Government And IT - "A Recipe For Rip-Offs": Time For A New Approach - Public Administration Committee Contents

Written evidence submitted by Cloud Industry Forum


The Cloud Industry Forum was established in 2009 to provide transparency through certification to a Code of Practice for credible online Cloud service providers and to assist end users in determining core information necessary to enable them to adopt these services.


The Cloud Industry Forum (CIF), is a company limited by guarantee, and is an industry body that champions and advocates the adoption and use of Cloud-based services by businesses and individuals.

We use our resources to support a credible and certifiable Code of Practice that provides transparency of Cloud services such that consumers can have clarity and confidence in their choice of provider.

Our ambition is to bring business consumers and suppliers of Cloud Services closer together in a trusted and sustainable marketplace.


Driving consumption-based and shared delivery IT models in the age of austerity:

"Access to the networked resources provided by 'clouds' enables companies to enter markets without having to meet the capital costs of building their own computer infrastructure. What they get instead is a sort of 'pay as you go' service tailored to their specific requirements."

"This is especially significant today, at a time when we are seeing an explosion in the number of portable devices with limited storage capacity. Access to clouds enables them to transcend that limitation and provide a level of functionality which would normally be associated with much larger machines."

"It is in all of our interests to turn this vision into reality. But let us not under-estimate the challenges."

"First, there must be a step change in the co-operation between industry, consumers, and governments to ensure individual privacy: data security: and confidence in the remote storage of critical information. It is no good, for example, in the European Union—as they propose—deciding on data protection rules that might prevent citizens from accessing the service they want just because this might involve data transfers outside of Europe."

"Second, we need to address the public policy issues in particular those which relate to trans-national cloud computing. There is a real example to clarify which jurisdiction applies to the stored data. Here we will need both vision and an acceptance that the old certainty of knowing where data is stored may have passed."

Ed Vaizey MP
Minister for Culture, Communications and Creative Industries

22 November 2010


—  The evidence submitted in this paper is designed to address the issues raised in questions 5, 8 and 9.

—  Chancellor of the Exchequer George Osborne announced that the coalition government would be cutting £95 million from public sector IT spending this year.

—  He also implemented a freeze on ICT projects valued at £1 million or more and scrapped Becta, the non-departmental agency tasked with promoting government use of IT.

—  However IT remains an essential vehicle for the efficient delivery of services to the public. What we are seeing with the immediate reduction announced in May 2010 and the subsequent squeeze in the Budget has been a dramatic impasse in the IT procurement landscape in the public sector.

—  Whilst these spending cuts may at first seem concerning for public sector IT chiefs and IT suppliers, we are confident that the advance of cloud computing (the delivery of online, secure, scalable and resilient IT services on a pay-as-you-use basis) will be a tremendous enabler to ensure that required IT solutions can still be implemented but without the significant capital costs associated with the more traditional "on-premise" supply models.

—  Local and central government have more technical delivery options available to them today than in years gone by, and as such the thoughtful application of cloud based services offer a credible and viable way to save costs and improve the way IT is procured and delivered. There is no doubt that the financial constraints imposed today will give added impetus to the adoption of Cloud based computing services and advance the delivery of the Government Cloud (G-Cloud).

—  The role of the Cloud will be crucial where departments that either don't have solutions in place yet, or need to upgrade their infrastructure, will need to make decisions on the basis of what will drive efficiency and optimise their IT expenditure.

1.  Cloud Computing—A transformational technology

1.1  The Cloud Industry delivers cloud computing services and is defined as follows by ISO/IEC JTC 1 N9687 Report on Cloud Computing:

Cloud computing provides the IT infrastructure and environment to develop/host/run services and applications, on demand, with pay-as-you-go pricing, as a service. It also provides resource and services to store data and run applications, in devices, anytime, anywhere, as a service.

1.2  Cloud computing therefore is a style of computing whose foundation is the delivery of services, software and processing capacity using private or public networks.

1.3  The focus of cloud computing is the user experience, and the essence is to decouple the delivery of computing services from the underlying technology. Beyond the user interface, the technology behind the cloud remains invisible to the user, making cloud computing incredibly user-friendly.

1.4  Cloud computing is an emerging approach to shared infrastructure in which large pools of systems are linked together in private or public networks to provide IT services. The need for such environments is fuelled by dramatic growth in connected devices, real-time data streams, virtualization and the adoption of service-oriented architectures and Web 2.0 applications, such as mashups, open collaboration, social networking and mobile commerce.

2.  Customer Benefits

2.1  Cloud computing is widely expected to transform the way IT capacity and capability is delivered over the coming years due to its highly economical pay-as-you-consume business model.

2.2  No longer is IT adoption the privilege of the wealthiest companies or public sector bodies but it is both affordable and more resilient than many services can be delivered internally.

2.3  The customer benefits of Cloud Services typically get grouped into three areas:


—  Shift from capex investment to opex.

—  Pay only for what you use.

—  Lower and predictable operating costs.

—  Matching costs to operational demand.


—  Reduced IT Management overheads.

—  Faster deployment.

—  Higher Reliability and fault-tolerance.

—  Scalability to ensure resources are available as needed.

Workforce collaboration and productivity

—  Enhanced Service Levels.

—  Internet enabled.

—  Anywhere access.

—  Resilient infrastructure = less downtime.

3.  Market size

3.1.  According to recent findings by research firm IDC, cloud IT services are currently worth £10.7 billion globally and is estimated to grow to around £27 billion by 2013. These are staggering predictions and something for the industry and general UK economy to be excited about. The economic and innovation implications are profound for businesses adopting cloud solutions as it reduces the barriers to entry for small and mid-sized companies to have a world class agile and secure infrastructure without the capital expenditure traditionally required.

4.  Challenges confronting Government data centres

4.1  Ballooning labour costs—IT budgets are increasingly strained by the rising cost of personnel required to maintain and manage the data centre. Administration costs for servers have spiked by 400% since 1996 and now comprise the single largest cost within the data centre. (source IDC)

4.2  Sky-high energy consumption—Power and cooling costs for data centres have skyrocketed by 800% since 1996, and the escalating costs see no end in sight, yet data center resources have low utilisation (many below 20%).

4.3  Growing Demands from users—Today's on-demand society assumes nearly universal access to real-time data and analytics in a resilient, secure environment. Anything short of that standard is unacceptable. These demands are being driven by a proliferation of data sources, mobile devices, radio frequency identification systems, unified communications, Web 2.0 services and technologies such as mashups. These rising expectations are also creating demands of data centres that IT administrators are challenged to satisfy.

4.4  Chaotic data silos—Too often, today's data centre is a haphazard collection of multiple hardware systems, operating systems and applications that have accumulated over a period of years in response to the demands of various internal business units. These disparate systems grew without an enterprise approach to the data centre that was based on a common set of goals and standards. Instead, the systems were often dedicated to meeting the specific needs of a single business unit or process function without a view toward interoperability with the rest of the data centre or the needs of other parts of the organisation. Often, the result was a data centre with multiple versions of databases, operating systems and hardware from a variety of vendors. This environment can easily result in thousands of different system images in a data centre. This high degree of complexity not only greatly increases the number of dedicated technical staff needed to troubleshoot issues—it also heightens the risk of service outages.

4.5  Exponential growth in data volume—The proliferation of devices, compliance, improved systems performance, online commerce and increased replication to secondary or backup sites is contributing to an annual doubling of the amount of information transmitted over the Internet, according to market researcher IDC. The world's information, the raw material for databases, is projected to double every 11 hours by this year.

4.6  A key goal of the G-Cloud initiative is to facilitate the reduction in the number of Government data centers.

5.  Innovation, flexibility and cost control in the post bureaucratic age

5.1  The hidden cost in responding to these challenges is lost innovation. Having to spend much of their day fixing problems prevents IT professionals from devoting the time and resources to development activities that could truly promote innovation and tap the potential of IT.

5.2  To move forward, one must begin to look differently at how the delivery of cloud can help drive innovation. Government IT executives must reposition themselves as leaders who can bring their organisations to new levels of performance and efficiency through IT while also focusing on improving service, reducing costs and managing growing risks in an ever-connected world.

5.3  Cloud computing liberates organisations to deliver IT services as never before. Cloud enables the dynamic availability of IT applications and infrastructure, regardless of location or scale.

5.4  More rapid service delivery results from the ability to orchestrate the tasks to create, configure, provision and add computing power in support of IT and business services much more quickly than would be possible with today's public sector computing infrastructure and delivery models.

5.5  Enhanced service delivery reinforces efforts for customer and voter satisfaction, faster time to market and information management and service management initiatives, which also support your service delivery initiatives.

5.6  Cloud computing also promotes IT optimisation so that IT resources are configured for maximum cost-benefit.

5.7  This is possible because cloud computing supports massive scalability to meet periods of demand while avoiding extended periods of under- utilised IT capacity. With the click of a mouse, services can be quickly expanded or contracted without requiring overhauls to the core data centre.

5.8  The benefits include lower cost of ownership, which is an essential prerequisite of the age of austerity, enabling you to more easily reinvest in your infrastructure and answer the question, "How do I do more with fewer resources?"

5.9  Cloud computing fosters public sector innovation by enabling organisations to explore quickly and cost effectively the potential of new, IT-enabled business enhancements that can grow with unprecedented scale.

5.10  Not only does cloud computing deliver a lower cost base and greater return on IT spending, but it also promotes more efficient and effective use of technical staff. IT labour costs alone represent as much as 70% of an IT operating budget. With its highly autonomic character, cloud computing eliminates much of the time traditionally required to requisition and provision IT resources.

5.11  Cloud computing also yields significant cost savings in the real estate required for the data centre as well as power and cooling costs. Thanks to virtualisation and the cloud's capability of tapping resources (either through a private cloud or tapping publicly available cloud resources), data centres can rein in the relentless pressure to expand their physical footprint. That space savings translate into reduced energy consumption, an important consideration in light of the fact that power and cooling costs for data centres have risen eight-fold over the past 12 years (Virtualization 2.0: The Next Phase in Customer Adoption. Doc. 204904 DC, Dec. 2006). Cloud services by nature can be delivered as a service and need not be implemented in the Governments current data centres, whilst still leaving full management and control with the public Sector IT executives.

5.12  Studies have documented that cloud computing can save 80% on floor space and 60% on power, while tripling asset utilisation ( POV_MAR_2008_-_02.pdf)

January 2011

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© Parliamentary copyright 2011
Prepared 28 July 2011