CCS Spend Data update gives sales figures for the Digital Marketplace April – July 2019
Here we look at the data from the perspective of the buying organisations
We compare April-July 2019 with the previous year
Strong evidence supports conclusion that CCS are managing the demand-side of the marketplace effectively
The growth in numbers of Local authorities using Digital Marketplace is remarkable (though £-value is muted)
On the SME agenda there is healthy growth in spend to SMEs, but Large enterprises take the lion’s share
G-Cloud Spend Data – September 2019 Update
Ah! September! I’ve shaken the sand out of my socks and the first thing in my in-tray is the new spend data on G-Cloud and DOS. Well the data covers the first 4-months of the financial year, so with a third of the year gone I’m going to ask the question: Is G-Cloud working?
We suppliers tend to look at the market from the supply-side. But there are two sides to every market and for G-Cloud to be an efficient marketplace both need to be optimised. So, we are going to start by looking from the customer perspective or the demand-side.
I am going to compare this recent period of 4-months (April-July) with the same period last year. Where we can, and it’s logical to do so, we combine G-Cloud and DOS as there has been a trend of crossover between the two frameworks. The table presents a summary of the relevant data to answer the question which we will approach with some subsidiary questions.
Summarised Spend Data – Buyer Data April-July 2019/2018
Is CCS doing enough to increase public sector usage of Digital Marketplace?
There are 51,000 potential customers on the URN list, making up the demand side of the equation. Only 1,293 unique customers transacted business on G-Cloud and DOS (eliminating double counting of organisations buying on both). But as the 51,000 on the list includes every individual primary school, individual military units (and other zoos), the active buying organisations on the marketplace probably represent a significant proportion of the total addressable market.
The size of this market is increasing in terms of the number of buying organisations and the amount spent. This is good news and a key vector of effort at CCS (Crown Commercial Service). The number of discrete customers buying services from the G-Cloud platform increased from 995 to 1,229 (24%) between the two periods and the amount of spend (combining G-Cloud and DOS) rose to £852m from £613m (39%). Eliminating duplicates from the list of buyers, the total number of public sector customers on G-Cloud and DOS rose from 1,060 to 1,293 (22%).
Looking in more detail at the customer list, it has often been cited that local authorities are slow in using G-Cloud. In the 4-months to July 2019, 277 of the 376 local authorities in England Wales and Northern Ireland were in the G-Cloud spend figures (74%). This is a massive increase of penetration as in the earlier 4-month period only 173 of 376 (46%) were represented in the figures. The value transacted is modest accounting for 6% of the total on the Digital Marketplace, but at £52m in the 4-months it more than doubled the earlier £24m.
In terms of these overall demand-side numbers the Digital Marketplace is definitely working, and Geoffrey Moore would probably consider the Chasm to have been crossed. CCS could always do more, but from this objective view of the data – what they are doing is working well.
Before we leave the demand side, what does this comparison tell us about the SME agenda? This is one of the original goals of the Digital Marketplace – to enhance value, innovation and the intellectual capital of the economy by diverting spending from the oligopoly and hitting the target of 33% of spending going to the SME sector.
The increase in purchasing organisation numbers that are transacting with large enterprise vendors is increasing strongly – a 43% increase compared with a 19% increase in the number of buyers transacting with SMEs. However, when looking in detail at the proportionate value of spend going to SMEs, that has remained fairly constant between the two periods.
Did CCS achieve the projected forecast of £2.5bn in the 12-months to June 2019?
The short answer is ‘no’. But the actual result against this ambitious forecast was remarkable against a backdrop of Brexit uncertainty and continuing austerity.
The dotted line represents the trajectory of spend we estimated would be required to achieve the £2.5bn goal made in December 2017 after its disclosure at TechUK in the previous month. DOS has performed slightly better than this ‘flight-path’ but G-Cloud has been under-achieving over the last 12 months. Nobody could have anticipated the impact of Brexit’s delay – you may have budget to implement border controls or payments to farmers, but you can’t specify requirements if you don’t know what outcome you are planning for. So, it is unsurprising that there has been an undershoot.
There is also a paradox: If CCS has as its mission to save money by managing an efficient, competitive market, then greater success than anticipated would lead to lower spending and so result in a ‘missed’ spend target.
Given these factors, the £2.2bn spend on G-Cloud + DOS when added to the other spend on the Digital Marketplace looks like a very good result, a very significant achievement when at the time of making the forecast the run-rate had just hit £1bn.
The demand-side picture is looking very strong. While Central Government still dominates the marketplace and demand grew almost 25% between the two samples, strong increases in transactions from Local Government and Health have reduced the proportion of Central Government spend from 80% to 75% in our comparison.
In Part 2 we take a look from the supply-side and find out how that has been evolving over the comparison periods.