G-Cloud Procurement: The Importance of “Caveat Emptor”

By Allan Watton on

The CloudStore logo.The government’s G-Cloud programme recently celebrated its first birthday and its success (or failure) still seems to be in the balance. On the one hand you have the G-Cloud programme director Denise McDonagh stating that “most big government departments have bought services from the Cloud” and citing “significant buy-in from local government.” Meanwhile, the numbers tell perhaps a different story with just 0.04 percent of all government IT spending taking place through the CloudStore.

Of course, the programme’s level of success does not necessarily correlate with its usefulness to public sector organisations in procuring IT solutions quickly and easily, which is exactly the topic I want to explore today. In fact, I want to ask what I consider to be a fundamental question:  should public sector organisations want the procurement process to be quick and easy? Is the commoditisation of complex services a step in the right direction in terms of bringing long term benefits through IT procurement?

When a Commodity Can Be a Liability

We all make off-the-shelf purchases on a regular basis. When we go to our local supermarket we do not generally seek advice on the type of bread we should buy — we are comfortable in taking on that responsibility ourselves because we are confident of making the decision and know that the potential fallout (should we make a poor decision) is minor. The purchasing of commodities on this basis is quick and cost-effective.

But when a purchase becomes large and complex enough, one would be remiss not to ensure that the solution is fit for purpose through a more stringent process. At some point you wander into territory when you would prefer to rely upon expert opinion. It is at that point that the commoditisation of goods and services potentially becomes dangerous.

I have nothing against commodities per se, but I do believe that complex solutions should not be commoditised. Here’s why.

The Fundamental Flaw in Commoditising a Complex Solution

The procurement of major IT systems is not for the faint of heart. In short, there’s a lot that can go wrong.

In a way it is admirable to see an effort to simplify what is a notoriously complicated process, but one could argue that these efforts are undertaken on the mistaken belief that the process should be simplified.

The concept of purchasing “off-the-shelf” cloud solutions is without doubt an attractive one. The outlay is minimal compared to traditional procurement and the system can be up and running in a fraction of the time. However, such a procurement method is likely to burn you in the long run if it is applied to a service of any real complexity.

To put it simply, although the service may be bought off-the-shelf, your organisation is not similarly packaged. Unless your business processes happen to align entirely with industry best practice and the assumptions made by the developers of the service, you will find that your desired business outcomes will not be matched by the solution.

Ultimately, procurement of complex IT services should be a consultative sell, not a commodity sale. The provider must understand your organisation in order to determine whether or not its solution is a good fit. The danger is that the CloudStore’s recommended method of procurement skips this step altogether.

Good Procurement

When it comes to early stage procurement, a provider should find oneself speaking far less than the customer. The key is in understanding, not selling. When an expert listens to the unique needs of the customer they can ensure that the proposed solution is fit for purpose.

It’s not just a case of the customer knowing whether or not the solution is fit for purpose — it’s about the provider understanding the desired outcome and ascertaining whether or not they will stake their reputation (and ultimately the profitability of the contract) on their service. If you remove this step you remove all expert responsibility and are completely exposed in terms of the long term viability of the solution.

For the customer, good procurement is secured by liability. If the vendor is fully liable for any shortcomings in the solution then the likelihood of any shortcomings materialising is greatly reduced. If on the other hand you purchase a solution off the shelf, you are assuming all responsibility for its efficacy. It may be cheaper at the purchasing stage but it can be far more expensive in the long run.

Buyer Beware

I am not against the G-Cloud — in fact, in certain applications I think it has promise. For relatively simple systems in which the buyer can safely assume responsibility for its suitability it seems like an effective means of procurement.

However, I maintain that a solution of any real complexity must be procured with expert advice. More importantly, you must ensure that the vendor is held responsible for any shortcomings in their capacity as an expert. Without this, you may find that the savings made up front are outweighed heavily by the financial burden in the long run. Click here for our white paper on Cloud Computing which focuses on how to successfully contract for cloud services.