Government information technology procurement has been largely conducted on an independent basis, with each federal agency determining its own needs and acquiring the infrastructure -- both hardware and software -- to meet those needs. However, the procurement landscape may change significantly with the latest breakthrough in IT -- cloud computing.
Cloud technology, it seems, has appeared on the horizon at just the right time. In challenging economic times, and with intense scrutiny of federal budgets, IT expenditures are being closely monitored. The Obama administration's directive that essentially freezes domestic spending is putting pressure on federal agencies to meet growing constituency obligations while keeping expenses under control.
As a result, the cooperative use of IT capacity by federal agencies, versus independent procurement, is being encouraged by the administration. The cooperative element found in cloud computing that gives users the ability to essentially rent computer capacity as one of many "tenants" within an IT structure, rather than spend heavily on owning IT hardware and software, is getting the attention of federal managers.
In addition, cloud computing has the potential for significantly enhancing IT performance within federal agencies -- not only to streamline internal operations, but also to vastly improve the way these agencies serve the public.
"Government has the same need for customer relationship management applications, collaboration, customer service centers, case management solutions and software development as the private sector," said Dan Burton, senior vice-president for global public policy at Salesforce.com (NYSE: CRM).
Much as these functions have already been used in the private sector, they can be implemented easily and at much lower cost in the cloud, Burton told the E-Commerce Times.
Cutting Costs, Maximizing Capacity
"One of the attractive features of the cloud is that it is inherently a shared system," noted Sanjeev Bhagowalia, deputy associate administrator for innovative technologies at the General Services Administration.
"So, rather than building and operating a dedicated infrastructure, you can gain very significant economies of scale with multiple users operating from a common platform," Bhagowalia told the E-Commerce Times.
"Also, you can reduce the duplication in capital expenditures among federal agencies by avoiding the costs of having each of them independently spend funds for the same thing over and over again," he said.
While the cost savings in a handful of case studies may seem modest in terms of actual dollars, the relative value in ROI or percentage reduction in costs is impressive. Multiplied throughout the federal government, the potential economies could be enormous. Some examples:
- General Services Administration: GSA moved its primary portal, USA.gov, to a cloud-based host. This allowed GSA to deliver a consistent level of access to information as new databases were added, as peak usage periods were encountered, and as the site expanded to encompass more services. As a result, GSA reduced site upgrade time from nine months to one day; monthly downtime improved from two hours to 99.9 percent availability; and the agency realized savings of US$1.7 million in hosting services.
- US Army: In a pilot project, the Army Experience Center in Philadelphia, a recruitment operation, adopted a cloud-based CRM tool. The center's managers were seeking ways to utilize a real-time approach, and employ familiar tools and techniques that would appeal to young people. The cloud application allowed the Army to track recruits as they worked with the center. Since the tool integrated directly with email, Twitter and Facebook,, recruiters were able to maintain connections with potential candidates directly after they left the center. The Army estimated that a traditional CRM would have cost $500,000. The cloud-based solution was adopted for only $54,000.
- US Interior Department: Interior has 80,000 email users widely dispersed around the country and is pursuing a Software as a Service (SaaS) cloud-computing model. Currently, DoI uses more than a dozen different email systems. DoI determined that a single infrastructure would reduce complexity and improve the level of service when it decided to analyze cloud-based solutions. The analysis was compelling: By implementing email using an external commercial SaaS model, DoI found it could provide improved service to its 80,000 users and save 67 percent of its current costs. DoI expects to complete the conversion in fiscal year 2011.
Better IT Load Management
One element of cloud computing that holds great promise for federal agencies is the inherent scalability of the systems. Cloud platform providers absorb all the investment risk in assembling huge IT capacity and then manage that capacity so as to provide ample reserves for all users, similar to the load and distribution management of an electric utility. Thus, when a user needs to scale up quickly, the reserve capacity becomes available. For many federal agencies, better reserve management can yield huge savings.
"Some federal agencies were overinvesting in IT capacity because they never knew when a big surge in demand might come, and they wanted a buffer, but as a result, they normally operated at less than 20 percent of capacity," Darrell West, director of governance studies at the Brookings Institution, told the E-Commerce Times. West authored a Brookings study of the federal cloud computing situation that was issued in April.
On the other hand, an agency without enough capacity can find itself in big trouble. For example, the federal "Cash For Clunkers" program failed under peak load demand. To process the anticipated 250,000 transactions, the National Highway Traffic Safety Administration deployed a customized commercial application hosted in a traditional data center on June 19, 2009. When dealer registrations began on July 24, 2009, demand quickly exceeded capacity, and the system was overwhelmed within three days, leading to numerous unplanned outages and service disruptions.
The program ultimately handled 690,000 transactions -- but the lack of an adequate scale-up mechanism delayed processing. System stability was not achieved until August 28, more than a month after registrations started coming in.
One of the chief proponents of cloud technology is Vivek Kundra, the federal chief information officer. Kundra has directed the federal government's cloud computing initiative since its launch in September 2009.
At a July hearing conducted by the House Committee on Oversight and Government Reform, Kundra told lawmakers that the government often mismanages IT investment and deployment. He outlined several corrective measures being taken to improve IT performance. Noting the freeze on federal spending, Kundra described the huge potential for efficiency in cloud technology.
"To do more with less, we need game-changing technologies. Cloud computing is one such technology," he said.
However, Kundra cautioned against viewing the cloud as a panacea, conceding that issues involving data security, operability, and privacy remain major hurdles to full implementation. Rep. Edolphus Towns, D-N.Y., who chaired the hearing, was also cautious about use of the cloud at the federal level.
"Government wide implementation of cloud computing will be a decade-long journey," Towns noted, adding that he hopes the federal government's venture into the cloud is "well thought out, that the benefits and risks are fully examined, and that there are comprehensive plans in place to ensure that we do this the right way, the first time."
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In addition to developing an overall plan for cloud adoption, both GSA and the Federal CIO are working to incorporate cloud computing operations at a functional level, both to demonstrate the capabilities of the cloud to other agencies, and to improve efficiencies within government.
The U.S. government is searching for ways to reduce the fog of bureaucracy to improve communication with citizens, and has turned to the cloud as a key strategy to achieve that goal.
In addition to improving services to taxpayers, use of the cloud could save cash-strapped federal agencies millions of dollars. With an annual tab of more than US$80 billion for information technology, the federal government is in a unique position to leverage the potential efficiencies offered by cloud computing.
Commercial vendors, as well as government managers, are well aware of the potential for cloud computing at the federal level.
"The cloud represents a great opportunity for government to focus on its main objective of serving the public. Cloud computing offers tremendous advantages for federal agencies, such as higher productivity, access to innovation, improved collaboration, built-in disaster recovery, better reliability, and unmatched economies of scale and savings," Mike Bradshaw, director of Google (Nasdaq: GOOG) Federal, told the E-Commerce Times.
Google is aggressively pursuing government business and in late July introduced Google Apps for Government, a Cloud-oriented program that includes features dealing with the policy and security needs of government agencies.
"By using cloud computing services, the government can gain access to powerful technology resources faster and at lower cost," said Federal CIO Vivek Kundra at a House committee hearing on cloud computing in July. "Ultimately, this will allow the government to focus on mission-critical tasks instead of on purchasing, configuring and maintaining redundant infrastructure."
White House, GSA Lead Effort
The strategy for adopting the cloud on a broad basis is still very much a work in progress. There are two critical federal centers for cloud development.
The first is the Office of E-Government and Information Technology, which is charged with guiding the use of Internet-based technologies. The office is directed by Kundra, who is encouraging the adoption of cloud technology through informal educational and promotional efforts, as well as through formal directives.
The second is the General Services Administration, which established a Cloud Computing Program Management Office (PMO) in April 2009. The GSA office is responsible for coordinating the federal cloud computing effort in key areas such as security, standards and acquisition. GSA is considering its future role as a cloud provider within the government, both as a consultant to agencies and as a conduit for acquiring cloud resources.
"We are discussing that role, but we see it as based on industry participation. GSA may act as a broker and as an acquisition mechanism, but industry is going to get the business," Sonny Bhagowalia, GSA's deputy associate administrator for innovative technologies, told the E-Commerce Times.
The pace of moving federal agencies to the cloud has picked up within the past year. In September 2009, Kundra launched a more aggressive federal cloud initiative. The key element was an Internet accessible platform developed by GSA, Apps.Gov, that was designed to assist federal managers in learning about and acquiring cloud technology.
In November 2009, the GSA cloud office established working groups on security and standards, with the National Institute of Standards and Technology (NIST) charged with leading the effort. In February 2010, GSA launched a government-wide security certification and accreditation process for cloud computing solutions. Last May, NIST hosted a forum for government and industry officials to collaboratively develop standards and explore solutions for cloud interoperability, portability and security.
In addition to developing an overall plan for cloud adoption, both GSA and the Federal CIO are working to incorporate cloud computing operations at a functional level, both to demonstrate the capabilities of the cloud to other agencies, and to improve efficiencies within government. For example, in February 2010, Kundra directed all federal agencies to develop plans for consolidating various data centers, with an eye to using cloud technology for data management.
"Over the past decade, while the private sector was consolidating data centers, the federal government increased its data centers from 432 to over 1,100, leading to redundant investment, reduced energy efficiency, and poor service delivery," Kundra said at the House committee hearing. "Cloud computing has the potential to greatly increase data center efficiency. It is a model for delivering computing resources --- such as networks, servers, storage or software applications."
For its part, GSA is seeking to transfer more than 15,000 of its own email accounts to a cloud application. GSA plans to replace its current enterprise, on-premise system with a primarily Web-based Software as a Service operation offered by commercial cloud service providers. GSA accepted proposals through July 12 and is now analyzing vendor offerings.
GSA Eyes Procurement Role
Despite these initiatives, widespread adoption of the cloud at the federal level could take years, as agencies and departments strive to overcome impediments to adoption, including the receptiveness of IT managers, security issues and vendor relationships.
For example, GSA's role as a cloud broker and facilitator is still a bit of a mixed bag.
"The success of GSA remains to be seen. The Apps.gov site has not been utilized for actual cloud computing purchases as GSA envisioned," Deniece Peterson, manager of industry analysis for INPUT, told the E-Commerce Times. "Agencies have used the site more for information and education -- however, it may make it easier for agencies to find vendors. But ultimately, centralized procurement is easier for the government, for sure."
Deployment issues including security and interoperability have not been completely resolved. For example, the General Accountability Office (GAO), noted that while cloud computing can increase security by reducing the use of portable devices, the use of the cloud can also pose added security risks.
"In response to a GAO survey, 22 of 24 major agencies reported that they are either concerned or very concerned about the potential information security risks associated with cloud computing," Gregory Wilshusen, GAO's director of information security, said at the July hearing. GAO faulted GSA and OMB for failing to develop a comprehensive cloud implementation strategy and a better plan for safeguarding information.
In response, GSA's Bhagowalia told the E-Commerce Times that "we have initiated a cloud strategy program, and we should be making that public by the end of the year." In addition, GSA, OMB and NIST are collectively developing a Federal Risk and Authorization Management Program (FedRAMP), a government-wide initiative to provide joint authorizations and continuous security monitoring services for all federal agencies, with an initial focus on cloud computing.
The FedRAMP initiative is important for IT vendors.
"Federal agencies need to have valid certification and accreditation processes and a signed authority to operate in place for each cloud-based product they use," Douglas McClure, GSA associate administrator for citizens services and innovative technologies, said at the hearing.
"While vendors are willing to meet security requirements, they would prefer not to go through the expense and effort of obtaining a certification and authority for each use of that product in all the federal departments and agencies," he explained.
The FedRAMP template, expected for release this fall, is designed for multiple applications.
Federal agencies are also worried about becoming dependent on a single vendor for a cloud application for a long period of time. The vendor lock-in concern is another factor contributing to reluctance to adopt cloud technologies.
However, these concerns about security and operations may be overblown.
"I am a little skeptical when people make general statements about some of the impediments to cloud adoption," Dan Burton, senior vice president for global public policy at Salesforce.com (NYSE: CRM), told the E-Commerce Times.
"First we heard the cloud was okay for the private sector but not for government, until we installed some government applications. Then we heard about security issues -- until it worked for the State Department on nuclear nonproliferation issues," Burton recalled.
"The vendor 'lock-in' issue is not that big of a deal," he maintained. "It doesn't take a whole lot of effort to opt out of a vendor's platform because there are standard transfer programs that are readily available. When it comes to cloud adoption, you really have to look at the specific government application and the capability of each vendor."
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"Those companies that embrace the multitenant architecture and business model that are inherent to cloud computing will win," predicted Dan Burton, senior vice president for global public policy at Salesforce. "Those that try to repackage traditional single-tenant, hosted applications and rebrand them as 'cloud solutions' will lose."
The allure of utilizing the latest advance in information technology -- cloud computing -- is that cloud applications will greatly increase efficiency and reduce IT costs. The U.S. government, which spends upwards of US$80 billion per year on information technology, clearly presents a big opportunity for cloud applications.
By some estimates, nearly 40 percent of annual federal IT spending -- some $32 billion -- is for infrastructure operations, the component of IT use that embraces cloud technology. In order to gain future efficiencies on current IT operations by using the cloud, federal IT managers will have to make some significant front-end investments. In addition, as these agencies gain experience with the cloud, they will find new uses for the technology going forward.
Market estimates of the potential for federal cloud investments differ, but that hasn't stopped IT vendors from positioning themselves to gain a piece of the federal cloud business.
"We see spending for Cloud computing at the federal level growing from approximately $420 million in fiscal 2010 to $1.4 billion in fiscal 2015," Deniece Peterson, industry analyst at INPUT, told the E-Commerce Times.
"It is hard to give precise estimates," said Dan Burton, senior vice president for global public policy at Salesforce.com (NYSE: CRM), "but there is no question that the government cloud market is a multibillion dollar opportunity and growing dramatically."
Diverse and Undefined
While the sheer potential value of federal cloud investments is impressive, vendors will still have to work hard to get the business. This is largely due to a diversity of applications and the somewhat undefined shape of the government market.
For example, there is the question of how federal agencies see the scope of useful applications for cloud computing.
"The cloud is just as relevant for government as for other sectors," Burton told the E-Commerce Times. "Government has the same need for customer relationship management applications, collaboration, customer service centers, case management solutions and software development. And much like the private sector, all of these functions within government can be managed easily and at much lower cost in the cloud."
Initially, government managers may utilize cloud technology for more prosaic and routine functions. That's because cloud solutions have the potential to save agencies money for standard commodity-type services such as storage, hosting of common applications, and quick server availability.
However, "the cloud is less effective at saving money when an agency requires highly customized applications," Shawn McCarthy, research director for IDC government insights, told the E-Commerce Times.
An important consideration is the role played by "public" and "private" cloud offerings. A public cloud service is one that is made available to the general public by a provider selling cloud computing capability to a broad market. It exists as an external mechanism for users and is the more commonly referenced type of cloud, mainly because it matches the general accessibility of the Internet.
However, a private cloud is operated solely by one organization and is shared by its various sub-parts. "For particularly large organizations -- such as the federal government or a large Internet service company like Google (Nasdaq: GOOG) or Microsoft (Nasdaq: MSFT) -- many of the benefits of cloud computing can be realized with a private model," said Gregory Ganger, a computer engineer at Carnegie Mellon University, at a July House committee hearing on federal cloud computing.
"For such organizations, the economies of scale and aggregation are sufficiently present without sharing externally, because of their many sizable sub-organizations," he explained.
"Cloud solutions fall into two camps, public and private," noted IDC's McCarthy. "The difference is that private is dedicated specifically to a private set of customers in a more tightly controlled environment. While some public cloud solutions have gained traction in government offices, by far the vast majority of solutions for government will be private cloud systems."
Vendors that have marketed servers and other IT equipment, as well as software and programming providers, will find a different kind of marketplace in dealing with the government conversions to the cloud. Many will have to reshape their marketing strategies, as agencies dispense with owning their own systems and start to "rent" capability from either public or private cloud providers.
"While cloud computing will increase in adoption, the government is not ready as yet for a large-scale transition to cloud technology. If and when that time comes, much of the government will build their own cloud environments, which requires the hardware and software offered by traditional IT vendors," said INPUT's Peterson.
There will definitely be a shift in some low risk areas such as email, collaboration and case management to external cloud mechanisms, but it's likely that more mission-critical computing will remain in-house, she added.
"Those companies that embrace the multitenant architecture and business model that are inherent to cloud computing will win," predicted Salesforce's Burton. "Those that try to repackage traditional single-tenant, hosted applications and rebrand them as 'cloud solutions' will lose."
Google, which introduced its "Apps for Government" cloud-oriented program this summer, is confident that its basic capability will be a plus.
"We're a company born on the Web, and that experience gives us an advantage in the cloud computing innovation space," Mike Bradshaw, director of Google Federal, told the E-Commerce Times.
"The big winners should be the IT service providers and the systems integrators. They are the ones most likely to put together powerful cloud solutions which they can offer as utility computing to government agencies," commented IDC's McCarthy. "But software companies are likely to counter this by offering their own cloud solutions, effectively trying to bypass some systems integrators. It's not yet clear which approach will win in the long run.
"Actually, cloud solutions may take off faster in the states than at the federal level," he noted. "States have very similar IT needs, and because of this, a cloud solution provider who creates a service for one state can easily adapt it for other states."
GSA Seeks to Spur Cloud Adoption
The initiative for adopting the cloud is largely being driven by two high-profile organizations. One is the Office of E-Government and Information Technology, which is directed by Federal Information Officer Vivek Kundra. The other is the General Services Administration (GSA), which is responsible for coordinating the federal cloud computing effort in key areas such as security, standards and acquisition.
For IT vendors, GSA is the organization to watch. In order to speed up cloud adoption, GSA launched a procurement program that will enhance the ability of federal agencies to actually enter into cloud contracts with vendors. GSA initiated a blanket purchase agreement mechanism under which multiple vendors will be selected to provide cloud services throughout the government.
The blanket contract approach will enable agencies to take advantage of a standard contracting mechanism through GSA rather than going through more time-consuming procurement procedures on their own.
Vendors receiving the awards will have the ability to team with various IT providers and subcontractors, so there should be ample opportunity for participation in federal cloud computing by many commercial providers. Under Infrastructure as a Service contracts, GSA is initially seeking capabilities in three critical areas: cloud storage, Web hosting services, and virtual machines. GSA accepted proposals through June 30, and it hopes to award the contracts soon so that agencies can begin contracting for cloud services by the end of the year.
As a result of the government's conversion to cloud computing, there may be some changes in the competitive environment among IT vendors. However, "the real winners," said Google's Bradshaw, "are federal agencies who will be able to take advantage of the multiple benefits offered by cloud computing."
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Autor(en)/Author(s): John K. Higgins
Quelle/Source:
- Uncle Sam Wants the Cloud, Part 1: E-Commerce Times, 29.09.2010
- Uncle Sam Wants the Cloud, Part 2: E-Commerce Times, 07.10.2010
- Uncle Sam Wants the Cloud, Part 3: E-Commerce Times, 13.10.2010
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