Government To Cut Costs With Cloud Computing

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The government will look to outsourcing and cloud computing to cut costs in 2011, predicts Ovum

Cloud computing and business process outsourcing (BPO) will gain momentum during 2011, as the government looks for new ways to cut costs, according to a report by analyst firm Ovum.

The report, entitled ‘2011 Trends to Watch: Government Technology‘, predicts that government departments will offer more services via the cloud, and increase their outsourcing, particularly of back-office processes, over the coming year.

“Governments should push beyond knee-jerk cost-cutting measures and adopt a long-term vision of how fundamental changes to the way they deliver services will bring efficiency,” said Jessica Hawkins, Ovum analyst and author of the report. “Many will look to their IT vendor to guide them through the new technologies that can help them achieve this, and vendors should be ready to do this.”

Using the cloud to save money

Several industry commentators made similar predictions in June 2010, following the announcement by the coalition government that public sector IT spending would be cut by £95 million. Andy Burton, chairman of cloud-promoting body, the Cloud Industry Forum, said at the time that cloud computing could enable implementation of the required IT solutions, without the capital costs associated with more traditional supply models.

“The thoughtful application of cloud-based services offers a credible and affordable way to save costs and scrutinise the ways in which IT is procured and delivered,” said Burton at the time.

Plans have already been laid for the ‘G-Cloud‘, which the government will use to provide multiple services, interoperability and data sharing via the cloud, together with a government application store. It is estimated that the flagship project will save £1.2 billion a year, gradually building to £4 billion by 2020.

The strategy could also improve the sustainability of government services. According to a strategy paper drawn up by the previous Labour government in 2009, the rationalisation and consolidation of data centres used by the public sector could allow the number to be reduced from many hundreds to between 10 and 12. The data centres themselves would become more resilient and secure, reducing costs by £300 million per year and power consumption by up to 75 percent.

“The business case for cloud computing is obvious – it’s computing on tap, available instantly, commitment-free and on-demand,” said ENISA expert Giles Hogben.

Security of shared services

Ovum’s report also predicts growth in shared delivery models during 2011. Ewen Anderson, managing director of independent consultancy Centralis, predicted this key trend last year, claiming that shared frameworks allow multiple authorities to shoulder the cost of IT upgrades, and the development of resources and best practice.

“If the need for each organisation to maintain all its own specific systems and infrastructure can be removed then real savings, without compromising service levels, is a realistic expectation,” he said.

However, the main issue currently holding up adoption of cloud and shared services in the public sector is concern about security. There is a high level of distrust around cloud services, as a recent poll of eWEEK readers confirmed, and few readers were willing to move all of their business applications to the cloud.

However, a recent survey by public sector supplier CSC revealed that government departments are beginning to show a willingness to be flexible on security governance and cloud adoption.

“While the vast majority strongly agreed that the use of a public cloud would substantially increase risk to confidentiality, a majority also agreed that a shared private cloud (or community cloud) among users with similar security cultures would likely be an acceptable risk,” said CSC.

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