Welcome!

Agile Computing Authors: Elizabeth White, Tim Hinds, Karyn Jeffery, Nate Vickery, Liz McMillan

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
SYS-CON Events announced today TechTarget has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. TechTarget is the Web’s leading destination for serious technology buyers researching and making enterprise technology decisions. Its extensive global networ...
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device. For more information, please visit https://www.mangoapps.com/.
The essence of data analysis involves setting up data pipelines that consist of several operations that are chained together – starting from data collection, data quality checks, data integration, data analysis and data visualization (including the setting up of interaction paths in that visualization). In our opinion, the challenges stem from the technology diversity at each stage of the data pipeline as well as the lack of process around the analysis.
Designing IoT applications is complex, but deploying them in a scalable fashion is even more complex. A scalable, API first IaaS cloud is a good start, but in order to understand the various components specific to deploying IoT applications, one needs to understand the architecture of these applications and figure out how to scale these components independently. In his session at @ThingsExpo, Nara Rajagopalan is CEO of Accelerite, will discuss the fundamental architecture of IoT applications, ...
SYS-CON Events announced today that Tintri Inc., a leading producer of VM-aware storage (VAS) for virtualization and cloud environments, will exhibit at the 18th International CloudExpo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
In his session at 18th Cloud Expo, Bruce Swann, Senior Product Marketing Manager at Adobe, will discuss how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects). Bruce Swann has more than 15 years of experience working with digital marketing disciplines like web analytics, social med...
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, wh...
SYS-CON Events announced today that EastBanc Technologies will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. EastBanc Technologies has been working at the frontier of technology since 1999. Today, the firm provides full-lifecycle software development delivering flexible technology solutions that seamlessly integrate with existing systems – whether on premise or cloud. EastBanc Technologies partners with p...
SYS-CON Events announced today BZ Media LLC 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. BZ Media LLC is a high-tech media company that produces technical conferences and expositions, and publishes a magazine, newsletters and websites in the software development, SharePoint, mobile development and Commercial Drone markets.
SYS-CON Events announced today that ContentMX, the marketing technology and services company with a singular mission to increase engagement and drive more conversations for enterprise, channel and SMB technology marketers, has been named “Sponsor & Exhibitor Lounge Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York. “CloudExpo is a great opportunity to start a conversation with new prospects, but what happens after the...
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, will discuss the importance of WebRTC and how it enables companies to fo...
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...
IoT generates lots of temporal data. But how do you unlock its value? How do you coordinate the diverse moving parts that must come together when developing your IoT product? What are the key challenges addressed by Data as a Service? How does cloud computing underlie and connect the notions of Digital and DevOps What is the impact of the API economy? What is the business imperative for Cognitive Computing? Get all these questions and hundreds more like them answered at the 18th Cloud Expo...
SYS-CON Events announced today the How to Create Angular 2 Clients for the Cloud Workshop, being held June 7, 2016, in conjunction with 18th Cloud Expo | @ThingsExpo, at the Javits Center in New York, NY. Angular 2 is a complete re-write of the popular framework AngularJS. Programming in Angular 2 is greatly simplified. Now it’s a component-based well-performing framework. The immersive one-day workshop led by Yakov Fain, a Java Champion and a co-founder of the IT consultancy Farata Systems and...
Customer experience has become a competitive differentiator for companies, and it’s imperative that brands seamlessly connect the customer journey across all platforms. With the continued explosion of IoT, join us for a look at how to build a winning digital foundation in the connected era – today and in the future. In his session at @ThingsExpo, Chris Nguyen, Group Product Marketing Manager at Adobe, will discuss how to successfully leverage mobile, rapidly deploy content, capture real-time d...
SYS-CON Events announced today that BMC Software has been named "Siver Sponsor" of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. BMC is a global leader in innovative software solutions that help businesses transform into digital enterprises for the ultimate competitive advantage. BMC Digital Enterprise Management is a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mo...
What a difference a year makes. Organizations aren’t just talking about IoT possibilities, it is now baked into their core business strategy. With IoT, billions of devices generating data from different companies on different networks around the globe need to interact. From efficiency to better customer insights to completely new business models, IoT will turn traditional business models upside down. In the new customer-centric age, the key to success is delivering critical services and apps wit...