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Government Cloud Economics

Transformation Network

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The Achilles heel of every transformative business model is their reliance on ever increasing amounts of data that need to be transported quickly across wide area networks and processed at…

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Cloud Musings

In the The Economics of Cloud Computing, Gwen Morton and Ted Alford have published an EXCELLENT economic evaluation of the federal government’s push to cloud computing. Anyone interested in this market should definitely read it, analyse it, and believe it !! The conclusion acknowledges the value of cloud computing, but also offers these practical considerations:

  • It will take, on average, 18-24 months for most agencies to redirect funding to support this transition, given the budget process.
  • Some up-front investment will be required, even for agencies seeking to take advantage of public cloud options.
  • Implementations may take several years, depending on the size of the agency and the complexity of the cloud model it selects (i.e., public, private, or hybrid).
  • It could take as long as 4 years for the accumulated savings from agency investments in cloud computing to offset the initial investment costs; this timeframe could be longer if implementations are improperly planned or inefficiently executed.

Final recommendations are:

  • OMB, GSA, and other organizations, such as National Institute of Standards and Technology (NIST), should provide timely, well-coordinated support-in the form of necessary standards, guidance, policy decisions, and issue resolution-to ensure agencies have the necessary tools to efficiently plan and carry out migrations to cloud environments. As the length of the migration period increases, the potential economic benefits of the migration decrease.
  • OMB and GSA should seek to identify those agencies with the highest near-term IT costs and expedite their migration to the cloud.
  • To encourage steady progress, OMB should establish a combination of incentives and disincentives; e.g., consider allowing agencies to retain a small percentage of any savings realized from cloud computing for investments in future initiatives. To monitor progress and heighten transparency and accountability, OMB could incorporate cloud-related metrics into the new government-wide IT dashboard.
  • Agencies should consider which of the high-level scenarios described in this article best suits their needs, with the understanding that regardless of scenario chosen, proper planning and efficient execution are critical success factors from an economic perspective.
  • Given the significant impact of scale efficiencies, agencies selecting a private cloud approach should fully explore the potential for interdepartmental and interagency collaboration and investment (consistent with emerging OMB and GSA guidance). This, in effect, leads to the fourth cloud deployment model-the community cloud. A community cloud is a collaboration between private cloud operators to share resources and services.
  • Agencies should identify the aspects of their current IT workload that can be transitioned to the cloud in the near term to yield “early wins” to help build momentum and support for the migration to cloud computing.

Definitely a must read !!

( Thank you. If you enjoyed this article, get free updates by email or RSS – KLJ )

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