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Public sector ‘could save £300 million’ in cloud licensing


Mark Say Managing Editor

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The UK public sector could save hundreds of millions of pounds through less restrictive supplier rules on cloud software licensing, according to a new report.

Cross-party thinktank the Social Market Foundation (SMF) has highlighted the issue within a broader report on cloud software licensing, Clearing the air, which says the sector is overspending by about £60 million a year due to what it describes as unfair licensing practices. It could save at least £300 million over the next five years.

The report, based on a series of interviews with public sector IT professionals and high level modelling, has been sponsored by the Computer and Communications Industry Association and comes at a time when the UK cloud services market is being investigated by the Competition and Markets Authority (CMA).

It highlights the UK Government’s policy for central departments to use cloud services, pointing out that the spend through its G-Cloud marketplace amounted to £17.3 billion between 2012-24.

Costs in restrictions

Public sector buyers are meanwhile subject to a number of restrictive practices – highlighted last year by communications regulator Ofcom – including egress fees for moving data to a different cloud, technical barriers in making data and applications work across different system, and discounts structured to encourage buyers to use a single cloud provider.

There are also concerns around over-reliance on a single large software provider – with several references to Microsoft – which can involve umbrella agreements with highly integrated contracts across entities and services. These can be an issue for fragmented public sector organisations and limit freedom of choice.

Such concerns have led Ofcom to refer the issue to the CMA.

The SMF report outlines a number of measures that could mitigate the problems, including the adoption of 10 principles of fair cloud software licensing from the French non-profit organisation Club Informatique des Grandes Enterprises Françaises (Cigref), a renewal in the use of ‘bring your own licence’ models, and more centralised public sector recruitment.

More clearly defined licensing, transparency on the compatibility of cloud services with others and more standardised services would also help.

Squandering taxpayers' money

Jake Shepherd, senior researcher at the SMF, said: “Our research shows that restrictive software licensing practices squander millions of pounds – taxpayers’ money that could fund vital public services and boost national productivity – while interviews with public sector IT professionals reveal the ‘real’ day-to-day operational costs.

“Software licensing isn't just a technical issue – there’s an economic and social imperative to ensure it works smoothly and prevents needless wastage of public resources in the future.”

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