Government procurement chiefs on the Crown Commercial Service are below hearth for extending the lifetime of the G-Cloud 13 framework and stopping suppliers from upping their costs as inflation bites
By
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Caroline Donnelly,
Senior Editor, UK
Published: 31 Jul 2023 10:52
The authorities’s determination to delay the lifetime of the thirteenth iteration of the G-Cloud framework is making it a commercially unviable approach for small and medium-sized enterprises (SMEs) to sell cloud companies to the general public sector, it is claimed.
The Crown Commercial Service (CCS) confirmed in June 2023 the G-Cloud 13 framework would now expire in November 2024, somewhat than November 2023 as initially deliberate, which implies suppliers can’t replace their listings on the Digital Marketplace for one more 12 months.
This is as a result of, below the phrases of the G-Cloud framework, suppliers are unable to replace the vary of companies they provide, increase costs or amend their phrases and circumstances of doing enterprise for so long as the present settlement stays reside.
In a press release to Computer Weekly, a CCS spokesperson laid out the explanations for extending the lifetime of the framework, and confirmed it was not potential for members to improve their pricing.
“The extension gives CCS time to further improve the customer journey and performance of the platform before the next iteration of the agreement is delivered,” the spokesperson mentioned.
“In line with the framework terms and conditions, suppliers have applied and signed up to a one-year plus one-year agreement. During this period, pricing cannot be increased but suppliers may reduce pricing or offer discounts. Suppliers are able to update but not materially change service definitions, which are subject to approval by CCS.”
This is not the primary time CCS has prolonged the lifetime of an iteration of G-Cloud, however – this time round – suppliers are feeling the results of being unable to improve their pricing in keeping with inflation, which has risen due to the testing macroeconomic surroundings.
Speaking to Computer Weekly on situation of anonymity, a supply from the G-Cloud SME neighborhood mentioned the problem was being exacerbated by the worth rises a number of the hyperscale public cloud giants have rolled out in response to rising vitality costs and forex fluctuations, significantly within the wake of the UK’s extrication from the European Union.
The supply claimed the corporate they labored for had been left with a £250,000 gap to plug between what the hyperscale cloud agency it depends on is charging it and what it might cost its public sector IT purchasers for utilizing its companies through G-Cloud.
Many of the SMEs with cloud software program choices listed on G-Cloud depend on the likes of Microsoft and Amazon Web Services (AWS) to host their companies. So, when the hyperscalers increase their costs, these SMEs have to soak up the fee till the settlement ends and the subsequent iteration of G-Cloud begins.
“Microsoft put up its prices god knows how many times in the four years post-Brexit or post-referendum, but if you’re a G-Cloud provider, you can’t put up your prices,” the supply mentioned.
“Many representations have been made to CCS about this. Requests have been made for an inflation breakpoint [in the framework], or if it’s a third-party price rise, which the supplier has absolutely no control over, for a way to pass that on to customers, but the problem remains. And that is very anti-SME.”
The downside was laid naked in analysis, printed by public sector IT procurement consultancy Advice Cloud on Thursday 27 July 2023, which polled G-Cloud 13 suppliers concerning the affect the framework’s 12-month extension was having on their enterprise.
Of the respondents to the ballot, 79% recognized as SMEs, whereas the remaining 21% have been enterprises. Just below half (48%) of members have been supplying merchandise through the “cloud software lot”, whereas 37% of respondents have been listed below offering “cloud support services” and 15% have been within the “cloud hosting lot”, which is sometimes dominated by the general public cloud giants.
When requested how extending G-Cloud 13 was affecting their enterprise, 69% of respondents mentioned negatively, with greater than half (51%) stating they want to replace the pricing of their companies due to inflation. And 77% of the respondents that outlined their want to up their pricing have been SMEs.
“For them, the extension means some contracts will become commercially unviable and some services will need to be removed from the framework [because it is no longer cost-effective to offer them],” the accompanying report from Advice Cloud acknowledged.
Elsewhere, 49% of respondents additionally acknowledged the extension was “hampering innovation” and “preventing them from meeting customer needs” as a result of they have been unable to add new companies.
“Of the 31% who neither need to update pricing or add new services, 48% of them have currently made no sales, and a further 32% have contracted ‘once or twice’ [through the framework],” the report added.
G-Cloud 13 went reside two months later than deliberate in November 2022 and was initially set to run for 12 months, which is the popular framework size for 41.6% of respondents to the Advice Cloud ballot.
In addition to this, 68% mentioned they believed ready two years for a framework refresh was too rare, though 12% mentioned they might favour an 18-month hole between iterations “to balance the ability to update [pricing and services] with the operational burden of re-applying”.
The report’s closing abstract additional acknowledged: “The majority of respondents felt that the extension would negatively affect their ability to transact with the public sector… [they] also felt that each G-Cloud iteration should be 12 months or less before a refresh, or if longer, then relax the rules on making changes.”
When Computer Weekly requested CCS for a touch upon the survey’s findings and suggestions from suppliers, the spokesperson mentioned the organisation “welcomed any feedback” as it “endeavours to engage with suppliers, industry groups and customers on any significant changes” to its frameworks.
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…. to be continued
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