Public Sector Cloud Services Market: present and future trends

Public Sector Cloud Services Market: present and future trends

Posted by Amy Lammin Picture of Amy Lammin on 09 September 2022

The cloud services market in the public sector is rapidly expanding: from the start of 2016 to the end of 2021, public authorities awarded approximately £4.43 billion worth of cloud services-related contracts.

If you want to capitalise on the opportunities in this growing sector, you'll need to get acquainted with the lay of the land.

Harnessing data from Tussell's market intelligence platform, we have produced a low-down of the cloud services market in the public sector, including the market's latest trends, top suppliers, upcoming renewals and future market trends. 

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*Note that the following data is taken from a search of cloud services which uses keywords including "cloud integration", "server hosting" and "data migration" therefore this analysis may include some anomalous, non-cloud service-related data. 

What does the public sector cloud data service market look like today?

Contract award data from Tussell's data platform shows us that the cloud services market is bigger than ever, with the value of contracts awarded now worth 3.8x times more than they were in 2016, growing from a total contract award value of £340.1 million in 2016 to £1.3 billion in 2021.

Alongside this growth, the data also shows that the contract award volume has greatly increased from the 299 contracts awarded in 2016 to the 1,300 contracts awarded in 2021- a growth rate of 4.3x.

Screenshot 2022-09-01 at 14.23.18

Below is a breakdown of the largest buyers and largest suppliers of cloud services, by total contract award value across the same period.

Top buyers:

Contracting authority

Organisation type

Total contract award value

Top supplier

HM Revenue & Customs

Central Government

£471mn

Fujitsu Services Ltd

Home Office

Central Government

£354mn

Amazon Web Services UK Ltd

Department for Work & Pensions

Central Government

£301mn

Amazon Web Services UK Ltd

Ministry of Justice

Central Government

£249mn

Amazon Web Services UK Ltd

Cantium Business Solutions

Non-Limited

£200mn

Avepoint UK, LTD

Top suppliers:

Supplier

Total contract award value

Top customer

Amazon Web Services UK Limited

£413mn

HM Revenue & Customs

Fujitsu Services Limited

£237mn

HM Revenue & Customs

Atos IT Services UK Limited

£171mn

Department for Work & Pensions

Bytes Software Services Limited

£115mn

Department of Health & Social Care

Oracle Corporation UK Limited

£115mn

Home Office

Impact of COVID-19:

The considerable growth in demand for cloud services within the public sector was likely intimately connected to the COVID-19 pandemic. The pandemic highlighted a gap in the market as a result of an increase in working from home: increased online traffic and the lack of secure pathways resulted in the urgent need for robust and abundant cloud-based solutions.

 

Frameworks

A critical route-to-market in this sector is through frameworks. Tussell's data tells us that between January 2016 and December 2021, 2176 call-off contracts were awarded with a total value of £2.14 billion across 79 frameworks.

Out of a total of 4,063 contracts awarded between 2016-2021, over half of these (53.5%) were awarded via a framework. With this many contracts being awarded through frameworks in this sector, it is critical that you are capitalising on these frameworks. 

Understanding the frameworks used within the cloud services sector allows you to prioritise which ones are worth targeting: which frameworks are used regularly in this sector? Which ones are your competitors on? Which frameworks do your target accounts regularly utilise? You can answer these questions through the insights provided on the Tussell platform.

By total call-off award value, we identified the most valuable cloud services frameworks during this period as:*

By total call-off award volume, the most frequently used cloud services frameworks during this period were:

These figures do not represent the entire value of call-offs awarded under the G-Cloud frameworks, but only those captured via a keyword search for cloud services-related contracts. 

G-Cloud 12:

The G-Cloud 12 framework started on 28/09/2020 and is due to end on 27/11/2022: during this time 656 contracts were awarded through it with a total award value of £753 million. The framework operates in the public sector to help customers find and buy cloud computing services. 

The top suppliers on the G-Cloud 12 framework by total contract award value are:

  • Amazon Web Services UK Limited- £324mn

  • Pricewaterhousecoopers LLP- £63.2mn

  • Trustmarque Solutions Limited- £35.8mn

  • CARBON60 Limited- £16.3mn

  • Accenture (UK) Limited- £8.86mn

The top suppliers by total contract awards were:

  • Amazon Web Services UK Limited- 16

  • CARBON60 Limited- 14

  • Microsoft Limited- 9

  • Gartner U.K. Limited- 8

  • Trustmarque Solutions Limited- 7

Amazon Web Services UK Limited, were the overwhelmingly dominant supplier within this framework, having won a total contract award value of £324 million- almost 20x times more than the next supplier on the framework. 

By call-off contract award value, G-Cloud 12’s top users were:

  • Home Office- £136mn

  • HM Revenue & Customs- £111mn

  • Department for Work & Pensions- £82.3mn

  • Ministry of Justice- £68.6mn

  • HM Treasury- £63.5mn

Using this data, it is crucial that you get onto these frameworks in order to win contracts in the cloud services sector.

 

What does the future have in store for the sector? 

Upcoming renewals:

It's key to proactively get ahead of contract renewals in public sector sales rather than be reactive. You need to engage with your target accounts well before a contract expires, to begin staking your case and understanding the authorities' needs. 

Tussell's platform identified 1,165 likely-to-be-renewed contractsworth £2.45 billion that are due to expire between the beginning of 2023 and the end of 2025.

Screenshot 2022-09-01 at 16.25.10"Likely-to-be-renewed" is defined as 'services' and 'supplies' contracts.

Some of the largest of these upcoming renewals include:

Title

End Date

Award Value

Supplier

Business Operations Services Agreement

Sep 2025

£426mn

Capita Business Services Ltd

Services Agreement

Jun 2025

£169mn

Fujitsu Services Limited

Hosting and Application Support Services

Jun 2023

£135mn

Atos IT Services UK Limited

Public Cloud Hosting Services- One Government Value Agreement

Nov 2023

£120mn

Amazon Web Services UK Limited

Command and Control Futures- OJEU 2

Jul 2023

£109mn

Lockheed Martin UK Limited

The future:

Looking to the future, it is clear that cloud services will continue to grow in size, demand, capability and importance. As the repercussions of COVID-19 are still felt across the globe, more and more companies and households will be turning to online platforms, including data storage and cloud services. There are a few major changes coming in the next couple of years that are likely to increase demand for cloud-based services within the public sector, namely the PSTN switch-off and the government's Cloud First Policy. 

The Public Switched Telephone Network (PSTN) is an analogue, copper wire-based network that has formed the backbone of much of the UK's telecommunications infrastructure for the past several decades. In 2017, BT Openreach announced that the PSTN will be switched off by the end of 2025, meaning businesses, households and - notably - public authorities will need to have moved off PSTN-based services by this time. Cloud-based alternatives will more than likely take its place. If you want to learn more about the PSTN switch-off, read Gamma's explanatory article here.

Furthermore, the government's Cloud First Policy makes clear its preference for the cloud going forward. The Policy, introduced back in 2013 and reaffirmed in 2019, aims to encourage public bodies to consider the adoption of cloud-based solutions before conventional alternatives. The Policy advocates that the adoption of cloud solutions is the best way to modernise the public sector's IT infrastructure in a cost-effective way.

At the moment the Cloud First Policy is only compulsory for Central Government bodies, but it is strongly recommended to the rest of the public sector. As this policy becomes more widely known and more companies put an onus on it, cloud services will increase in the future in order to provide these services. 

Finally, before the close of 2022, we'll see the arrival of a new framework: G-Cloud 13. This framework will replace G-Cloud 12, and continue to provide cloud hosting and software services. G-Cloud 13 will have new and improved terms and conditions that will allow for more provision of day rate inclusion, the inclusion of the latest procurement policies (including social value and prompt payment) and a further Lot to allow for more competition within cloud support services. Getting onto this framework is a huge benefit for suppliers as it provides a quick and easy route to sell your cloud solutions to the public sector.

 

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Cloud services are at their highest levels of demand, and so suppliers must keep up with the trend and capitalise on this rise. If you are a cloud services provider, now is the time to act and strengthen your position within this sector. Now is the time to enter this booming sector: be sure to capitalise on the insights in this blog and from the wider Tussell platform

Book a personalised demo with our team to see how Tussell can unlock public sector insights and opportunities for your business.

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