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Increase in tenders reflects rising cloud market

by Michael Read •
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Just three jurisdictions accounted for 85 percent of all approaches to market for cloud arrangements over the first two quarters of 2013-14, research by Intermedium has found.

435 Approaches to Market (ATMs) were released by Federal and State agencies across Australia over the first two quarters of 2013-14. 

Just under 10 percent of these ATMs (41 in total) contained an ‘as a service’ or cloud requirement for the stated solution.

This figure is likely to under-represent the true volume of ‘as a service’ procurements, as a number of jurisdictions have IT Services panels or catalogues that would allow agencies to obtain such solutions via a restricted procurement process.

Queensland accounted for 40 percent of all cloud tenders released over the first two quarters of 2013-14 as it looks towards implementing a cloud-first policy.

In May 2013, Queensland’s IT minister Ian Walker indicated that the Department of Science, Information Technology, Innovation and the Arts would “take a lead role in the adoption of cloud services”. 

DSITIA is currently in negotiation for two cloud collaboration panels and is in stage one of transitioning to a single cloud-based email platform.

Despite having no formal cloud strategy or ICT strategy, Western Australia approached the market for 25 percent of all cloud arrangements over the first two quarters of 2013-14.

The Federal Government was the third largest tenderer for cloud arrangements over Q1 and Q2, accounting for 20 percent of all ATMs. These approaches follow the release of The Australian Government Cloud Computing Policy in July 2013 that requires agencies to:

  • Consider cloud options for any new ICT procurements;
  • Migrate public-facing websites to a cloud hosting model; and
  • “Adopt public cloud services for their testing and development needs, as appropriate and where the service represents best value for money and is fit for purpose”.

South Australia and New South Wales accounted for the remaining 15 percent of cloud tenders.

It is likely that both jurisdictions will increase the procurement of cloud solutions, following the NSW Government’s release of its Cloud Services Policy and Guidelines, released in September 2013, and South Australia’s new ‘SA Connected’ strategy, released in November 2013.

Tasmania, Victoria, the Northern Territory and the ACT did not approach the market for a single cloud arrangement over the first two quarters, despite clear statements of intention to explore cloud by three of the four jurisdictions.

Federal Tendering Activity

January 2014 saw a strong increase in the number of ATMs published across the Federal Government for ICT goods and services.

Over the period, the Federal Government released 16 ATMs, compared to 9 in January 2013, and 12 in January 2012. The New Year spike is indicative of a general upward trend in ATMs for 2013-14 year-to-date (YTD), which is in contrast to the downturn of almost 15 percent in 2012-13. Intermedium believes the downturn can be explained by the combined forces of:

  • A significant push to reduce government spending by the previous Labor Government which has been continued by the Coalition Government;
  • A protracted ‘quasi-caretaker’ period following then Prime Minister Julia Gillard’s January 2013 announcement of her intended election date;
  • The actual caretaker period from 5 August 2013 to 18 September 2013; and
  • The September to December 2013 hiatus in decision-making following the election of the Coalition Government.

Federal government ATMs for 2013-14 YTD are up 27% compared to the same period in 2012-13.  A total of 131 ATMs were released between July 2013 and January 2014, compared to 103 for the same period in the previous financial year.

Of the Federal ATMs released in 2013-14 YTD:

  • 69 percent were for IT Services;
  • 15 percent were for Software; and
  • 16 percent were for Telecommunications and Hardware combined.

Software, Hardware and Telecommunications ATMs have decreased each year since 2010-11. As at the end of 2012-13, the number of Federal ATMs has declined since 2010-11by:

  • 26 percent for Hardware;
  • 60 percent for Software; and
  • 55 percent Telecommunications.

Over the same period, the number of ATMs for IT Services increased by 20 percent.

The decline in the number of ATMs for ICT goods can be explained by:

  • The fact that State and Federal Coalition governments are favouring a move away from buying and owning ICT infrastructure to ‘as-a-service’ solutions;
  • A 20 percent cut to capital expenditure budgets from 2012-13 to 2014-15 for asset replacements worth less than $10 million; and
  • Increased use of whole-of-government and agency panels.

State Tendering Activity

State governments issued 52 ATMs during January for ICT goods and services. ATMs of note include:

Approximately 50% of all State tenders issued in January were from New South Wales and Western Australia.

Of all jurisdictions, Tasmania and South Australia made the fewest approaches to market over January, releasing seven ICT Requests for Tender (RFT) between them.

This result is likely to be due to the pre-election caretaker periods in both jurisdictions as both have elections on March 15.  According to caretaker conventions, agencies avoid initiating ATMs for major contracts or undertakings that are likely to commit an incoming government.

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