Cloudy with a chance of big savings

As the new coalition government has settled into power, it is clear that the number one priority on its agenda will be reducing the huge hole in the public finances. Inevitably, as we have seen from the recent emergency budget, this will mean government organisations will be asked to find further savings in their budgets. As ever, many government organisations will look first to their IT departments to find the savings they need to balance budgets, both by increasing efficiency in their own operations and across the organisation as a whole.
One of the quickest and most common approaches to reducing ICT budgets has been through the use of virtualisation technologies and we have seen widespread adoption of these across the public sector over the last few years.

Benefits of virtualisation
The cost cutting benefits of virtualising are well-established – not only does virtualising reduce data centre costs by reducing physical infrastructure and administration, but fewer servers and related IT hardware means less real estate and reduced power and cooling requirements. We have seen customers in the public sector achieve significant cost savings as a result. Sevenoaks District Council, for example, saved around £80,000 in its first year of virtualisation, at the same time as reducing its data centre requirements by 50 per cent. Somerset County Council, achieved a server consolidation rate of 20:1 through virtualising, which has brought significant cost savings via reduced power and hardware maintenance costs.
While these types of cost savings are a key attraction to virtualisation, organisations across the public sectors have seen other benefits including:

  • Increased availability of hardware and applications for improved business continuity
  • Enhanced operational flexibility and the ability to cut provisioning times for new application servers 
  • Reduced energy consumption
  • Reduction in staff required to maintain data centres.

Taking all these benefits into account, it is perhaps no surprise that a survey of CIOs by Gartner revealed virtualisation to be their number one priority for 20101. However, while some organisations are yet to discover the benefits, our experience tells us that the majority of public sector organisations have virtualised to some extent. Indeed, there is a feeling among many public sector CIOs I speak to that, having endured two or three years of dramatic belt tightening, the ”big save” solutions such as virtualising have been tackled, and the next steps for cost cutting may call for some more radical solutions. One need only look to second place on Gartner’s CIO priority list to see the potential answer – cloud computing.

Cloud computing
The cloud computing approach reduces ICT complexity by leveraging the efficient pooling of on-demand, self-managed virtual infrastructures, to be consumed as a service. Analyst IDC, expects spending on IT cloud services to grow almost threefold during the next five years, reaching US$55.5 billion by 2014, and it is clear that there is tremendous interest in the potential benefits it offers2.  
These benefits start with the cost savings offered both by economies of scale and also the ability to offer an “on demand” model where you only have to pay for what you use. Second is the removal of a lot of admin work for the in-house ICT department – with a highly automated cloud ICT staff need to spend less time worrying about server maintenance or upgrades.

Third, the cloud can act as a huge enabler for change in working practices and improved productivity, with employees able to access ICT resources wherever they are, as long as they have an internet connection.
Indeed, many public sector bodies have already been using elements of what is now loosely termed “cloud computing” for a while. An interesting recent survey from IDC discovered that nearly 60 per cent of European CIOs, both in the public and private sector, are already using cloud services3. Interestingly, it also revealed that many don’t even realise they are doing it, thanks to the confusion and hype surrounding the many different definitions of cloud technologies. One example of a ”cloud approach” that many would not immediately identify is that many organisations no longer manage certain applications in-house and instead use a Software as a Service equivalent, which is run and hosted elsewhere.
While this is an interesting aside, for many in the UK’s public sector (and indeed in the private sector), there remains a real hesitancy about the perceived risks involved with public cloud models, particularly with regards to the security of their data, data location and the ability of third parties to host mission critical applications. Following a number of high profile instances of data loss over the last two years, both within the public and private sector, it is not hard to see why these concerns remain front and centre for many CIOs.

The Cabinet Office’s proposed G-Cloud initiative promises to address many of these concerns, particularly with regards to SLAs and data security. A core part of the most recently outlined ICT strategy, the government cloud infrastructure will ”enable public bodies to select and host ICT services from a secure, resilient and cost-effective shared environment. Multiple services will be available from multiple suppliers, which will make it quicker and cheaper for public sector bodies to switch suppliers if they face service or delivery issues”. Furthermore, the G-Cloud has been identified as a key part of the government’s ongoing savings programme by offering the benefits of economy of scale to all public sector bodies and providing a single access point for ICT services, applications and assets. Central to the G-Cloud initiative and its potential success is that it will be able to offer public sector bodies benefits far beyond those of the average cloud service provider. Not only will the economies of scale already associated with cloud be available, but added to this will be the leveraged purchasing power of an initiative potentially representing over 400 public sector bodies who account for £4-5 billion of annual ICT spend.

The G-Cloud will essentially act as a ”gold standard” brand for public sector bodies, with private cloud providers having to meet strict SLAs around availability and data location and security in order to make it onto the list of approved providers.
The evolutionary path to cloud
A key part of the G-Cloud initiative will be the ability for organisations to migrate parts of their existing infrastructure to be hosted elsewhere, removing the costs and hassle associated with running this themselves. However, it will also aim to help to drive down cost by reducing the 10,000 plus software packages and services currently being used by public sector bodies. Instead of each using separate applications, public sector bodies will be able to choose from a shared range of applications held in the Government Application Store, to be hosted in the G-Cloud. With more applications hosted centrally and less run from individual data centres, there will be the potential for large cost and efficiency savings across the board, and increased standardisation will help different public sector bodies work together more effectively.
Having been involved in the consultative part of the G-Cloud development process, one of our shared core beliefs is that the shift to the cloud should not be seen as a giant leap into the unknown for public sector organisations. As already discussed, the majority of public sector organisations are in the process of adopting virtualisation, and while some may be further down the track than others, the ability for organisations to create their own private clouds through virtualisation is a stepping stone to the ability to incorporate external cloud services.
We’ve already seen a number of customers using our tools to create their own ”private clouds”, abstracting complexity and creating an internal elastic pool of compute, storage and networking resources. You can also maintain data security, compliance and control, and gain efficiencies in resource utilisation and automation without impacting SLAs and existing applications. By enabling federation of on-premise infrastructure with third-party cloud infrastructure, organisations will easily be able to extend selected workloads into off-premise cloud providers.
However, while the ability to create a private cloud that can be ”lifted and shifted” to be run by an external cloud provider is a hugely exciting proposition, there is an expectation that, for most, the move to G-Cloud will be more of a gradual process. Organisations are expected to dip their toes in the water with some of their least mission critical applications before committing further.
While we wait to see exactly how the G-Cloud initiative will shape up, it is clear that the potential benefits it offers are enormous. As with many technologies, not least virtualisation, it will be the cost savings that will be the main initial driver for the public sector. However, this is merely opening the door to a whole range of benefits for public sector bodies and, ultimately, public service provision. Exciting times lie ahead!

1. The Gartner EXP CIO report ‘Leading in Times of Transition: The 2010 CIO Agenda’
2. Worldwide and Regional Public IT Cloud Services 2009-2014 Forecast  
3. IDC European Software Survey, 2010

Please register to comment on this article