A new report released yesterday from IDC Government Insights shows that while all levels of government are working to implement cloud services, workers tend to be somewhat unclear on what the cloud really is. Further, that while IT shops work to upgrade and integrate legacy systems, hesitancy from budget directors to foot the bill may be holding off upgrades for too long, resulting in a bigger net spend.
The study found that despite the growing demand, more than a third of the respondents lacked knowledge of cloud budgeting. IT teams are not only unsure of their organization’s overall cloud strategy, but have no idea how much money is available to purchase and implement cloud services. Chief Financial Officers (CFO) are often the people who drive their group’s transition to cloud (due to potential cost savings, but in another notable finding, 60% of chief financial officers are only somewhat familiar with their organization’s cloud strategy.
“The results of the survey showed that there really needs to be a greater level of communication between CIOs (Chief Information Officers) and CFOs, both need to be in lockstep on the enterprise strategy, goals, and how to get there,” said report author and IDC Research Director, Shawn McCarthy, in an interview with CivSource.
15.2% of respondents said they would dedicate between 1% and 10% of the IT budget to cloud endeavors. However, McCarthy notes that when budget allocations to cloud services lag, CFOs may find themselves faced with a significantly higher cost down the road. “We’ve reached a point where people need to upgrade now, in order to continue to grow with the cloud, getting in later will be a significant cost and time commitment,” he says.
So far, established IT firms are getting the biggest share of cloud services work, according to the survey. When it comes to cloud providers, there is a clear preference across all levels of government for large IT vendors versus smaller, specialty providers.
“For the next few years, say, five or less, the real drivers for this market are going to be the systems integrators. Shared services centers are also part of the whole cloud concept. As cloud services become more ubiquitous, software providers may decide to move around the systems integrators, but systems oriented architectures haven’t penetrated heavily enough yet for that to really work,” McCarthy explains.
He notes that at the state level this is especially true. Some states including Utah and Michigan are also taking their cloud and shared services models to the next level by offering the services to neighboring states and creating regional cloud hubs. “It’s a way to turn a cost center into a revenue center for states,” McCarthy says.
The report shows that states are lagging their federal counterparts slightly, which could be due to a number of factors including variable procurement cycles, and budgetary concerns. At the federal level, the President has also mandated a “cloud first,” strategy which has given a little more firepower to the federal transition. The federal government is expected to spend $20 billion on cloud as part of its near term $80 billion IT spend, and has also partnered with IT and data organizations to create federal standards for the cloud and maximize cost efficiencies.
As CivSource reported previously, at the state level cost is also an important factor in the move to cloud. Systems integration can allow legacy systems to continue working during a broader IT upgrade that includes cloud services. According to McCarthy, survey respondents were clear that in order for all of this to continue the price point and projected savings have to be there. “An office isn’t going to move on to the cloud to save a few hundred dollars, but if it saves a few million that’s a compelling reason.”