G-Cloud & DOS Spending Review to April 2021
Our Strategic Adviser Lindsay returns to break down how the Digital Marketplace has been for suppliers up to April 2021 and explain the spend data of G-Cloud and DOS.
- Almost 30% growth year-on-year, heavily weighted to 2nd half
- Professional Services continue to dominate 70%+ of total spend
- Software showing strongest growth in percentage terms (56%)
- SMEs had a good year in 2020/21 but a core of buyers never engage with SMEs
Digital Marketplace Spend 2020/21
Crown Commercial Service (CCS) have published the spend data for the G-Cloud and DOS frameworks for April 2021. This provides an excellent platform to look at the spending patterns for the full financial year 2020/21.
Who buys on the Digital Marketplace?
The Public Sector is big. That can be an obstacle for many newcomers to the sector deciding where to target marketing resources. The list of organisations which can buy on the Digital Marketplace has over 52,000 names from HM Treasury to Wolverhampton Scouts. But in the financial year to 31 March 2021 there were 1,858 distinct Public Sector buying organisations making at least one transaction on either of the two frameworks. Roughly 80% of spend is by central government. The top 10 by spend in the year were:
These 10 organisations accounted for just under half (47%) of the total spend for the year.
When devising a marketing strategy to address the Digital Marketplace an SME with limited resources needs to focus on organisations who are buying. To give an idea of the concentration of buying organisations, the 80 customers with the biggest spend (4% of total active organisations) account for 80% of the total spend in 2020/21.
Marketing to organisations which have not formerly been active on the Digital Marketplace can produce results. It is good to see new active buyers join the list every year and in 2020/21 there were 300 new ‘names’ appearing in the spend data for the first time (Public Sector is in a perpetual state of reorganisation so these new ‘names’ may be reincarnations of other organisations which have been previously active on the Marketplace). These 300 customers spent £33m in the year, which although only 1% of the total spend, £13.5m (40%) did go to SME suppliers. However, evangelising to the uncommitted can be a costly form of marketing to burn through resources.
A further refinement of the same principle is to concentrate on the organisations which seem inclined to buy from suppliers like you. Use our Spending Dashboard to identify which organisations are buying from SMEs. Although from the outset G-Cloud was created with the intention of delivering the better value SMEs can provide to the Public Sector, there is a stubborn rump of buyers who, while active on the Digital Marketplace, have never engaged with SMEs. Since 2012 roughly 700 organisations which have been active on the Digital Marketplace have never concluded a transaction with an SME through the frameworks. The following table shows for each financial year the number of organisations which only transacted with Large (i.e. not SME) suppliers in that year:
|Fiscal Year||Only Large Suppliers||Total active in the year||%|
The Spending Year in Detail
2020/21 was a year of two halves, spending across all Lots (combining DOS and G-Cloud) in the first 6 months to September 2020 increased 13% over the previous year. The second 6 months saw a 44% rise bringing the full year to a 29% increase. Spending on the Covid 19 Pandemic response was evident in these numbers with Department of Health & Social Care spending £104m in the year (compared with £8m in the earlier period) and NHS Digital spending £153m (£65m). The principal beneficiaries were Deloitte LLP (software), Accenture (hosting) and Kainos Software and Mastek (UK) on the DOS framework.
SMEs Increasing Share of Spend
The growth of spend to SMEs in 2021 (G-Cloud & DOS) rose 39% over the previous year reaching almost £1.2billion or 38% of total spend (2019/20: 35%).
On G-Cloud, a total of 1,206 SMEs made some sales during 2020/21 (2019/20: 1,099). When G-Cloud 12 went live, there were 4,635 SMEs on that framework this means over 75% of SMEs on G-Cloud 12 have made no sales. At the other end of the spectrum, 193 SMEs recorded over £1m sales in 2020/21 (2019/20: 163). SME suppliers making their first sales on G-Cloud in 2020/21 were 268.
Over 70% of spending across the two frameworks is on professional services (Lot 3 in G-Cloud and all Lots in DOS). The concentration of spend is, unsurprisingly, with the large suppliers. Of the 1,100 professional service suppliers enjoying some spend in 2020/21 the top 30 suppliers account for 50% of the spend.
Growth in professional services rose 25% over the previous year. Nominally SME growth was higher, though the classification of some large suppliers as SMEs makes the distinction less meaningful.
Spending on Cloud Software rose 56% in 2021 (2019/20: 43%) to a total of £668m (£429m) accounting for 20% of all spend on the two frameworks combined or 30% of G-Cloud spend.
Spend on SMEs Cloud Software rose 61% resulting in SMEs accounting for 35% of software spending on G-Cloud.
Spending on Lot 1, Cloud Hosting, grew 12% in 2020/21 (it fell 11% in the previous year).
Hosting on G-Cloud is only one of several markets where the Public Sector can access IaaS & PaaS. As those other sources do not publish spend data, it is difficult to draw meaningful conclusions about the hosting market. Amazon, Accenture and Entserv dominate the leaderboard with these top 3 suppliers accounting for 54% of the spend in 2020/21. The next two places go to UKCloud and SecureCloud+ (SMEs with just under 10% of the spend). But this will understate the total spend on hosting services as many software offerings will bundle hosting services but be accounted for as part of the software spend.