Features: September 3rd, 2010

By Brian Klingbeil

Public services are under intense pressure to cut costs and technology budgets are no exception. The author explains how a major shift in technology now offers a way to deliver more for less. Cloud computing has arrived on the scene at a time when the search for efficiencies is at its peak. Cloud computing is like the electricity grid. It is Internet-based and shares resources, software, and information to computers on demand.

Savvis recently completed its second global research project1 on IT outsourcing attitudes and practice. The researchers spoke to IT and business decision makers in the U.K., U.S. and Singapore. The results highlighted issues facing the public sector; 69 percent of public sector business decision makers say doing more with less is their key challenge this year. Further, 83 percent of business decision makers regard cost savings as their top strategic priority for 2010.

Public sector IT managers are also acutely aware of the pressure. In line with their private sector peers, 48 percent cite finding more cost-effective IT infrastructure as their top priority, followed by effectively managing and prioritising IT demand, then delivering faster data access across their organisations.

Attitudes to outsourcing

Despite identifying the need to reduce IT infrastructure costs as their primary concern, IT managers in the public sector say that only 7 percent of their infrastructure is outsourced. The figure is significantly lower than in the private sector, where IT managers say 19 percent of their infrastructure is outsourced.

Historically, owning and operating your own IT infrastructure was seen as a differentiator. It could enable greater business flexibility of service design and, once equipment was provisioned with sufficient capacity, flexibility.

However, with the availability of high-powered processor and virtualisation technologies, plus the increased standardisation of platforms and ability of service providers to deliver game changing services, the landscape has changed. Now the operation of underlying IT infrastructure is most often best left to companies that execute the routine deployment and management of IT infrastructure on a massive, and hence more efficient, scale. When a full audit of costs and impacts is taken, in both monetary and environmental terms, it is now only an exceptional enterprise that can justify building and operating an IT infrastructure.

Technology is changing thinking

This technological revolution has parallels in the Industrial Revolution. There was once a huge advantage to building a factory close to a river where a waterwheel could provide power. The coming of electrification via a grid changed power into a commodity. Today, few businesses would consider investing in supplying all their own electricity as the outlay and ongoing costs outweigh the advantages of being independent.

As IT follows a similar path, a large-scale shift toward outsourced systems is expected to occur. Public sector respondents expect to have 64 percent of their infrastructure under third-party management within 10 years, approaching the predicted private sector level of 67 percent.

The move to cloud computing

Much of this change will result in applications for government moving to cloud environments where shared resources, software, and information are provided to computers and other devices on demand. In fact, 59 percent of government and public sector IT teams are already using or expect to use cloud for enterprise applications within five years. Fifty-one percent anticipate savings by switching to cloud-based infrastructure.

Despite the many different definitions of cloud used for marketing purposes, the proposition is simply a new purchasing model, typically on multi-tenant infrastructure in which capacity can be easily added or removed to match demand for the services running on the system. This means there is no need to invest in infrastructure that will only be used during times of peak demand.

The key differences between the various clouds available are vested in the levels of service delivered and depend on who has access to the resources of the cloud. Both public clouds, in which resources are available for purchase by any organisation, and private clouds, in which an organisation shares a pool of resources amongst its divisions and partners, offer the same capabilities in terms of rapid deployment and scalability.

Private clouds enable more control and simplify compliance auditing when the highest levels of security are required. In either public, private or hybrid mode, however, only the latest generation of enterprise cloud services are able to offer the full range of security, application stack choice and service-level capabilities required for critical services.

Public discussions on the G-cloud and the actions of our government clients in Europe show the shift has already begun. As this change gains momentum, we expect to see a series of small cloud clusters form around functional groups, based on open platforms.

Over time, these functional groups will be linked, forming larger, distributed G-clouds regionally, nationally and potentially supranationally. This rollout will both mirror and be enabled by the continued development of networks such as the Government Connect Secure Extranet (GCSX) and the wider Government Secure Intranet (GSi), which have already demonstrated that improved interconnection of data and user communities rapidly deliver significant benefits in terms of both cost and increasing the range of services that can be provided.

A key barrier to adopting these more efficient and effective IT operations models appears to be that decision makers in public office currently lag behind their private sector counterparts in their understanding. Only 8 percent of public service managers claim they know exactly what cloud computing is and the benefits it can offer. There is clearly a need for more dialogue between the IT teams and the wider organisation on what is now possible.

Service managers, however, do see the potential for development of new ways of working based on more flexible IT infrastructure, with 64 percent agreeing they could change the way they plan if they could reduce or eliminate the capital cost of IT infrastructure.

In our experience, culture and politics are also likely to play a role in slowing the move to more effective IT infrastructure purchasing. Fully adopting cloud computing within any corporate structure often means sharing across departments or organisations, yet the process of allocating budgets and the desire or political motivations in place to incentivise a pooling of resources appear all too often to be lacking or lagging behind the aspiration to develop large-scale shared resources. The issue needs to be forced from the top; otherwise little progress will be made, which would be a shame because the opportunity for synergies in the currently disconnected, silo environment is truly massive.

Managers facing these challenges are fortunate that we now have available the potent combination of new enterprise-class systems that can enable a radical change of approach where cost is tied to demand and the strong economic need for change. This should grant them the freedom and capability to make the changes needed to gain unprecedented flexibility in planning and development and hence secure long-term efficiencies.

The choice between cuts or the cloud is clear. Cloud computing offers the opportunity to do more by buying less. IT teams and service managers need vision and the courage to work differently to drive the required changes.

This vision needs to apply to the regulatory environment with virtualisation being quickly accredited for government use as an approved technology, and learning from high security environments in the commercial world where virtualisation is already accredited.
Such efforts must be accelerated as soon as possible in order to benefit from the corresponding economic efficiencies. When implemented effectively, resources will be freed to deliver the services taxpayers and citizens need in a flexible and more sustainable way.

Brian Klingbeil is managing director EMEA, Savvis http://savvis.itleadership.info/