The reason is simple: From Arkansas to Arizona, consolidation, transformation and lean initiatives are in. Having weathered the Great Recession, state and local governments increasingly seek the most cost-effective ways to deliver enhanced services to their customers — residents who expect more from public agencies after positive digital experiences in the private sector. Moving to cloud makes sense on several basic levels and within five years it may become the norm.
That’s the forecast from Gartner. In its report Predicts 2017: Cloud Computing Enters Its Second Decade, published in December, the IT research firm said organizations are increasingly moving beyond just experimenting with cloud to seeking strategic relationships with providers, based on the breadth of their vision and delivery.
Cloud Players: Who’s Who in the Government MarketWe examined the industry’s big players in the state and local government market. Using purchase order data from SmartProcure and state term request for proposal data from the Center for Digital Government, we hunted down cloud vendors serving thousands of agencies across the country. Check out the results. |
Gartner predicts that through 2020, cloud adoption strategies will influence more than half of IT outsourcing deals.
For public agencies, cost is one of the biggest reasons for the move to public cloud. Privately built and maintained clouds can be expensive and deliver minimal returns, said Lauren Nelson, a principal analyst at Forrester Research. The CIA had the spending power to commission its own Amazon-built custom cloud, but state and local agencies typically haven’t had that throwing power, she noted.
“The last seven years, building private clouds has been a really hard journey for local companies, and local and state governments are particularly challenged by that,” Nelson said. “The challenge is how do you feasibly do that.”
Security is another key factor. As public cloud providers like Amazon Web Services, Microsoft Azure and Salesforce increasingly meet federal Criminal Justice Information Services (CJIS) and Federal Risk and Authorization Management Program standards, and boost their own internal safeguards, state and local agencies are getting on board.
Shawn McCarthy, research director for IDC Government Insights, said control and security are more important than cost to government agencies. “Cost is a driver for cloud but it’s no longer the main driver,” he said. “Just as important is the ability to improve security, to improve access control, the ability to streamline your configuration management.”
Gartner cited “growing evidence” that the security of business data in the cloud for most mainstream enterprises is equal to or greater than what mainstream IT can provide on-premises.
Government agencies are also realizing that public cloud providers that do one thing — build and sell cloud — can do it better than government agencies whose focus is sometimes spread thin among many lines of business. That’s why a migration to public cloud makes sense for agencies, said Neville Cannon, public sector research director at Gartner.
From March 1, 2012, to March 1, 2017, state and local agencies issued more than 16,000 cloud-related purchase orders, for a total spend of nearly $463 million, according to SmartProcure.
At the federal level, IDC Government Insights reported that total cloud spending is projected to rise from $2.2 billion this year to nearly $3.3 billion in 2021.
The state and local numbers didn’t differentiate by model, but on the federal side, IDC showed that the infrastructure-as-a-service (IaaS) model is expected to lead the pack, with spending anticipated to rise from $1.4 billion this year to nearly $2.2 billion in 2021.
Gartner agreed in February, predicting IaaS would demonstrate the highest growth this year in the $246.8 billion public cloud services market worldwide. IaaS is forecast to grow nearly 37 percent this year to $34.6 billion. Platform as a service (PaaS), another of the three models most commonly associated with government agencies, is predicted to grow more than 23 percent this year to nearly $8.9 billion. And software as a service (SaaS) is expected to be the biggest money generator of the three, growing more than 20 percent this year to about $46.3 billion.
Public agencies may not do away entirely with their own data centers, but those that have moved to public cloud are seeing benefits. Instead of being tasked with running all that infrastructure, their IT staff is freed up to focus on developing solutions to the core problem of government: effectively delivering services to citizens.
That can be a game-changer for IT departments eager to focus on data-driven operations. In its report, Predicts 2016: Cloud Computing to Drive Digital Business, Gartner said that no-cloud policies would be nearing extinction in 2020, “about as rare as a ‘no-Internet’ policy is now,” noting that many mainstream software vendors already consider cloud their first option for new apps.
“It will be largely unthinkable to eschew cloud deployments as a matter of policy,” the report reads. The question for government agencies is what their cloud strategies will look like.
For federal-level agencies, McCarthy said 2017 is already bringing a lull in cloud growth. A key reason is a common complaint heard from local governments too: legacy systems.
“While the system may be cheaper to host in the cloud, the cost of getting there may be expensive,” he said, noting that eventually agencies will have to take the leap as the silver tsunami washes out more and more workers capable of running COBOL and other venerable programs and architecture.
In fact, legacy systems are responsible for dragging down agency savings attributable to the cloud — averaging around 16 percent — down toward zero, said Cannon. Eventually, a tipping point will arrive. “Organizations that are putting this off because it’s too different now, that situation is never going to get easier,” he said.
As budgets continue to be trimmed, it can leave agencies stuck with legacy systems but unable to adapt or evolve, said Dave Rey, Salesforce’s executive vice president for the public sector.
“If they don’t look at changing this paradigm, [look] at moving this off-prem to a cloud, they’re going to have a very difficult time effecting innovation. It absolutely eats up a lot of free dollars,” said Rey, who estimated that legacy systems can consume 70 to 80 percent of IT budgets.
Asked by Gartner where they’d spend new or discretionary funding in 2016, 31 percent of government agencies said in “cloud services or solutions,” which ranked first out of 11 options.
But Cannon warned against thinking governments’ move to cloud would be accomplished with startling swiftness, adding that it’s “much, much slower than people believe or might hope.”
Nelson cautioned agencies to do their due diligence and realize cloud is not one size fits all. “I think you’ll see almost every organization will be using cloud to a certain extent, but the extent and the scope of that will vary for a very long time,” she said.
Several use cases show where agencies of varying sizes are headed in cloud.
In Seattle, Chief Technology Officer Michael Mattmiller said the city has maintained applications including its Microsoft Office 365 email system in the cloud for several years and works with other cloud vendors including Amazon Web Services. But he questioned whether cloud will soon become an all-or-nothing proposition for government.
In 2012, a time Mattmiller said likely pre-dated at-scale cloud deployment for the city, officials were faced with an on-premises data center nearing the end of its life. After an investigation, they decided remaining on-premises was more cost-effective in terms of hardware, staffing and operational expenses.
Over four years of planning, officials stood up a new co-located, three-tiered data center that houses mission-critical systems like the police and fire computer-aided dispatch and records management software, enterprise resource planning and utility billing systems.
“We opportunistically leverage cloud where it makes sense. Broadly, in the city, we see ourselves having a data center that we maintain and control for at least the next five to 10 years,” Mattmiller said, noting that there’s simply not a path to cloud for all of the roughly 1,200 applications the city maintains.
Of the three cloud delivery models, Mattmiller said SaaS seems to offer the most opportunity because of the speed at which solutions and access can be deployed. SaaS costs, he said, are more predictable than IaaS or PaaS — the latter of which also presents questions about portability should the city need to change vendors.
Having moved Seattle’s email system to the cloud, Mattmiller suggested that telecommunication services might be the next candidate for cloud migration.
In New Mexico, Albuquerque too has a hybrid approach to the cloud and continues to host many enterprise applications and data stores internally.
“We have found the cloud to be especially beneficial for services that are citizen-facing and/or require technology that would be unique for us,” said Associate CIO Brian Osterloh.
The city’s website is based in an open source content management system hosted in the cloud and uses unique database and middleware technology. “The cloud lets us source the needed expertise while allowing city resources to focus on the strategic value of the Web; i.e., the content,” Osterloh said.
In San Diego, CIO Jonathan Behnke said the city has taken a hybrid public-private approach to cloud — but stood up its own private cloud about four years ago, where it maintains nearly 400 applications. The city has kept an eye on Microsoft Azure and Salesforce solutions, but finds some public solutions are still cost-prohibitive.
“We do see some things that are a better fit for our private cloud but then we still see a profound effect from the cloud on how we do business,” Behnke said.
Key issues for the city in public cloud are retaining data ownership and keeping downtime to an absolute minimum. Ten percent discounts from public cloud providers whose servers crash are fine, Behnke said, but “the 10 percent won’t bring back critical services to residents.”
“Overall, our private cloud competes very well with the public cloud model,” he said. “The agility is there, but it’s too costly to go all-in.”
Behnke sees future processes like municipal permitting primarily ending up in cloud models, and on-premises models becoming orphaned. And he agreed that the SaaS cloud model is often preferred for its automatic updates and economies of scale — but said PaaS can offer real value in the right circumstances.
In June 2016, San Diego debuted its Get It Done app that lets citizens submit mobile service requests. On the back end, it’s run by enterprise resource planning software from SAP. But the entire front end runs on Salesforce’s PaaS platform. More than 10,000 residents are using the app less than a year after its arrival, and staffers are able to quickly push results, including photos of completed services, out to residents.
In Vermont, Gov. Phil Scott signed on Jan. 15, Executive Order 06-17, which reorganized state IT under the new Agency of Digital Services and should also enable the state to leverage its tech buying power.
John Quinn, Vermont’s new CIO, said he’s been asked by the governor to inventory state software, scrutinize contracts and determine which apps could be moved to the cloud quickest. Currently the state operates in a hybrid environment, one that Quinn sees continuing for the “next few years” — but is planning long-term to migrate everything to its private cloud, which will better prepare legacy systems and applications for an eventual move to the public cloud.
The state is in the testing phase on moving some servers and apps to Microsoft Azure. Vermont already uses cloud-based Microsoft Office 365, Quinn said, and is working on enabling multifactor authentication so it can use Microsoft OneDrive and SharePoint as well.
“We are very focused on a cloud-first strategy. Whenever it makes sense financially, it’s our position to move to the cloud first as long as it meets our security requirements,” Quinn said, noting that Vermont looks closely at public cloud solutions to ensure they are CJIS-compliant and meet HIPAA and FTI standards for preserving health and tax information, respectively.
Quinn said his personal preference is for the SaaS model — asking rhetorically, “Who better to support Microsoft servers than Microsoft themselves?” — but that depending upon the situation, the state might consider IaaS and PaaS models too.
“I think there are efficiencies to be gained by moving to a SaaS solution and to a cloud-based environment to free up resources, whether it be infrastructure people or server people, to work on other priorities,” he said.
