UK govt office admits ability to negotiate billions in cloud spending curbed by vendor lock-in
- Reference: 1712234710
- News link: https://www.theregister.co.uk/2024/04/04/uk_cddo_admits_cloud_spending_lock_issues_exclusive/
- Source link:
A document from the Cabinet Office's Central Digital & Data Office, circulated within Whitehall, seen by The Register , says the "UK government's current approach to cloud adoption and management across its departments faces several challenges" which combined result "in risk concentration and vendor lock-in that inhibit UK government's negotiating power over the cloud vendors."
The paper also says that if the UK government – which has spent tens of billions on cloud services in the last decade – does not change its approach, "the existing dominance of AWS and Azure in the UK Government's cloud services is set to continue."
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Doing nothing would mean "leaving the government with minimal leverage over pricing and product options.
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"This path forecasts a future where, within a decade, the public sector could face the end of its ability to negotiate favourable terms, leading to entrenched vendor lock-in and potential regulatory scrutiny from [UK regulator] the Competition and Markets Authority."
The document has been circulated under the heading "UK Public Sector Cloud Marketplace." It is authored by Chris Nesbitt-Smith, a CDDO consultant, and sponsored by CDDO principal technical architect Edward McCutcheon and David Knott, CDDO chief technical officer.
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The stated concerns of vendor lock-in follow a number of mega-agreements with major cloud vendors signed under Memoranda of Understanding (MoU). For example, AWS, the world's largest cloud provider with a dominant market share, signed a deal worth up to [5]£450.3 million ($569.7 million) with the Home Office under the auspices of the [6]One Government Value Agreement (OGVA) . Other deals have been signed with tax collector HMRC and the Department for Work and Pensions, bagging AWS a total of around £900 million ($1.138 billion) under the MoU, which has since been updated to [7]OGVA 2.0 and will run until October 2026.
It has [8]been suggested the OGVA has achieved an 18 percent base-line saving on its cloud deals.
AWS collected [9]76 percent more direct public sector revenue from the UK government in the fiscal year 2022/23 compared with the earlier year, according to figures from public sector spending researcher Tussell.
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The document cites challenges with the government's current approach to cloud adoption, including the length of time it takes to adopt cloud services, as departments "typically experience a six-nine month period often costing £500k+ to activate and deploy" them. Its approach is also hampered by inconsistent cloud environments, which result in an "absence of a standardised approach" leading to "inconsistencies and reinventions of low-level cloud architecture, security, and compliance across departments, posing risks, inefficiencies and challenges of understanding equivalent controls in data sharing agreements."
The paper lists four other challenges to cloud adoption in UK government. The document proposes a solution which involves a "UK Public Sector Cloud Marketplace service," in partnership with major cloud providers. It would offer "consistently secure, well-architected cloud environments that can be rapidly deployed."
"This service promises to level the playing field for all departments, ensure adherence to the best security and compliance practices, and enable the government to negotiate more effectively with cloud vendors, thus leading to better deals and cost savings," the paper says.
However, it remains unclear how the CDDO would execute such a strategy without the help of the Crown Commercial Service, an executive agency and trading fund that also sits within the Cabinet Office.
In fact, it says there is a key risk to succeeding with the proposed approach if the CCS is "unable to create a commercial implementation that will be compliant and non obstructive for pre-approved spend."
Speaking to The Register , one expert close to the arrangements said: "If the government is questioning its negotiating power, then perhaps you ought to believe them."
The expert said the AWS contracts had seen the government's commitment to the cloud platform quadruple in deals any incoming government would find nearly impossible to back out of. The UK will vote in a general election before the end of next January, with the opposition Labour Party currently well ahead in the polls.
[11]UK government sets sights on £8B tech procurement overhaul
[12]Lenovo scores deal to build supercomputer at UK's Hartree Center
[13]Fujitsu set to be preferred bidder in UK digital ID scheme
[14]Euro-cloud consortium CISPE calls for investigation of Broadcom
The experts pointed out that the AWS deals were structured such that AWS had offered larger discounts for upfront payments, with commitment to minimum spending year-on-year.
The individual close to the negotiations said the proposed strategy lacked detail and a plan for how it would influence a procurement strategy led by the CCS and individual government departments, which have well-established commercial teams of their own.
A spokesperson at AWS told us: "Government departments using AWS are not only enjoying cost savings of up to 60 percent but also supporting a vast ecosystem of smaller companies, across the UK, that offer products and services that complement and help customers take full advantage of AWS.
"Amazon recognises that its status as a supplier to the public sector is a privilege which has to continually be re-earned through the quality of our services and the value for money that we bring for UK taxpayers. We know they will only remain customers for as long as we are able to deliver on both of those things."
The Register has asked the Cabinet Office, Microsoft Azure and Google Cloud to comment.
Competition watchdog the CMA has already [15]taken an interest in the broader cloud market in the UK. ®
Get our [16]Tech Resources
[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Zg7OmyDzx9FxbJkKV2CRyAAAAE0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zg7OmyDzx9FxbJkKV2CRyAAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2023/12/01/uk_home_office_aws/
[6] https://www.theregister.com/2020/11/02/aws_signs_memorandum_of_understanding/
[7] https://www.crowncommercial.gov.uk/products-and-services/technology/technology-memorandum-of-understanding
[8] https://www.publictechnology.net/2021/05/13/business-and-industry/excl-government-agreement-offers-public-sector-20-discount-aws-hosting/
[9] https://www.theregister.com/2023/12/13/aws_sees_direct_uk_government/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zg7OmyDzx9FxbJkKV2CRyAAAAE0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2024/04/03/ukgov_8_billion_tech_deals/
[12] https://www.theregister.com/2024/03/27/lenovo_hartree_supercomputer/
[13] https://www.theregister.com/2024/03/26/fujitsu_id_card_scheme/
[14] https://www.theregister.com/2024/03/21/cispe_vmware_broadcom_license_warning/
[15] https://www.theregister.com/2023/10/05/uk_iaas_probe_confirmed/
[16] https://whitepapers.theregister.com/
Re: Cloud
We've still got loads of Data Centres owned by Gov - and that's the rub: we moved to Cloud but didn't have a real strategy to decommission all the DC's scattered around the country.
That's to say nothing of the huge diversely routed networking pipes they all had - now presumably left untouched?
In the 50's & 60's Ww abandoned the railways and all jumped into cars, building motorways up and down the country on which we now spend lots of time looking at other slow moving cars: but the old railways still exist - we left most of them in-situ and occassionally use them for country walks if we can find a convenient motorway exit,m or maintain a 'heritage railway' (on which by the by you'll rarely see a drivers strike... ;)
Its just the same with the Governments UK datacentre and national networking capabilities - much of it remains in place, but will it ever be re-used or will it simply rot?
My money's on the latter - I doubt we'll get someone with the vision to do anything else, and even if they did have such a plan - can we afford it?
shocked
So a monopoly with the power to directly take from the population by force and borrow even more on the backs of that same population has difficulty negotiating with vendors who see them as a cash cow?
The Unacceptable
https://gds.blog.gov.uk/2011/11/02/the-unacceptable/
Cloud computing - the ability to buy proven solutions on a pay-as-you-go basis - is what lets government make this change. Once we recognise that we're not different and that we don't need special IT, then we can buy what everyone else is already buying and using.......Everything changes when we do this. We will pay less, get more and get it sooner. If a supplier fails to do what they've promised, we will find another supplier - with no tears. There won't be contracts running for decades; smaller businesses will be able to enter the market, engage directly with Government and compete with far larger companies; UK businesses will get a chance to out-deliver foreign ones; government will be more efficient and our customers will get the service they need.
Re: The Unacceptable
Wanna buy a bridge?
Re: The Unacceptable
>>>"Cloud computing - the ability to buy proven solutions on a pay-as-you-go basis - is what lets government make this change. Once we recognise that we're not different and that we don't need special IT, then we can buy what everyone else is already buying and using"
In many cases the UK Government ARE however special; the idea that they are not is one of the biggest falsehoods in the whole Cloud First debacle. Seems you believed it...
GDS and Cabinet Office have tried to hang on to that old chestnut for years, whilst steadfastly ignoring that UK Gov are bound by legislation - both national and international - that commercial organisations are not, and that their data differs significantly from corporate data both in terms of its sensitivity and its scale.
Few companies deal with data that can result in death or serious injury if its incorrectly handled, whereas every local authority in the land does so, and Central Government, NHS and blue-light services do so at massive scale.
To be fair there are plenty of 'digital leaders' across Gov who have done the same - ignoring the factors that should have constrained, informed, or steered their cloud adoption such as Policy, Legislation and just the wisdom of not putting all our national eggs into a couple of (admittedly large) non-UK owned baskets.
These services are of course also not designed for high value Government data - the terms of service for both AWS and Microsoft specifically say as much in their terms of service - and yet HMG continue to put more and more data and critical UK National systems into these commodity platforms.
The nirvana you suggest of simple mobility and SME competition are a pipe dream - we're ten years into Cloud first now and still largely using these Cloud Providers just like we used Managed Service Providers - moving legacy systems with minor change from virtualised datacentres into Cloud. SME's get crumbs from the table whilst managing the move into Cloud remains the preserve of the big SI's and Consultancies,
Where we DO re-engineer its to couple ourselves ever more tightly into the Cloud providers platform - using their services and literally 'coding by technology platform' in many cases - creating systems that are genuinely portable costs money, and the UK Gov has prioritised speed and cost over consideration of how we might exit the Cloud.
The UK also adopted these global spanning Cloud Services at the expense of their own domestic market, and the few who have tried to co-exist with them have been undermined by Gov Policies (or more specifically by those ignoring Government Policies that SHOULD have controlled this sprawl and ensured that high value data never made it on to these platforms). There are few choices available for anyone seeking to move complex AWS or Azure optimised workloads to a different platform - and many of those who continue to exist in the UK are really just satellites of the big boys - offering hybrid solutions, not true alternatives.
Even if we had those platforms, almost the entire UK workforce today have re-trained to become AWS or Microsoft Azure engineers - and who can blame them when the past 10 years has had that as the sole direction of travel?
The article suggests we've now hit a commercial tipping point - AWS & Microsoft no longer need to give introductory discounts, their UK Government business has hit the critical mass to ensure we can't readily leave, and a long-term revenue stream is gauranteed, so we'll of course be reverted to the locked in customer pricing... that's standard practice in most industries, so I can't criticise them too much for doing so TBH.
Its naivety and lack of foresight on the part of UK Gov commercial and digital teams that's led us to this position, along with the headlong rush across Gov Depts to buy into AWS & Microsoft without giving any consideration to the long-term implications. "Buy in haste, repent at leisure" has never been more relevant.
The CDDO suggestion to resolve this?
Lets repackage and re-brand it and then buy more of the same.
That's not a strategy - its capitulation.
I DO hope whomever makes up the new Government has more imagination, gumption, and smeddum than this lot.
Cloud
For that money, they could have built multiple state of the art data centres to serve the citizens.
But I am guessing civil servants won't be able to afford the kind of incentives the big corporations have at their disposal for politicians.