Traditional information technology (IT) has long fostered a belief in the value of buying and owning infrastructure, a dominant model across many public sector organizations. However, the era of buying, building, and maintaining complex and costly infrastructure is quickly becoming an outdated and arcane approach to long-term technology investment. The need for state governments to deliver services to citizens as efficiently as possible has hastened the demise of traditional processes for planning, developing, and testing IT capabilities. Cloud computing, in its various iterations, embodies much of the debate in the public sector on how to maximize shared investment in technology and lower the cost of service delivery. In this new era, technology services are brokered instead of infrastructure being procured.
Public sector benefit
Retiring the era of buy-and-build infrastructure promises a number of benefits. In the IT ecosystem today, cloud computing represents a new reality—nearly infinite scalability. Cloud computing will minimize or potentially eliminate the need to make capital investments in technology infrastructure, one of the more difficult tasks for a public sector chief information officer (CIO). Charge-back models for IT organizations raise revenue for work as it is defined today, but they do not allow planning for tomorrow. That is the most incrementally conservative and safest way to fund technology services, and it is much easier than drafting requests from a general fund. Yet, information technology is fast becoming critical infrastructure for governments to make significant investments—on par with transportation and economic development. The elimination of upfront costs with cloud computing is a powerful argument, especially in the public sector.
Cloud computing has carved out a niche in commodified services like email and storage. Larger mission-critical systems may not now be a good fit for cloud computing, with questions of performance, security, and obsolescence still viable business concerns. Even with little need for upfront investment in cloud computing, incremental investment in onsite infrastructure remains a norm; however, that model is unlikely to remain stable. Cloud computing may very well mature into the norm for how technical services are procured and managed in the public sector, and with that maturation the landscape for public sector CIOs will change dramatically. Cloud computing would alter the landscape of IT management, and redefine how technology budgets are prepared and defended during the appropriation process. And the defining metric of cloud computing—hyper-scalability—would be front and center in public sector funding discussions.
Promise and peril
The basic promise of cloud computing lies in hyper-scalability, the ability to aggregate a greater volume than any one collection of agencies and departments can muster. Hyper-scalability of cloud computing is synonymous with shared services in the public sector CIO lexicon. This is both the promise and peril of cloud computing. For the public sector CIO, building enterprise services of all varieties and sorts is fundamental to success. Volume can drive down the unit price of any and all services. That pattern has certainly been true of email, for example. Cloud computing pricing for email seems to beat, hands down, what can be offered by on-premises email systems. Across the board, public sector CIOs are steadfastly focused on building consensus for the development of enterprise services used by many of the agencies and departments of government. Why? Many argue that it is to gain and keep control, but enterprise models that drive volume up and price down are also the most cost effective in government.
Similarly, relying on cloud computing also comes with perils. Typically, cost recovery models offer the greatest savings when volume is maximized, as is the case in a government-owned and operated data center. More agencies and departments participating in a data center, as an example, allows contract managers to negotiate discounts and reduced operational costs. Yet, the purview of a government data center limits the number of customers that can be served and volume of services delivered. In the past, that volume was enough to drive efficiencies and make the case for shared services. Cloud computing renders that model obsolete.
In the evolving arena of information technology, change is expected even in the slower-paced public sector, and hyper-scalability of cloud computing services gives the public sector CIO another tool in the toolbox. While they will benefit from leveraging cloud computing services in conjunction with standard service delivery, does the hyper-scalability of cloud computing remove volume as a key negotiation lever? Will the unit price of cloud computing services fall to the point of nullifying volume? At first glance, public sector CIOs may see hyper-scalability as a direct challenge to specific services offered in a cost recovery data center. This idea will prompt the CIO to develop a strategy that advances investment in cloud computing as a counterweight to traditional IT services.
Meanwhile, the public sector CIO must also consider a more challenging issue: how can enterprise services be planned and implemented without volume as a driver? Individual agencies and departments will see diminishing from shared services, when these services can be procured in the cloud.
The shift away from buying and building infrastructure will push the public sector CIO to focus on business leadership and strategy instead of technology management.