In just one year, UK.gov's direct spend on AWS rises 76 percent
Cloud vendor remains a distance behind leading tech suppliers though
Cloud giant AWS collected a staggering 76 percent more direct public sector revenue from the UK government in the past financial year.
The cloud infrastructure and hosting titan saw direct sales hit £253 million in fiscal year 2022/23, according to figures from public sector spending researcher Tussell. Although AWS pocketed the largest increase among revenue raked in by strategic suppliers to UK government, it was a long way behind the leaders, largely construction and defense firms. Kier, for example, accrued £1.4 billion in revenue over the same period.
Overall spending with strategic suppliers — those the Cabinet Office deems worthy of a direct relationship — in the technology sector was flat, remaining at £5.6 billion.
The leading tech supplier was Capital, whose revenue remained flat at £923 million. Atos was the second tech supplier, with £850 million, up 21 percent on the previous year.
Oracle and Microsoft also took a dramatically bigger slice of direct revenue from the government. The Redmond software giant won £114 million in direct revenue, up 36 percent, while Big Red got £290 million revenue, up 14 percent.
Tussell pointed out that its analysis covers only direct procurement spend, not revenue earned by sales of their products/services indirectly by third-party partners or resellers. “For this reason, the revenue attributable to technology vendors like Microsoft and Oracle is under-represented as much of their sales are made by channel partners,” the report said.
Framework agreements — which handle some pre-procurement paper pushing, suggest indicative spending and offer price discounts — are a popular vehicle for UK public sector buyers. Strategic suppliers in the technology sector, for example, won 73 percent of their total contract value via a framework agreement in FY22/23. The Technology Services Framework reached £801 million, Technology Products and Associated Services hit £272 million and G-Cloud allocated £187 million.
But some tech and outsourcing suppliers are put in a perilous position by their reliance on government. Tussell also measured the value of contracts set to expire in the next two year. It found tech and business processing outsourcing company Capita was set to see £1.8 billion in deals come to an end during that period, nearly half of which will end next year. CGI is also set to see £1.1 billion in contracts end over the next two years while BT and Atos are set to see £969 million and £896 million end respectively.
AWS has made inroads into the UK public sector market as central and local government continue their push to transition workloads to the cloud.
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Earlier this month, AWS won a Home Office contract worth up to £450.3 million for three years. Payment will be spread over the contract period, and the contract was a call-off from a framework agreement. This means it could have been awarded after a mini-competition or given directly to AWS.
The dominance of Amazon and Microsoft in the UK cloud market has attracted the attention of regulators. The Competition and Markets Authority (CMA) is set to carry out an investigation into public cloud infrastructure services following an earlier report from telecoms regulator Ofcom. ®