Crown Hosting – A Surprising Government Shared Service Story

The UK government has developed a number of shared services over the years where the model is a joint venture between a private sector provider and the government itself. Generally, the government retains a minority stake in the venture, but relies on the private partner for expertise and operational management.

The government stake does allow the taxpayer to share in any future benefits, and gives the public sector side an incentive to try and drive uptake of the service. However, the track record has been mixed in terms of delivery and results so far. The two Cabinet Office back-office BPO ventures (with partners Sopra Steria and Arvato) have not been successful to date according to the NAO, while the record of the  NHS Shared Business Services has been mixed; we felt it was doing a pretty good job generally but the operation ran into trouble recently over the medical records “incident”.

So when we heard of a quite new and so far fairly low-profile shared service jv, called Crown Hosting Data Centres, we were curious, and to be honest fully expected it to be another dubious operation. But having asked a few questions and talked to a number of people who know a bit about it, we are somewhat shocked to say that it looks like a real success, at this point in time anyway.

Crown Hosting Data Centres Limited is a “joint venture between the Cabinet Office and Ark Data Centres that delivers increased efficiency, improved value and transparency of data centre hosting utilisation across all of the UK public sector”. There are over 2000 “data centres” of different shapes and sizes across the UK public sector apparently, including local authorities, health organisations and so on as well as central government, so the opportunity for some rationalistion, economies of scale, standardisation of Ts&Cs and so on is clearly considerable.

Crown Hosting is designed to offer a flexible approach to non-cloud datacentre services, particularly where the public sector client wants a UK-based, highly secure yet flexible service, and there are a number of interesting aspects about the whole set-up. The first is that the seven-year contract, let in March 2015 after an EU-compliant “competitive dialogue” procurement process, was won by Ark, a relatively small UK firm, rather than one of the IT industry giants.

The four-year framework contract is open to all public sector bodies but no volume was guaranteed as far as we can tell. However, Crown Hosting appears to be building business successfully – and without a “mandate” from the centre – with around 30 customers so far and a pipeline of many more. We understand volume and revenues are ahead of plan, and the client list is impressive. That’s because we hear stories of clients saving “two thirds of our previous cost”. The savings come from efficiencies on both the “rental” side of the cost structure and ongoing power and other running costs of data centres.

Contracts can be of various lengths, but use a single set of Ts&Cs for all customers, early termination is allowed and is not commercially “punished”, and the pricing is very interesting. The volume discount is based on the entirety of the government spend – so you don’t get a lower price if you are a huge department as opposed to a small local authority. But as more volume comes in, everyone benefits from the same pricing discount.

Crown Commercial Service acts in effect as the contract manager and prospective customers first of all approach CCS to establish an NDA and check feasibility. That seems to be working well, and as well as the potential for direct cost savings, there should be benefits for users in not having to go through all the usual checks on a supplier they would make as a single buyer.

What about implementation? Surely there have been some of the disasters we have heard about on the BPO shared service side? Apparently not – well, nothing we could discover anyway. Indeed, one very large civil government department chose to move their most “difficult” applications first to Crown Hosting as a test. All went well and more business is following.

One of the physical data centre sites is close to my home, so I can also tell you that we are talking VERY high security stuff here. I didn’t get arrested as I approached, but there was clearly a point at which I might have been! We’ll say no more about that ...

We may return later and think about why this particular shared service operation appears to be working well – what are the underlying causes of success? But for the moment, we have what looks like a flexible, cost-effective, secure operation for public sector bodies, run by a UK-based small (but growing fast) supplier. So if you do have hosting requirements and you haven’t looked at Crown Hosting, we’d suggest it is definitely worth your while. And if you do find some major flaw we’ve missed, please let me know.

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Voices (3)

  1. Secret Squirrel:

    Les, very much agreed on it being a shared service success.

    The key point here is that the service being offered is generic. Shared services for back office require either bespoking (i.e. not sharing!) or change at the customer. Neither are easy. Running a server farm is much simpler in terms of change.

    Also, some in the GDS leadership opposed this and argued that everything should just be sent to the cloud. Probably to join where their heads are. A change like this is pragmatic and viable. Moving to a new infrastructure type….much less so.

    1. James A. Duncan:

      While some in GDS may have opposed it, this was a programme that I led from within GDS from day one – which was nearly five years ago now. GDS has had and continues to have plenty of issues, but let’s not cast shade where none is due.

  2. Les Mosco:

    In my MOD days I visited an Ark data centre site. I was v impressed. Security is v high; some innovative technology was in place to dramatically reduce power consumption (a major cost for data centres); the whole operation looked positive. So good news that Ark have won the Crown Hosting contract, and maybe this one can indeed be a shared service success.

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