Welcome!

Agile Computing Authors: William Schmarzo, JT Ripton, Jim Malone, Sematext Blog, Janakiram MSV

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
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
SYS-CON Events announced today that Pulzze Systems will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Pulzze Systems, Inc. provides infrastructure products for the Internet of Things to enable any connected device and system to carry out matched operations without programming. For more information, visit http://www.pulzzesystems.com.
There is growing need for data-driven applications and the need for digital platforms to build these apps. In his session at 19th Cloud Expo, Muddu Sudhakar, VP and GM of Security & IoT at Splunk, will cover different PaaS solutions and Big Data platforms that are available to build applications. In addition, AI and machine learning are creating new requirements that developers need in the building of next-gen apps. The next-generation digital platforms have some of the past platform needs a...
Data is an unusual currency; it is not restricted by the same transactional limitations as money or people. In fact, the more that you leverage your data across multiple business use cases, the more valuable it becomes to the organization. And the same can be said about the organization’s analytics. In his session at 19th Cloud Expo, Bill Schmarzo, CTO for the Big Data Practice at EMC, will introduce a methodology for capturing, enriching and sharing data (and analytics) across the organizati...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
SYS-CON Events announced today that Adobe has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. Adobe is changing the world though digital experiences. Adobe helps customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of co...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
Pulzze Systems was happy to participate in such a premier event and thankful to be receiving the winning investment and global network support from G-Startup Worldwide. It is an exciting time for Pulzze to showcase the effectiveness of innovative technologies and enable them to make the world smarter and better. The reputable contest is held to identify promising startups around the globe that are assured to change the world through their innovative products and disruptive technologies. There w...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, 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 strategy. Meanwhile, 94% of enterpri...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business in 2016. However, IoT is far more complex than most firms expected. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, a renowned visionary and thought leader, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology and business models to adopt and leverage IoT. He will drill down to the components in this fra...
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud 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 for long dev...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices 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 business opportuni...