Welcome!

Agile Computing Authors: Harry Trott, Elizabeth White, Carmen Gonzalez, Liz McMillan, Yeshim Deniz

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
"LinearHub provides smart video conferencing, which is the Roundee service, and we archive all the video conferences and we also provide the transcript," stated Sunghyuk Kim, CEO of LinearHub, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
"There's a growing demand from users for things to be faster. When you think about all the transactions or interactions users will have with your product and everything that is between those transactions and interactions - what drives us at Catchpoint Systems is the idea to measure that and to analyze it," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York Ci...
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, 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 opportunity. Submit your speaking proposal ...
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, 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.
Discover top technologies and tools all under one roof at April 24–28, 2017, at the Westin San Diego in San Diego, CA. Explore the Mobile Dev + Test and IoT Dev + Test Expo and enjoy all of these unique opportunities: The latest solutions, technologies, and tools in mobile or IoT software development and testing. Meet one-on-one with representatives from some of today's most innovative organizations
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
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, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web co...
"A lot of times people will come to us and have a very diverse set of requirements or very customized need and we'll help them to implement it in a fashion that you can't just buy off of the shelf," explained Nick Rose, CTO of Enzu, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Buzzword alert: Microservices and IoT at a DevOps conference? What could possibly go wrong? In this Power Panel at DevOps Summit, moderated by Jason Bloomberg, the leading expert on architecting agility for the enterprise and president of Intellyx, panelists peeled away the buzz and discuss the important architectural principles behind implementing IoT solutions for the enterprise. As remote IoT devices and sensors become increasingly intelligent, they become part of our distributed cloud enviro...
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, John Jelinek IV, a web developer at Linux Academy, will discuss why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers...
SYS-CON Events announced today that MobiDev, a client-oriented software development company, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex softw...
WebRTC is about the data channel as much as about video and audio conferencing. However, basically all commercial WebRTC applications have been built with a focus on audio and video. The handling of “data” has been limited to text chat and file download – all other data sharing seems to end with screensharing. What is holding back a more intensive use of peer-to-peer data? In her session at @ThingsExpo, Dr Silvia Pfeiffer, WebRTC Applications Team Lead at National ICT Australia, looked at differ...
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Day 2 Keynote at 17th Cloud Expo, Sandy Ca...
Fact is, enterprises have significant legacy voice infrastructure that’s costly to replace with pure IP solutions. How can we bring this analog infrastructure into our shiny new cloud applications? There are proven methods to bind both legacy voice applications and traditional PSTN audio into cloud-based applications and services at a carrier scale. Some of the most successful implementations leverage WebRTC, WebSockets, SIP and other open source technologies. In his session at @ThingsExpo, Da...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
Manufacturers are embracing the Industrial Internet the same way consumers are leveraging Fitbits – to improve overall health and wellness. Both can provide consistent measurement, visibility, and suggest performance improvements customized to help reach goals. Fitbit users can view real-time data and make adjustments to increase their activity. In his session at @ThingsExpo, Mark Bernardo Professional Services Leader, Americas, at GE Digital, discussed how leveraging the Industrial Internet and...
Who are you? How do you introduce yourself? Do you use a name, or do you greet a friend by the last four digits of his social security number? Assuming you don’t, why are we content to associate our identity with 10 random digits assigned by our phone company? Identity is an issue that affects everyone, but as individuals we don’t spend a lot of time thinking about it. In his session at @ThingsExpo, Ben Klang, Founder & President of Mojo Lingo, discussed the impact of technology on identity. Sho...