We note that one of the more high profile elements of the Government’s ICT Strategy is a step closer to reality this week. Prototype versions of the Government Application Store (G-AS) – a central store of software applications that can be accessed by public sector organisations in ‘the cloud’ – have been made available to a selection of UK Government bodies. The aim is to allow software applications that are widely used across the public sector – such as ERP applications – to be supported from the cloud. The intention being to save on the money currently spent supporting hundreds of separate versions running in a multitude of datacentres.
The pilot will determine if the G-AS is technically achievable and will also help to gauge the likely level of adoption by public sector departments and agencies. However, there will still be hurdles to overcome. In my mind the biggest barrier is cultural. Government bodies are notorious for their lack of willingness to accept change. For too long they have favoured bespoke solutions tailored to what they believe to be their unique situation. Getting them out of that mindset will be incredibly tough. The good news? The current public sector spending cuts will force organisations – both central and local – to at least consider ‘re-use’ rather than embarking on fresh procurements and the G-AS will make re-use possibilities more visible. Nonetheless, the CIO Council has a big challenge in building support for the new approach.
The other big issue up for debate is the level of savings that can be achieved through the G-AS implementation. The UK Government IT strategy cited anticipated savings of £500m p.a. over the next ten years (that’s a large chunk of the £3b per annum savings it is looking for). However, that calculation is based on some interesting numbers. For example, the ICT strategy states that a large government organisation can have between 300 and 1,000 applications in its portfolio... but it doesn’t highlight how many of those will be candidates for cloud computing. A £500m saving over ten years seems ambitious.
Regardless of potential savings and timescales, the pilot and its outcome could change the S/ITS supplier landscape in UK Government. The trial versions will be built on four existing cloud platforms from Microsoft, Cisco/EMC/VMWare, Amazon and a “major supplier of utility computing”. It is likely that more than one of these platforms will be used should the pilots be successful thus putting the selected platform supplier in a strong position in UK Government. In addition, software suppliers will be looking to get their applications accredited in order to host software targeted at the public sector on the G-AS. The trick for these suppliers will be to judge how much to invest, and when, in order to ensure software applications will get accredited. And that will depend how quickly they think G-AS will become a viable alternative to the status quo. Martin Bellamy, director of the office of the government CIO, and the civil servant in charge of the G-Cloud Project is cautious; at last week’s GovNet event he asserted that it would take four to five years to build up the G-Cloud and the application store and at least another four to five years for them to become widely used across the public sector. Knowing the optimism of UK Government when it comes to IT projects, we regard that as the best case scenario.
The FT’s interview with Chancellor Alistair Darling this morning (
The Visioners will design the interactions. They will have broad and deep domain and technology experience. Visioners will be relatively high margin businesses - typically mid-high teens or even higher - charging premium prices, but mainly on a ‘time and materials’ businesses. Their fortunes will then, as now, wax and wane in line with the economy.
The Assemblers will piece together the ‘interaction modules’ mostly from readily available parts (i.e. ‘apps on tap’) and integrate them using architected platforms such as those from Salesforce.com, Microsoft, and Google. There will be a huge ecosystem of Assemblers, some ‘vertically’ focused on specific industries and sub-industries, others assembling ‘horizontal’ interactions, for example personnel management, procurement, etc. Where independent, they will primarily target mid-sized enterprises and as such will only be able to command high single-digit or low teens margins. Pricing will be more aligned to ‘functions assembled’ and numbers of interactions. This is a more resilient business model than for Visioners as there will be a long-term support requirement post-assembly, albeit at a relatively low annuity fee.
The ‘Deliverers’ will provide the interactions. Some will do it directly to the enterprise as SaaS Deliverers and Business Process Deliverers; others will just provide the raw infrastructure to Visioners and Assemblers – Utility Deliverers. Whichever, most interactions will be delivered from a ‘Cloud’. Deliverers will generally be relatively low margin businesses – mid-high single digits – running standardised processes using a low-cost base and highly leveraged assets (i.e. shared services). There will be little ‘value add’, especially for Utility Deliverers, though specialisation – notably in business processes – will command higher margins. Deliverers are the proverbial ‘keep the lights on’ businesses, but as pricing will be mainly output-, volume- or usage-based, they won’t be totally immune to downturns. Deliverers will themselves be supported by an ecosystem of technology support organisations, basically maintaining the hardware and software (e.g. break/fix).
This week has seen daily pronouncements on public sector spending culminating in today’s pre-Budget report from Chancellor Alistair Darling. The most interesting ‘new’ news in the report for IT suppliers was the additional £5b of savings to be achieved by 2012-13 from ‘targeting and prioritising spending’. The £5b includes savings of £500m from reducing spend on IT, notably by reducing the cost and scope of the NHS IT programme. Astute readers will notice that, rather confusingly, that is less than the £600m Secretary of State for Health Andrew Burnham promised to save from NPfIT alone on Monday (see 
Prime Minister Gordon Brown gave further clues today as to how a Labour government would harness technology to help deliver more than £12b in additional efficiency savings over the next four years (that’s on top of the £35b in savings already promised by 2011 and the £26.5b already delivered through the Gershon review). The £12b figure includes £3b of new ‘efficiency savings’, which the Prime Minister claims have been identified since the Budget. 
Can I commend you to read 