virtual services with a variety of providers is a "no-brainer", according to Phil Dawson, chief executive of Skyscape Cloud Services, a G-Cloud accredited provider.

image copyrightDavid Betteridge
image captionPhil Dawson of Skyscape Cloud Services says adopting cloud is a "no brainer"

"My one plea to government would be that they shout louder and more frequently about the case studies demonstrating the cost savings that can be achieved through the cloud.

"But while the infrastructure cost savings are plain to see, cloud also delivers the agility and responsiveness we need to provide services fit for the 21st Century," he argues.

'Unable to deliver'

Since launch, G-Cloud has seen £175.5m of sales made through the platform up to the end of March 2014, with 60% of those going to small and medium-sized (SMEs) businesses.

CloudStore - soon to be called the Digital Marketplace - now lists 1,518 suppliers offering about 17,000 services, says the Cabinet Office.

While the government is keen to trumpet these figures as signs of progress - particularly for SME IT providers - the fact remains that 80% of those sales were made by central, not local, government.

And the figure seems tiny when compared with a total central government IT spend of about £7bn.

County councils remain apparently unimpressed by - or unaware of - G-Cloud's advantages.

Councillor Mark Hawthorne is the vice-chairman of the County Councils Network, which is part of the Local Government Association.

He told the BBC: "While the G-Cloud offers a number of contract solutions, for some councils the framework is unable to deliver best value due to the existing nature of their IT contracts where IT management is already outsourced and would have to be recreated at significant cost to make the G-Cloud the right solution for them.

"It would be wrong to assume that non take-up of G-Cloud services represents a missed saving opportunity."

Cultural issue

But IT service providers - and the government - disagree.

"It makes so much more sense for councils to rent and share virtual services rather than buy hardware, only 15% of which is ever used on average," says Bull's Mr Carr.

image copyrightother
image captionThere are more than 1,500 suppliers listed on the government's CloudStore website

"The blame for lack of adoption lies primarily with the councils themselves," he says. "There's an unwillingness to change. People continue to do what is simplest and easiest."

Skyscape's Mr Dawson believes another barrier to the quicker adoption of cloud services by local authorities could be concern that efficiencies and automation may lead to job losses.

"There's no doubt locally run data centres would close," he says. "But there's also an opportunity to create jobs in the app development sector to compensate."


The Cabinet Office, which is responsible for the G-Cloud project, admits that the benefits of cloud services need to be spelled out more.

"Today, more councils than ever before are using cloud services because of the benefits they bring," a spokesman told the BBC. "However, we know more needs to be done to raise awareness of its potential and encourage use.

"Only then can organisations benefit from access to the most innovative, cost-effective solutions by a wide range of suppliers and pass these savings on to the taxpayer."

image copyrightThinkstock
image captionCouncils appear unconvinced by the government's cloud computing platform

And it is these potential tax savings that exercise bodies like the Taxpayers' Alliance.

Campaign manager Andy Sylvester says: "Cloud technology has been saving plenty of small businesses an awful lot of money, and councils should be no different.

"At a time when councils are finding long-overdue savings across their operations, it beggars belief that they are not taking advantage of these new, money-saving technologies.

"Taxpayers expect their council tax to be spent on essential front-line services, not unnecessarily expensive IT."

'Digital by default'

From April 2014, all new or redesigned government digital services must meet the "digital by default" service standard, a key plank of the Government Digital Strategy, published in December 2013.

Achieving this standard could save the government up to £1.8bn a year, it believes, based on the fact that digital transactions are 20 times cheaper than by phone, 30 times cheaper than postal and as much as 50 times cheaper than face-to-face.

Delivering these digital services needs expertise and often a lot of upgrading from old, so-called legacy, computer systems.

This is where G-Cloud is supposed to come in.

But county councils would appear to need more persuading of its benefits - and perhaps a visit or two from the National Audit Office to ensure they are getting best value from their IT contracts.

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