G-Cloud & DOS Spending Review to Dec 2020

In a first of regular reports for Advice Cloud, our Strategic Adviser Lindsay Smith looks at the most recent G-Cloud & DOS spending and looks at what it all means.

Summary

A review of the Digital Marketplace Spend Data shows strongly growing demand for Cloud Services.

Analysing the data reveals 3 ways a supplier, particularly an SME supplier might want to modify its approach.

1. The evidence indicates it may be beneficial to participate in both G-Cloud and DOS
2. 75% of SMEs are not generating any business on G-Cloud
3. G-Cloud is good for SMEs that recognise the need to adapt their offering

Turning data into information

Crown Commercial Service (CCS) publish the amounts spent on the G-Cloud and DOS frameworks of the Digital Marketplace on a monthly basis. This is available for you to query and drill-down on our Spending Dashboard a valuable marketing resource to help you see who is spending on suppliers of your size and type – a key factor in formulating your public sector marketing strategy.

Data is good, but information is better. In this article we are going to look for the stories in the data that can inform how we approach the marketplace.

In some of our analysis we combine G-Cloud and DOS spend numbers. They are two independent frameworks, but Professional Services spend has, over time, migrated from G-Cloud to DOS and for some purposes a clearer picture is achieved by combining the two.

G-Cloud is now in its 12^th iteration and spend on the G-Cloud 12 framework started being recorded in October 2020. So, spend in the full year to December 2020 actually arose under contracts formed under 4-different iterations (G-Cloud 8 to 12). There are approximately 38,500 services on the G-Cloud 12 catalogue being offered by 5,100 suppliers. There are 3,325 suppliers on DOS of which at least 1,785 (54%) are identified as being on both frameworks (an underestimate due to anomalies in the data). This overlap provides a first ‘story’ from the data which may inform how to address the marketplace.

Story No. 1: Many suppliers think it is in their best interests to be on both frameworks.

In the following table we summarise the spend data for G-Cloud and DOS over the last 2 calendar years and then we shall see what additional stories can be found there.

Summary of the Digital Marketplace Spend Data

Although there were fewer suppliers and services on the earlier frameworks, we can use the G-Cloud 12 total supplier count to look at relative success. In 2020, the spend data shows 1,633 suppliers had made some sales, that’s about a third of the total.

Drilling down a little further, about 10% of suppliers are those designated as Large (Enterprise) Suppliers – and we can see from the spend detail that virtually all Large Suppliers recorded sales in 2020. So, the unsuccessful suppliers are all SMEs. In the table we can see 1,180 SMEs recorded sales which is approximately 25% of the total number of SME suppliers on G-Cloud, which gives us ‘story’ number 2.

Story No. 2: 75% of SMEs are not winning any business on G-Cloud.

Further, the situation is worse for Cloud Software SMEs, where approximately 80% are not receiving any spend on the framework. We can see from the data on the buying organisations that 1,718 bought some services on G-Cloud in 2020, but 30% of this group did not transact with SMEs. While this may be a random coincidence and the data can not provide evidence on the causation leading to the anomaly, it may make sense for an SME prospecting for business to avoid those departments and other bodies who do not seem to buy from SMEs.

Let’s now reflect on some of the other big movements between 2019 and 2020. Overall a 19% increase in spend on G-Cloud & DOS to £2.8Bn is a very significant rise in demand for Cloud services and the proportionate increase of spend to SMEs was higher in both G-Cloud and DOS although the value of spending to Large Enterprises was still over 60% of the total.

The amount of spending on DOS increased marginally over the year and the total number of buying organisations reduced from 2019, although looking at the detail these buyers were not generally spending large sums in 2019.

On G-Cloud there was a modest 8% rise in the number of buying organisations so the rise in spend of 26% is largely a result of higher value transactions which is particularly apparent in Software (largely as a consequence of NHS Digital and the Dept. of Health spending from July to December as evident in the graph of spending to Large Enterprise Suppliers for Software).

To look for the final ‘story’ in the data we need to go back to the difficult finding on SME performance and look more critically at the way SME Suppliers have evolved their relationship with G-Cloud over the last 7 years.

Taking the example of the worst performing cohort, the Cloud Software SME Suppliers, the question is:

 

 ‘If 80% of Software SMEs are doing no business, is G-Cloud the right place for an SME to spend their marketing efforts?’

 

The simple answer is Yes, but the more detailed answer draws on the definition of insanity apparently wrongly attributed to Einstein: Insanity = doing the same thing over and over, but expecting different results. The data shows that there are Software SMEs who are doing very good business on G-Cloud, but in general, they approach G-Cloud in a demonstrably different way to the majority who are having a hard time.

The following histogram counts the number of Software SMEs achieving sales of up to £100,000, £500,000, £2.5m and over £2.5m in each calendar year from 2014 to 2020.

It is clear that each year more SMEs are joining the sales success club, although the rate of increase may have declined a little in the last year. These are the SMEs which are doing things differently. They understand how to do business with the public sector and make themselves easy to do business with.

So, ‘story number 3’…

Story No. 3: SMEs can succeed on G-Cloud, but need to adapt their marketing strategy. Things which work in the commercial sector may not work in the public sector.

For an overview of how to adapt a marketing strategy for the public sector, we recommend starting with our free guide “Public Sector Marketing & Sales Report.”