Welcome!

Release Management Authors: Pat Romanski, Elizabeth White, David H Deans, Liz McMillan, Jnan Dash

Related Topics: @CloudExpo, Government Cloud

@CloudExpo: Article

US Gov't Embraces “Cloud-First” Policy

Plans 40% Cut in Data Center Footprint by 2015

The Whitehouse Office of Management and Budget has announced that, from now on, cloud computing would be the "default approach to IT" for US government agencies.  The move comes as an element of a sweeping set of government IT reforms begun last summer intended to "close the IT gap" between the public and private sectors.  The cloud-first policy is expected to reduce a 2000+ data center infrastructure by as much as 40%, lowering costs, improving security and performance, and speeding up the deployment of new applications.

Closing the "IT Gap"

Last June, writing on the OMB web site, then-Director Peter Orszag made this observation:

"When many of my colleagues went from the cutting-edge, social media-focused Obama presidential campaign into the federal government, they remarked that it was like going from an X-box to an Atari.

"Indeed, a significant IT gap has developed over the past decade and a half between the public and private sectors - and that is a big part of the productivity divide between the two. Closing this IT gap is key to boost efficiency and make government more open and responsive to the wants and needs of the public."

It was the Obama administration's opening salvo in a war on manifold cost overruns, schedule delays, and outright failures in IT projects across dozens of federal agencies.  Since then, the OMB has formulated and started executing on a tripartite IT reform strategy, in which cloud computing plays an important role.

The first part of the strategy was the execution of an in-depth review of the highest priority IT modernization projects that were not yet delivered, "resulting in faster deliverables, terminations of projects that didn't work, and most importantly turned around projects that were in trouble," according to the OMB.  The second was a review of 30 financial systems projects across 20 different agencies with an aggregate budget of $20b, resulting in fully half of them being altered, reduced, or eliminated entirely.

"All In" on the Cloud

The third part of the IT reform strategy aims to substantially alter the way the US government spends its $80b annual IT budget going forward by adopting the "light technologies and shared solutions" of cloud computing, starting with the 2012 budget cycle.

In a speech last week before the Northern Virginia Technology Council, the OMB's deputy management director and chief performance officer, Jeff Zients laid out some of the particulars of the cloud-first strategy.

"What this means is that going forward, when evaluating options for new IT deployments, OMB will require that agencies default to cloud-based solutions whenever a secure, reliable, cost-effective cloud option exists," Zients said, adding, "These platforms will allow agencies to easily adopt cloud solutions for systems, such as infrastructure, email, and productivity suites."

He also said that the OMB will help this initiative along by setting up secure, government-wide cloud computing infrastructure that will serve the needs of multiple agencies and result in the closing of as many as 800 data centers in the next five years.

This is great news for cloud computing for a number of reasons.

Cloud Validation

When an ultra-conservative customer like the US federal government embraces a new technology so whole-heartedly, it goes a long way to dispelling the enterprise CIOs' concerns about security and other issues that have been retarding cloud computing adoption in the high end of the commercial market.

Democratized Procurement

Furthermore, the cloud-first announcement included a declaration that the government would be "increasing budget flexibility and speeding up [technology] acquisitions."  This will almost certainly translate into smaller, pure-play cloud startups being considered for inclusion in new project procurements in a way that companies of their size never were before.

Increased Vendor Profit Margins

Finally and most notably, although the federal government aims to reduce its IT cost through its use of cloud computing, which means a corresponding reduction in the IT vendors' collective top line, the cloud-first initiative could actually improve their bottom line on federal sales.

In general, today, doing business with the federal government is not a high margin endeavor.  Where the average profit of S&P 500 companies overall is about 8.5%, most government contractors make only about five percent.  And, although highly specialized IT systems can individually earn above-average margins, the overall average for software systems sold to the federal government is about 8%, versus 12-16% for similar systems sold to commercial clients.

There are two main reasons why federal IT sales are less profitable than their commercial counterparts, and both of them stand to be potentially mitigated by the cloud-first initiative.

The first reason hardware and, to a lesser extent, software vendors make less profit on federal contracts is the typical government agency's enormous buying power.  Whether it is servers, switches or seats, huge agencies buy huge amounts of everything, and are so able to negotiate the lowest possible unit price on each thing they buy.

The economics and technology of cloud computing say that where an agency might have bought, say, ten separate server boxes to run dedicated application instances before, they will now buy a single box to run ten virtual servers now.  So, while the overall revenue might go down, the margin per megabyte or MIPS will go up.

The second reason for lower federal profit margins made by software and, to a lesser extent, hardware vendors is the attenuating effect on project schedules and budgets of excessive bureaucracy, shifting priorities, and even less wholesome factors like fraud and incompetence, coupled with a procurement process that makes it nearly impossible for vendors to be properly compensated for the time and money they lose because of those things.

There are multiple provisions accompanying the cloud-first initiative that should a long way to reducing and eliminating the various kinds of government waste that currently diminish vendor profits.   One is that the OMB is creating a new formal, government-wide career track for professional program management and will only approve IT projects with effective program management teams "hardwired into the agency's organizational structure."  Another is that they plan to streamline governance and increase accountability by "bringing senior executives to the table armed with the right information and expertise to provide meaningful oversight and drive interventions and decision making on specific projects."

In short, government cloud computing could be a much more profitable line of business than its predecessor.

Catch-Up or Leap-Frog?

Mr. Zients summed up the OMB's IT reform drive, of which the cloud-first initiative is such a large part, like this:

"Tackling the information technology gap between the public and private sectors is one of most effective ways we can make government work more effectively and efficiently for the American people. IT has been at the center of the private sector's productivity gains, but for too long Federal IT projects have run over budget, behind schedule, or failed to deliver what [sic] on their promise. That's why fixing IT is a cornerstone of the President's Accountable Government initiative."

That statement makes it sound like the government thinks it is trying to catch up to the enterprise, but, with regard to cloud computing in particular, one has to wonder if they really understand the magnitude of their goal.

While the OMB intends to use cloud computing to enable shutting down 800 data centers in a few years, most large commercial enterprises are still just taking baby steps, dragging their feet, or digging in their heels with regards to the cloud, and very few are attempting anything nearly as ambitious as the OMB plan.

The US government takes a lot of heat and engenders a lot of cynicism from its citizenry, and much of it is certainly deserved.  But, regardless of our individual politics, we each can probably think of at least a few things the government has done that to us represent startling achievements that we can't help but admire and hope will be further pursued in the wider commercial world, like space exploration or disease prevention.

Two weeks ago, I never would have guessed that cloud computing might be one such thing.

More Stories By Tim Negris

Tim Negris is SVP, Marketing & Sales at Yottamine Analytics, a pioneering Big Data machine learning software company. He occasionally authors software industry news analysis and insights on Ulitzer.com, is a 25-year technology industry veteran with expertise in software development, database, networking, social media, cloud computing, mobile apps, analytics, and other enabling technologies.

He is recognized for ability to rapidly translate complex technical information and concepts into compelling, actionable knowledge. He is also widely credited with coining the term and co-developing the concept of the “Thin Client” computing model while working for Larry Ellison in the early days of Oracle.

Tim has also held a variety of executive and consulting roles in a numerous start-ups, and several established companies, including Sybase, Oracle, HP, Dell, and IBM. He is a frequent contributor to a number of publications and sites, focusing on technologies and their applications, and has written a number of advanced software applications for social media, video streaming, and music education.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
Cloud Expo | DXWorld Expo have announced the conference tracks for Cloud Expo 2018. Cloud Expo will be held June 5-7, 2018, at the Javits Center in New York City, and November 6-8, 2018, at the Santa Clara Convention Center, Santa Clara, CA. Digital Transformation (DX) is a major focus with the introduction of DX Expo within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive ov...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, provided a fun and simple way to introduce Machine Leaning to anyone and everyone. He solved a machine learning problem and demonstrated an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intelligence and B...
"Digital transformation - what we knew about it in the past has been redefined. Automation is going to play such a huge role in that because the culture, the technology, and the business operations are being shifted now," stated Brian Boeggeman, VP of Alliances & Partnerships at Ayehu, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone inn...
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
The 22nd International Cloud Expo | 1st DXWorld Expo has announced that its Call for Papers is open. Cloud Expo | DXWorld Expo, to be held June 5-7, 2018, at the Javits Center in New York, NY, brings together Cloud Computing, Digital Transformation, Big Data, Internet of Things, DevOps, Machine Learning and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding busin...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
Nordstrom is transforming the way that they do business and the cloud is the key to enabling speed and hyper personalized customer experiences. In his session at 21st Cloud Expo, Ken Schow, VP of Engineering at Nordstrom, discussed some of the key learnings and common pitfalls of large enterprises moving to the cloud. This includes strategies around choosing a cloud provider(s), architecture, and lessons learned. In addition, he covered some of the best practices for structured team migration an...
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
Recently, REAN Cloud built a digital concierge for a North Carolina hospital that had observed that most patient call button questions were repetitive. In addition, the paper-based process used to measure patient health metrics was laborious, not in real-time and sometimes error-prone. In their session at 21st Cloud Expo, Sean Finnerty, Executive Director, Practice Lead, Health Care & Life Science at REAN Cloud, and Dr. S.P.T. Krishnan, Principal Architect at REAN Cloud, discussed how they built...
SYS-CON Events announced today that Evatronix will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Evatronix SA offers comprehensive solutions in the design and implementation of electronic systems, in CAD / CAM deployment, and also is a designer and manufacturer of advanced 3D scanners for professional applications.
22nd International Cloud Expo, taking place June 5-7, 2018, at the Javits Center in New York City, NY, and co-located with the 1st DXWorld Expo will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud ...
22nd International Cloud Expo, taking place June 5-7, 2018, at the Javits Center in New York City, NY, and co-located with the 1st DXWorld Expo will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud ...
DevOps at Cloud Expo – being held June 5-7, 2018, at the Javits Center in New York, NY – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Among the proven benefits,...
@DevOpsSummit at Cloud Expo, taking place June 5-7, 2018, at the Javits Center in New York City, NY, is co-located with 22nd Cloud Expo | 1st DXWorld Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait...
SYS-CON Events announced today that T-Mobile exhibited at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. As America's Un-carrier, T-Mobile US, Inc., is redefining the way consumers and businesses buy wireless services through leading product and service innovation. The Company's advanced nationwide 4G LTE network delivers outstanding wireless experiences to 67.4 million customers who are unwilling to compromise on qua...