Clearing the air: Confronting the costs to cloud adopters of restrictive software licensing practices

KEY POINTS

• Cloud provides online access to services without the need for specialised hardware or software.
  • It offers numerous potential business benefits such as agility, scalability, efficiency, and cost savings – a significant opportunity for public sector productivity.
• The government’s ‘G-Cloud’ procurement framework mandates that central departments adopt cloud services and encourages them among wider public sector organisations.
  • From 2012/13 to 2023/24, total G-Cloud spend, which includes spending across multiple entities, including charities, was £17.3 billion.
• Interviews with IT professionals, predominantly from the public sector, unveiled various potential costs and complications associated with software licensing – the rules of using cloud technology.
• We also quantified the economic harm inflicted by restrictive licensing practices in the UK.
  • Purely for the two illustrative examples we have identified, restrictive licensing practices may incur direct costs to the public sector worth £300 million over the next parliament.
  • The total cost of restrictive licensing practices is likely to be significantly higher.

There are some potential interventions that could help to mitigate the impact of restrictive licensing practices:

• In light of these concerns, we make suggestions for ensuring the cloud sector operates more smoothly, minimising harm to customers and improving efficiency within the public sector.
• To address possible harmful practices, there are principles for fair software licensing in cloud that providers can adhere to, including the freedom to bring previously purchased software to the cloud.
• With specific regard to the public sector, one remedy may be to centralise the procurement of cloud contracts, negotiating terms with software suppliers to help accommodate smaller organisations and circumvent lock-in.