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Tuesday 08 June 2021

DWP extends with Crown Hosting

Ark Data Centres logoThe Department for Work and Pensions (DWP) has extended its contract with Crown Hosting Data Centres (CHDC) under a contract extension valued at £26.6m over a five-year period starting on 1st June.

CHDC was incorporated in March 2015 as a joint venture (JV) between the Cabinet Office (21.5% stake) and Ark Data Centres (74.9% stake). The aim of Crown Hosting is to provide a means by which UK Government organisations can consolidate their infrastructure until they are ready to migrate to the public cloud. At TechMarketView we have often seen it as a halfway house; moving to a shared but dedicated facility allows those utilising the space to gain some of the advantages associated with a move to the cloud without fully taking the plunge.

DWP was one of the first public sector organisations to take datacentre space from CHDC. It signed its first contract for one datacentre room in 2015, subsequently expanding the arrangement to four datacentre rooms a year later. As highlighted by this contract extension, the department has now determined that, although it has a strategic objective to migrate all its services to the cloud to give it a more stable, flexible, and efficient infrastructure foundation for its digital services, the CHDC requirement will continue to exist for the “foreseeable future”.

For some applications, this need is driven by a security requirement. For others, their lifespan is short, and they are expected to become obsolete during the term of the contract extension. The newly-signed arrangement takes account of the expected asset refresh and continued migration to the cloud and allows for a reduction in capacity over the five years. Based on the average annual expected spend on CHDC rental, it is a drop in the ocean when considering it as a proportion of the department’s total spend on digital and IT, which stood at £903m in fiscal year 2019/20.

The recent performance of CHDC highlights the continued attractiveness of the arrangement for many public sector organisations (it is available to be used by UK publicly-funded, mandated, or regulated organisations and charities). In its last reported financial year to end June 2020, CHDC turnover increased by 46% from £29.5m to £43.1m, and operating profit grew by 52% to £2.5m. By way of comparison with the dominant public cloud provider to central government (and the main public cloud provider to DWP), TechMarketView estimates that AWS’ revenue from UK public sector totalled c£148m in its FY to end December 2020, representing a 28% increase.

Posted by: Georgina O'Toole at 09:39

Tags: publicsector   centralgovernment   contract   cloud   hosting  

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