The UK government's budget statement spelled out a 25% cut in departmental expenditure over a four-year period for all except ring-fenced spending on health and overseas aid.
The cuts are set to lead to budget squeezes for IT in the public sector and so spark a further review of efficiency. The quest for cost-effective solutions has already led many public sector bodies to go for outsourcing and shared services, but these latest cuts call for a fresh look at Cloud Computing.
The best thing for Cloud Computing
Research often indicates that hosting technology off site is the least preferred approach to buying technology by the UK public sector. Despite the preference for on-site deployments, the drive for efficiency savings has led the sector to opt for a number of delivery models that can have hosted elements to them, including outsourcing and shared services. The imminent and major budget cuts are set to further soften the sector's attitude towards hosted technology and the bigger Cloud Computing paradigm that has failed to make inroads into the government sector so far.
Cloud Computing is a whole new paradigm that not only offers hosted solutions but also standardisation, commoditization, and elasticity. The combination of these features can really push down costs. Faced with large budget cuts, some public sector IT managers are already talking about reassessing the data risk issue, and so the budget cuts could prove to be a blessing in disguise for Cloud Computing.
Facing data security truths
The idea for the creation of a "G-Cloud" – a government Cloud Computing service – has already been put forward in the Digital Britain report as a secure shared computing platform for use by multiple central and local government agencies as one of its ICT efficiency and procurement initiatives. A government service such as the G-Cloud could allay fears over sensitive data getting into the wrong hands.
However, the public sector has data security issues of its own, as demonstrated by a string of data loss debacles by government bodies over the last few years. Those included HMRC's loss of two disks with 25 million records in 2007, and security lapses in the DWP’s shared CIS system by local authority staff. The sector could charge a Cloud operator with the task of managing data security and privacy to a high standard on its behalf as part of a Cloud Computing service. Even the issue of having data transferred overseas could be addressed by government customers asking for data centres to be based within the EU.
Prepare for cuts now to avoid a crisis later
Urgent action is needed to identify areas where savings could be achieved. It is hoped that the G-Cloud will save the government billions of pounds each year through pooled capabilities, shared data centres, and even a government application store. However, going by past performance, large-scale government IT projects often end up hitting technical and implementation issues, being delayed and over budget. Furthermore, it is early days for the G-Cloud but the budget cuts are looming. The public sector will therefore have to evaluate existing Clouds offered by third-party suppliers for short- to medium-term cost savings.
Consultation on the cuts is under way, and if it is augmented with knowledge sharing and shared resources provided by central government it would speed up progress and accelerate the learning curve instead of each IT department attempting to carry out feasibility studies on its own. Joint working would also help save costs in terms of man hours and mitigate risks of failure later.
A local authority contact told Ovum that the combination of the 25% budget cuts and the likely top slicing of the Revenue Support Grant in order to pay for housing plans, with a freeze on council tax rises, could send councils into crisis management mode rather than careful reviewing and budgeting. That would be the worst of all outcomes.
Sarah Burnett is senior analyst at research firm Ovum
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