Kate's Comment

Thoughts on British ICT, energy & environment, cloud computing and security from Memset's MD

The Biggest Threat to G-Cloud is Amazon

G-Cloud has been one of the most effective initiatives implemented by the government to date, but is far from perfect as its relatively limited adoption shows.

You just have to look at the numbers. As of January 2016 the latest published figures show that the current total of reported G-Cloud sales is over £1bn. But you have to remember that that £1bn is the total G-Cloud spend to date. The actual run rate is about £40m per month. That is close to half a billion a year, so still good, but when you break down that further less than 20% of that is actually cloud services (*aaS). The other 80% is Lot 4 SCS, the consultancy services – hardly the aspiration of G-Cloud.

There have been some good reasons for the lack of true cloud adoption; the security impact levels have been a mess, PSN didn’t work, and government departments needed time to re-build their in-house IT capabilities and, in many cases, re-learn their own systems/applications after decades of relying on outsourcing.

However, a shift is slowly happening and G-Cloud stands at the forefront of a new paradigm in government ICT; one where oligopolies, over-priced services, vendor lock-in, fragmented (expensive) networks and poorly understood and implemented security standards are a thing of the past.

 

US Threat

Recently we have seen US giants like Amazon Web Services (AWS, IaaS), Oracle, Google (mainly SaaS, the Google Apps, and PaaS, Google App Engine) and Salesforce (SaaS) joining the Digital Marketplace causing some to fret that the celebrated 52% of total G-Cloud sales awarded to SMEs will soon become a thing of the past.

For the most part we should not be concerned. Most SMEs can still provide customers with an innovative edge, high agility and a competitive price-point, provided they have a USP. Our specialty, for example, is deploying low-cost generic hardware and open source software to provide government-accredited high-security hosting at commodity prices. If you lack a USP then perhaps think your business plan.

That said, when it comes to the bottom layer of the stack (infrastructure as a service; virtual machines etc.), AWS is absolutely a threat – not just to suppliers large and small, but also to government.

The war is starting in the IaaS space and will soon move up the stack into PaaS and SaaS. AWS is already overwhelmingly dominant in private sector IaaS (Gartner estimated recently that Amazon Web Services offers as much computing capacity as the next 14 players in the market, combined), and that’s without the inevitable price war really having started – IaaS prices have fallen much more slowly than underlying costs in recent years.

Consider their long-term strategy; once their competition is eliminated AWS, Google, et al will inevitably exploit vendor lock-in at the customers’ expense. Let us not have any illusions either; it doesn’t matter if you are an old-school “IT giant”, those guys have the jump on you, and your business structure is probably far too outdated, bloated, inflexible and sluggish to compete in that space anyway (think IBM).

 

Building An Open Source Community

AWS’s success is because they cleverly created an ecosystem of companies who build and innovate on their platform. They then duplicate or acquire those innovations. Google can be viewed similarly in SaaS and PaaS, and is trying to play catch-up fast in IaaS with their Compute Engine. The only way to beat them is at their own game.

If we want to avoid a situation where government is having to do all this (G-Cloud) again in 10 years time to break away from a new oligopoly, suppliers and the public sector, actually need to get together as a community. We need to start truly collaborating around open standards and open source technology.

The same applies to the likes of Oracle, VMware and EMC; I cannot see a future for their current business models. Thankfully the open source community is in now in a good position to fight back. Technologies like OpenStack grow in adoption and maturity by the day.

Even the unlikeliest of open source adopters, Microsoft, has seen this. Their newfound love of open-source code demonstrates that they understand the threat and recognise that the only hope against the new IT behemoths lies in collaboration.

I’m not advocating protectionism nor saying we shouldn’t compete with each other – that is at the heart of Britain’s free trade spirit and inspires innovation – I’m just saying that we should keep in mind how to usher in the new paradigm paradigm of better, lower-cost, higher-security public sector ICT services: We need to  work together as a community, around open standards and open source technology.

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