Skip to content

Search the site

UKCloud liquidation: Arguably became inevitable when AWS won the spooks

The "vast majority" of government customers using UKCloud services have "already moved" onto alternatives a Cabinet Office spokesperson said as the homegrown cloud services company went into liquidation.

"Those who remain on UKCloud will find alternative arrangements as soon as possible...

"We do not expect disruption to everyday public services" the spokesperson said.

Computer Weekly reported a year ago that the Cabinet Office had started briefing departments not to use the cloud provider amid concerns about its financial health -- a claim refuted at the time by officials.

The game was arguably up for the provider when hyperscalers like AWS won the trust even of the UK's spy agencies -- which were reported by the FT to have inked a deal worth up to £1 billion with AWS in 2021.

UKCloud had hoped the launch of its UKCloudX offering in 2018 would allow it to carve out a strong niche with secure UK government services and contractors serving them with a national security focus.

It touted infrastructure built and operated by UK security cleared and “extensively vetted” cloud experts in UK facilities and connections to networks like RLI, PSN-Protect, PSN-Assured, the Janet network and the health service’s N3/HSCN and independent assurance courtesy of NCSC/CESG PGA heritage, Home Office Police Assured Secure Facility (PASF), CTAS, ISO9001, ISO20000, ISO27001, ISO27017, ISO27018, etc.

It wasn't enough, despite attracting defence contractors like Leidos and Leonardo.

The loss-making business was bought by Chairman Jeff Thomas in January this year. It had reported losses of £17.4 million on revenues of £37.1 million for the 2020 fiscal year, the last it reported.

UKCloud liquidation: CEO had lamented resilience risk of concentration

Just last month UKCloud CEO Simon Hansford posted on LinkedIn that he welcomed Ofcom's study of the UK's cloud services market. He said: "There is a real issue with national resilience when the market is so concentrated and in the current geopolitical and economic climate we should all be concerned about that.

"Similarly, how will this concentrated market support the UK’s economic recovery when so much of the benefit is transacted off shore? And then with these hyperscale cloud services almost never competitively tendered, how does the consumer know that s/he is getting best value?" he commented on the regulator's report.

uk cloud liquidation
UK public sector spending with UKCloud via G-Cloud frameworks. Source: Crown Commercial Service.

A graph included with Ofcom's announcement showed the scale of the problem for smaller providers like UKCloud: Amazon, Microsoft and Google between them controlled 81% of the UK cloud market in 2021, up from 70% in 2018. The situation in the public sector is even worse, as the government's own figures show.

According to Crown Commercial Service data (slide 2) on the use of G-Cloud, public sector spending with UKCloud peaked in Q1 of FY16/17 at £8.1 million - since then it has shown a steady decline, with an even faster drop over the last few quarters. In FY21/22 public sector bodies spent just £11.7 million with UKCloud.

In contrast, public sector spending with AWS saw organisations dabble with the hyperscaler from 2016 onwards, until 2018 when spending took off dramatically (with the business moving from Amazon's US company to its EU-based equivalent from 2018 onwards). Government AWS spend hit £63 million in Q1 2022. The UK public sector has spent more than £543 million on AWS cloud services via G-Cloud frameworks.

Adam Turner, Head of Sustainability at DEFRA and author of HMG and NATO sustainable ICT policy was among those lamenting the UKCloud liquidation. He wrote on LinkedIn: "Well this is sad.

"From a sustainability reporting point of view they were the most thorough and complete of all the Cloud providers based on the service consumed. I often use their data as a benchmark and they were vital in the creation of the Capturing Carbon in the Cloud paper I co authored with TechUK. Hopefully we will see some reuse."

See also: AWS’s new carbon footprint tool criticised