Demand for Cloud Services Among Government Agencies

While much of the market attention on cloud services adoption tends to be focused on private enterprise applications, government agencies potentially have a lot to gain from its widespread use.

The cost-savings and scalability advantages of the cloud have been clear to those savvy IT leaders that are informed, but government adoption has been hampered by some unique challenges -- and the absence of a compelling mandate. That is, progress was slow until the "Cloud First" initiative was launched.

IDC has released a status update that details the growing demand for cloud services and enterprise architecture resources among U.S. government agencies. Their latest market study focuses on the results of an IDC Government Insights survey, which measured the progress of cloud solutions at government agencies -- while also examining the related architecture needs.

The results of the comprehensive survey revealed that despite the growing demand for cloud services, many IT managers are unsure of their organization's overall cloud strategy and the resources available to purchase and implement cloud services.

The Strategic Imperative for Cloud Services

The IDC report of the market study findings also highlighted that government employees now realize cloud solutions are becoming important for IT strategy. However, apparently many decision makers are still evaluating what cloud solutions will specifically mean to them and their organization.

In addition, in spite of the fact that managed cloud service offerings have been made available to government agencies for some time now, more than a third of the survey respondents lacked knowledge of cloud services budgeting.

IDC Government Insights finds that extensive government employee outreach is necessary to boost the comprehension or understanding of cloud migration strategies and related budgetary requirements.

Other findings from the latest IDC report include:

• Across all levels of government 90 percent anticipate cloud services will have impact on computing infrastructure.
• Local government participants were the least optimistic about cloud, with 14.7 percent saying cloud wasn't at all important.
• Despite the fact that CFOs are often the people who drive their group's transition to cloud (due to potential cost savings) 60 percent of chief financial officers are only somewhat familiar with their organization's cloud strategy.
• Indicating the presence of some progressive thinking, 15.2 percent of respondents said they would dedicate between 1 and 10 percent of their agency's IT budget to cloud services.
• When it comes to cloud providers, there is a clear preference across all levels of government for large IT vendors versus smaller, specialty providers.

"Survey data indicates that significant progress already has been made for cloud services, but overall progress will only accelerate once several important issues have been addressed," said Shawn McCarthy, research director at IDC Government Insights.

IDC believes that these outstanding issues include lack of knowledge by some participants on the level of funding available to spend on cloud solutions -- as well as the needed IT architecture changes that can help agencies move more aggressively into cloud.

Furthermore, by focusing on greater outreach efforts to bring all IT employees in line with enterprise cloud plans, government agencies can begin to benefit from the readily available cloud computing services.

The IDC survey was conducted in the late spring of 2012 and measured the responses of more than 400 government information technology employees at various levels of the U.S. government. About half of the participants work for the federal government, with the remainder working in either state or local government.

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How Government Agencies will Adopt Cloud Services

While most commentary about managed cloud services tend to focus on the advances in commercial enterprise applications, government agencies are also making noteworthy progress. In particular, the advent of regional community cloud hubs is a phenomenon that's worthy of further exploration.

According to their latest market study and related report, IDC Government Insights believes regional cloud hubs will significantly change the way state and local governments procure online computing services.

These regional cloud hubs, defined as one government agency offering computing and storage services to other government agencies, have proven successful in the State of Michigan and State of Utah. In addition, the IDC's research provides a framework for building similar regional cloud solutions.

According to Shawn McCarthy, research analyst, IDC Government Insights, "We believe that cloud hubs will see rapid growth, since the first multi-agency efforts have already shown a positive return on investment and solid service levels for cloud solutions subscribers."

Cloud computing is rapidly changing the way government organizations consume computing resources. This comes at a time when virtualized servers and efforts towards application standardization have merged many government solutions.

IDC says that as solutions merge, less data center space is needed. In fact, by the end of 2012 close to 40 percent of federal data centers will be shuttered. Many state governments are following a similar path, often combing multiple data centers into one or two large statewide operations. Remaining data centers often serve as a shared computing and storage resource for multiple departments.

Why State Government is Leading the Way

While any level of government can, in theory, offer services to any other government office, state-level governments are often most qualified to serve as regional hosts -- offering government-to-government services to other state agencies or to local municipal government entities.

Local governments are already looking for trusted cloud providers -- and for ways to significantly reduce their growing IT costs. Through these cooperative arrangements, the government sites are able to leverage private cloud services including software as a service, infrastructure as a service, online storage, and security as a service, among others.

Being able to purchase services through high volume state contracts can give local governments a substantial pricing edge. In addition, moving to a shared service environment also helps local governments conform to broader data standards and gain access to streamlined reporting tools that can be hosted right on the shared system.

"In general, the larger government operations that already manage complex IT systems will evolve as the most likely regional hosts," said McCarthy. "Smaller government agencies may choose to get out of most IT hosting and management operations, as long as they can find reliable, affordable and privately hosted solutions through the cloud."

Business Model for Regional Cloud Hubs

According to IDC, these managed cloud solutions often require zero to moderate capital expenditures and are developed in-house or are commercially developed private clouds -- dedicated to government use and designed to meet specific government standards.

As a result, this evolution has the potential to trigger the following game-changing consequences:

• For the host facility, it can turn a government agency cost center into a revenue center. By selling cloud solutions to other government organizations, host agencies can offset their own IT costs.
• Local governments can buy cheaper cloud solutions than they might find on their own and they may be able to reduce capital expenditures and overhead costs.
• Cloud services will replace internal client/server systems as the main model for government application delivery. The race is on to build shared regional data centers and the largest portfolios of government solutions.

The IDC Government Insights report features two U.S. states, Michigan and Utah, both well on their way to building cloud hubs that can be used by multiple government agencies at various levels of government. In addition, the report highlights several regional multi-state cloud computing efforts.

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Managed Cloud Services for the Public Sector

Cloud is not a one-size-fits-all proposition – clearly, the right approach depends on your organization’s needs and priorities. Different service and deployment models can be adopted to match the requirements of different types of workloads from across the whole organization.

To illustrate some of these solution trade-offs, we’ll profile public-sector organization needs, and their related information technology and communications service requirements.

Government entities will use a variety of Cloud configurations. Those of sufficient scale will likely adopt similar Cloud models to those of large enterprises. Organizations with common needs and interests may join together to build and share community clouds.

Some government services may be provided through the public clouds of managed service providers. A major issue for public-sector organizations will be balancing concerns and regulations regarding privacy and security with aspirations for transparency and sharing information.

Community Cloud Use-Case Scenario

• Governments are challenged to provide seamless, open, and transparent access to services and information while protecting security interests.
• End-users (e.g., constituents, journalists, government analysts, law enforcement, military, intelligence analysts) need secure access to information from various media, formats, and geographies.
• Traditionally, public sector organizations have taken a silo approach to data management (e.g., mapping specific information to specific communities of users). While the siloed approach offers some security benefits, it limits true collaboration potential.

Role for Cloud Technologies

• Community clouds offer a consolidated approach to shared resources, allowing data and applications to be stored collectively.
• Different end-users are able to work securely and collaboratively using these common datasets, thereby increasing transparency, cooperation, and efficiency.

Application Considerations

• Security and compliance policies must still be defined and managed (particularly for sensitive data sets).

We anticipate that there will be growing demand for collaboration solutions to support secure and rich collaboration experiences within and across government agencies -- and with external organizations.

While government organizations may also see tangible benefits in using public clouds, we expect private and hybrid cloud models to be popular. Hybrid clouds will come in many flavors, including the virtual private cloud model in which an organization has access to dedicated resources in a public cloud. An increasing percentage of total IT spend will move to managed hybrid clouds as the technology and applications mature.

Government organizations should invest the time to determine where Cloud applications are most appropriate, based on workload-specific requirements around cost, risk, and performance.

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Shared Vision for the Future of Hosted Collaboration

With the increased reliance on IT from business leaders, it's important for CIOs to understand the concerns of CEOs and the implications they may have on IT, according to Gartner, Inc.

"Business leaders see very uncertain times ahead in 2011, and they must defend growth despite falling business and consumer confidence," said Mark Raskino, vice president and Gartner Fellow.

According to Gartner's assessment, CIOs should target at least one major business process to be revolutionized or obliterated in 2011 or 2012 -- substantively improving how companies collaborate is one example.

BT and Cisco have a shared vision for the future of hosted collaboration and unified communications services, built on their insight across a variety of networked IT and communications services.

The companies' mutual understanding of complex network environments and solution provisioning has helped them deliver superior capability, service, and value with global reach.

BT and Cisco jointly addressed the ongoing transition to hosted collaboration, unified communications and Internet Protocol (IP) telephony services, including the developing demand for IP telephony as a cloud-based service, at the Gartner Symposium ITxpo 2010.

Collaboration: New Realities, Rules and Opportunities
Stephen Bruce, head of UCC and Mobility portfolios for multinational corporations at BT Global Services and Matt Rowan, manager of partner operations at Cisco, discussed the new realities, rules, and opportunities that stem from a cloud computing-based collaboration and unified communications strategy, including the implications of a utility-priced service.

Bruce said, "As more of our customers contemplate their end-of-life traditional telephony environments and look to embrace the cloud, they are obviously interested in the notion of moving their IP telephony applications into the cloud. The carefully planned transition to cloud-based IP telephony can help customers dramatically reduce upfront investment costs while accelerating the adoption of IP telephony and unified communications on a global scale."

Rowan said, "As businesses analyze their options related to the consumption of collaboration solutions, cloud models offer compelling value. We are seeing enormous demand for cloud based collaboration solutions. Customers are asking for a low risk, minimally disruptive transition, and I believe BT offers a solid answer."

BT, in collaboration with Cisco, announced its hosted unified communications and IP telephony service to business customers in the U.S. in June 2010.

The service allows businesses to bring converged voice, mobile and data services to every desktop in their organizations, using BT and Cisco's cloud computing-based technologies. BT can rapidly deploy services to both large and small sites, offering business customers significant savings as well as operational predictability.

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The Fundamental Power of Cloud Services

We live in a more connected and fast-moving world than ever before. Small business start-ups overtake established incumbents to dominate their markets with increasing speed. Developing countries leapfrog massive landline telecom investments and jump straight to mobile communications.

While our growing interconnectedness brings many benefits, it also sometimes means greater vulnerability and a heightened sensitivity to risk.

Increasingly we look to enabling technology to support both our personal and professional lives. As individuals, we expect instantaneous and ubiquitous access to communications, data, content, and applications.

We increasingly look to social media to inform our personal and business decisions. As business leaders, we expect technology to deliver cost efficiencies, improve customer experience, drive revenue growth, and foster innovation. At the same time, we expect constant availability and end-to-end security.

Evolving Beyond the Legacy IT Models
This combination of rising expectations and a rapid rate of change challenge traditional
approaches for information technology. Business cycles keep shortening, but business system complexity keeps escalating. Traditional information technology solutions are too often described as equal parts business accelerator and business obstructer.

A new approach is needed -- to free individuals and organizations from the constraints of traditional information technology. Many forward-looking executives now believe that Cloud Services are part of the answer and will play a central role in the next era of Business Technology evolution.

Cloud is a new computing paradigm. In Cloud, IT resources and services are abstracted from the underlying infrastructure and provided on-demand and at scale in a multi-tenant environment.

Cloud Services have several fundamental characteristics:

• Information technology, from infrastructure to applications, is delivered and consumed as a service over the network.
• Services operate consistently, regardless of the underlying systems.
• Capacity and performance scale to meet demand and are invoiced by use.
• Services are shared across multiple organizations, allowing the same underlying systems and applications to meet the demands of a variety of interests, simultaneously and securely.
• Applications, services, and data can be accessed through a wide range of connected devices (e.g., smart phones, laptops, and other mobile internet devices).

Cloud encompasses several variations of service models (i.e., IaaS, PaaS, and SaaS) and deployment models (i.e., private, public, hybrid, and community clouds).

In the coming weeks and months we’ll be sharing some insightful customer use case examples of where and how cloud computing services can be applied to deliver business-oriented benefits.

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Cloud Services Embraced by More Progressive Leaders

Once again, we return to the topic of managed cloud services lessons-learned, and the associated best practices that have been gleaned by the early-adopters. The need for agile organizations and adaptive business processes continues to fuel demand for alternatives to the legacy IT status-quo.

According to the latest market assessment by IDC, cloud computing is being adopted more widely for a larger portfolio of business applications, as IT and business leaders discover what works well -- and what doesn't work so well.

The active ingredients for cloud enablement are: just-in-time software stacks that are ready to provision, on-demand deployments, a self-service catalog of cloud services, the scalability to meet growing demand for computing resource and the flexibility to scale down resources -- when they're no longer needed by the user.

Cloud computing uses still focus primarily on public cloud services, with the early adopters leveraging cloud computing for application development, data back-up or archiving, and hosted collaboration solutions. IDC says that Software as a Service (SaaS) adoption has also been responsible for driving usage of cloud computing.

Cost Reduction is Still a Common Goal
No surprise, given the current global economic conditions, reducing IT operational costs has been a common goal of most cloud service adopters.

Moreover, the use of cloud technology is expected to speed time-to-market for new business services, to reduce ongoing operational costs through greater IT efficiency – and to make it inherently easier for users to consume and pay for IT services only when needed.

That said, IDC believes that users will have access to both old and new styles of computing within the enterprise, mapping specific apps to specific deployment models, including non-cloud implementations. Leaders are thereby reserving the right to change the IT service deployment model to fit the evolving business requirements.

A key trend that has surfaced is the selection cloud services from a number of different providers, raising the importance of service federation -- the ability to move from one cloud to another.

Apparently, support for federation is still nascent, with interoperability standards and interfaces that are in the process of being defined. Regardless, interoperability will become a gating-factor for cloud computing to become more widely adopted.

For the less progressive companies, moving their IT applications to the cloud typically requires considerable testing and eventually convincing the reluctant managers to experiment with small projects. Launching apps on private clouds can build confidence in the cloud services model, while minimizing concerns about security and data integrity.

Quest for Better Business and IT Alignment
IDC says that it appears the most critical factors to the success of cloud computing projects can hinge on human factors, not technical. Reason being, cloud computing is about aligning IT technologies to business processes, in a way that reflects the business imperatives and organizational structure.

IT and computing technologies are mere mechanisms, not ends in themselves. Therefore value is best reflected in business impact results, rather than system deployment benchmarks.

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Hannover Re Adopts Tata Managed Telepresence

The reinsurance business is evolving. Traditionally, reinsurance transactions are between two insurance entities: the primary insurer that sold the original insurance policies and the reinsurer. The companies in this industry are long-standing users of advanced communications technology, now including video collaboration.

Tata Communications announced that it has been chosen by German reinsurance company, Hannover Re, to deploy and run its Telepresence facilities -- serving the group’s internal teams in 18 locations across 16 countries, worldwide.

Tata Communications will deploy the Cisco TelePresence high-definition, immersive video collaboration systems to help employees based in Europe, North America, Asia, Middle East and Africa collaborate with each other on a daily basis.

Under this agreement, Tata Communications will provide Hannover Re with a solution that includes deployment and installation of rooms, maintenance, management and concierge service for scheduling and reservations, the world's first public rooms, open global Telepresence exchange as well as the Cisco-certified TelePresence network.

Reliable Integrated Telepresence Solution
Tata Communications' Telepresence services include managed private Cisco TelePresence rooms, public Telepresence rooms that can be rented by the hour -- and the ability for these private and public rooms to connect with each other.

"Tata Communications is the vendor that meets our expectations in respect of Telepresence operations and services. We are confident that Tata Communications will prove its reliability both in the course of the implementation project and in the operations phase," says Mr. Hartmut Fuchs, Hannover Re, CIO and Managing Director, Information and Technology.

"What convinced us is the option to integrate our internal Telepresence network into the general Telepresence infrastructure provided by Tata Communications. We expect that this will allow us to extend Telepresence based communication to business partners in a second phase."

Global Telepresence as a Managed Service
Tata will manage all aspects of Hannover Re's Telepresence needs, supported by its world-class global network. Tata Communications' open exchange also means that coverage can be extend to any public Telepresence rooms that Hannover Re chooses to use in the future, catering to external users such as customers, prospects and partners.

Tata Communications' Global Meeting Exchange enables meetings between any connected private or public rooms, and moves Telepresence from a private intra-company experience to a broader based inter-company collaboration tool of choice.

It meets the market demand for Telepresence meetings, regardless of the service provider network. With this collaboration, customers on either network can connect to each other extending their Telepresence coverage across their business ecosystem.

Claude Sassoulas, Tata Communications' Managing Director for the Europe and Africa Region, says, "This deal with one of the world's largest global reinsurance groups is a significant milestone for our organization. It will strengthen our position as a global provider in the German market, where we are looking to continue our expansion."

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Business Online Collaboration Dichotomy

The goal of creating a collaborative enterprise might seem like an essential requirement that all forward-looking business leaders would actively support. However, fear of the unknown sometimes makes intelligent people react in ways that, in hindsight, appear totally illogical.

A case in point, Cisco announced results of a global study that found that while 77 percent of IT decision makers surveyed plan to increase spending on internal collaboration tools, company employees believe that their ability to collaborate is constrained by their own employer policies.

That said, more than a quarter of those who work at organizations that prohibit the use of social media applications admitted to changing the settings on their corporate devices to gain online access -- claiming they "need the tools to get the job done."

This new insight was attained by investigating practices at medium to large enterprises -- those with more than 250 employees. The study, conducted by InsightExpress, surveyed 2,023 corporate end-users and 1,011 Information Technology Decision Makers (ITDMs) from 10 countries.

Progressive Use of Online Collaboration Tools
The research found that ITDMs around the world recognize the importance of collaboration tools to the future success of their business, with India and China being the most progressive in adopting the technology.

Consequently, many ITDM respondents said that they are planning to increase their spending on collaboration technologies over the next year, identifying video conferencing, Web conferencing and IP telephony as primary areas of investment.

• Globally, 96 percent ITDMs and end users recognize that collaboration tools have a role to play in the future success of their business.
• Of those surveyed, 77 percent of ITDMs expect investment in collaboration tools to increase between now and October, and 56 percent expect their spending on collaboration tools to increase by 10 percent or more.
• Productivity and efficiency were identified by both end users and ITDMs as the primary benefits of increased collaboration -- with 69 percent of end users regularly using advanced collaboration tools, such as video and Web conferencing, to help them complete tasks at work more efficiently.
  

Why Employees Defy the Policy Restrictions
Employees identified a variety of frustrations with devices and applications at work. These include restrictions set by IT managers on the types of collaboration technologies that can be used at the workplace, a lack of integration among the applications, non-compatible formats (video, data, voice), and the limited number of collaboration tools at their disposal.

• Slightly more than half (52 percent) of organizations prohibit the use of social media applications or similar collaboration tools at work.
• Half (50 percent) of the end users admit to ignoring company policy prohibiting use of social media tools at least once a week, and 27 percent admit to changing the settings on corporate devices to get access to prohibited applications.
  

The study also highlights how end users are clearly motivated by the benefits gained from increased collaboration, but also identifies a need for some enterprises to adapt their corporate processes and organizational culture.

• When asked to identify how collaboration benefits them, 45 percent of the end users pointed to improved productivity and efficiency, 40 percent noted they receive assistance in solving work-related problems, and 31 percent enjoyed accelerated decision making.
• Ease of use (58 percent), the ability to communicate anywhere and at any time (45 percent), and features and functionality (37 percent) are the three most desired attributes of a device or application.
• End users believe that elements of corporate culture can inhibit their ability to collaborate successfully: 46 percent feel that all decisions are made by people at the top of their organization, and 39 percent say colleagues are not willing to share information when it does not benefit their own business unit.
  

The research is the second of a two-part series that Cisco has commissioned to explore the impact of social networking and collaboration in the enterprise. Cisco previously shared findings that explored how organizations use consumer social networking tools to collaborate externally.

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