What challenges do Cloud Marketplaces present to public sector organisations?

A little over a year ago I was given the opportunity to move my career here at Softcat in a different direction. This change granted me the opportunity to gaze beyond the world of Microsoft that I’d immersed myself in for 15-years, with a renewed focus on all things Cloud across the UK Public Sector.

A year on, with lots of learning, I’m beginning to make sense of a few things including shaping my views of the maturity that exists in the use of Cloud Marketplaces within Corporate sectors vs Public Sector. Here are some of the insights I’ve gained..

Public Sector procurement – the basics

Something every Public Sector procurement professional knows, is the over-riding procurement policy requirement that all public spend must be based on value for money - which should be achieved through competition, unless there are compelling reasons to the contrary. To keep this process efficient, we often use frameworks - there’s lots of them in the technology sector alone!

Frameworks are the pre-vetting of all the available suppliers to bring together the most competent, qualified, skilled, financially stable and well-resourced, clustered pool of competition. There are a variety of these by a variety of providers covering all areas of IT supply. Frameworks enable buyers to verify value for money for their requirements, focus on business value, balance risk and minimise administration. Framework providers operate a lot like any other business would. They all desire for more governed spend to route through their framework, but we’ll come back to that later... For now, let’s get onto Marketplace.

Where do Cloud Marketplaces come in?

Marketplace you would think is a relatively fresh concept, especially as its starting to gain popularity amongst customers who have adopted a variable expense cloud operating model. However, the AWS Marketplace has been around for over a decade, Google’s longer still and Microsoft has now re-launched its Marketplace, hoping to cash in on greater market share.

Marketplace is where software suppliers aka ISVs (Independent Software Vendors), can supply their customer-ready solutions to end users and the payment for which can be added to the hyperscaler cloud bill – it’s simple, quick, effective. There’s so much choice here too, but that’s a whole other blog. The symbiosis of hyperscaler and ISV comes from the fact that out of the box hyperscaler cloud capabilities are one-size-fits-all and don’t work for everyone. Many customers have existing investments requiring refinement or have needs to branch out from hyperscaler-only solutions and the ISVs have gone to the effort of providing turn-key solutions delivered on or via public cloud to meet these needs with the results being an easily tailored (technically and/or commercially) solution, covering everything from security, resilience to simplifying IT operations.

This all sounds great, where’s the problem?

Public Sector continues to struggle with a variable expense cloud operating model. Budgets are cyclical, often centralised and need spending in chunks. The traditional model process of capture your requirements, pick a framework, run a competition, identify a single vendor solution for that IT project is starting to feel a little clunky.

There’s also a sentiment amongst buyers that Cloud Marketplaces are not a compliant route to market, that engaging vendors directly and paying for it through your cloud invoice doesn’t align with the traditional governing and competing spend processes. Buyers also note the lack of Cloud Marketplace specific framework to validate any thinking to the contrary of this sentiment, when in reality, Marketplaces can be rolled into your existing buying processes.

One approach for effective procurement could be to define a budget and use this as ring fenced spend on a multi-vendor ISV solutions approach, then appointing a partner that offer services to support a mature Cloud FinOps financial management practise. This approach will allow you to make better, data-driven spending decisions.

This brings us to the missed opportunity

In this new era of digital marketplaces, you gain access to more competitive quotes, realise savings through greater discounts, save time on running multiple competitions, foster direct relationships with the vendors for their market leading solutions and unlock the potential for further savings or investment on your chosen hyperscaler platform. Forward thinking customers are already realising that you can align budget to cloud solutions and ISVs agnostically, defining this as their aggregator marketplace approach.

Earlier I noted we could back to something later, and here it is: for Public Sector, there should be a Cloud Marketplace specific framework, one that streamlines for the buyer the competition to select an aggregation partner, that helps them select a partner based on the services they offer and aides the buyer to unlock the benefits. Any such framework provider who sits at the centre of this approach is going to find themselves very busy helping a lot of buyers be very productive, make lots of savings and deliver on the next wave of digital innovation.

It can be tricky to demystify the cloud marketplace, but we’re here to advise you on the best technologies and procurement route. Whether that’s through a distributor, marketplace or direct from the vendor – please contact cloudmarketplace@softcat.com or your Softcat Account Manager if you’d like to find out more.