What the changes really mean for the public sector...
The UK public sector is gearing up for what could be the biggest change for decades to the way it buys and uses technology.
By 2015, half of all new IT spending by government will be on public cloud services - scalable, shared software and systems which are accessed over the internet.
For the government - so often accused of paying well over the odds for unnecessarily bespoke systems - moving to off-the-shelf commodity IT model offered by the cloud means undergoing fundamental change.
It could mean no more projects on the scale of the 14-year £11.4bn National Programme for IT, opening up the £17bn public sector IT market to suppliers beyond the big five who traditionally carry out 80 per cent of the work, as well as the loss of public sector IT roles as the existing inefficient model of government technology is swept away.
According to Chris Chant, director for the government's cloud programme, the changes will be unpopular in certain quarters but says that the way the public sector buys IT has to change.
"There are lots of people who won't necessarily see this as a good thing to do - there are a bunch of people for who any change is not a good change," Chant said.
"The difference is it's not about what organisations want to do any more, it's about what organisations need and can afford."
First to feel the pinch: the big tech suppliers who are the only companies with deep enough pockets to front government contracts that span years and cost upwards of hundreds of millions pounds.
If cloud is to become the pipeline through which government IT will flow then these suppliers could well find themselves out in the cold - these big suppliers are not set up to deliver the patchwork of commodity software and services that government will rely upon in future.
"Suppliers are going to change quite dramatically. [Currently] we go to those suppliers and say 'run our IT please'. They are not in the product market. A few have products of their own but mostly they respond to what an organisation wants to run its entire IT," he said.
The problem is that, in general, the government will no longer be looking for someone to build and run bespoke IT, Chant says.
"We're doing fundamentally the same stuff as other organisations, and other organisations are going off and buying commodity IT solutions - there's no building of the infrastructure and software, which is the model that we've come from," he said.
"It seems unlikely they [existing large suppliers to government] will fulfil all our needs in that respect. We need to buy our stuff at the right price and when we're in a commodity market [you have to ask] how competitive are they going to be in that space when you've already got commodity suppliers out there."
Early indications are that there are...
...plenty of smaller suppliers willing to step in to fill the gap left by the big vendors in the commodity cloud space. A tender document asking for suppliers to provide software as a service, infrastructure as a service, platform as a service and general cloud support services to government under a framework agreement has drawn interest from more than 500 suppliers - some seven times the usual response to government contracts of this type.
How government IT will change
When you have an inefficient system of IT delivery, those inefficiencies not only feed private sector profits but spawn a swathe of jobs.
The phrase 'reinventing the wheel' is often used to refer to the way that government approaches IT - usually it describes the way that poor co-ordination between government bodies leads to them buying what is essentially the same IT system many times over. However, the same phrase can be applied to the roles that have grown up around public sector IT.
Because each government body tends to buy its own IT, each organisation will usually employ people who look after procurement of those systems, check they are secure and manage what are often very large and complex contracts with technology suppliers.
In the cloud world, many of these roles will disappear as the government moves to a model that allows it to buy systems once and then distribute them across the public sector. Making this new approach possible will be an online app store where authorities can buy cloud services.
The government app store is envisaged as an online shopfront where public sector bodies can procure cloud-based software and services - from office systems to payment engines - that have been accredited for government use. Because each product on the store will have been assessed to ensure it meets security standards and procurement regulations, it will remove the need for many of the checks that are currently carried out by each authority before they deploy systems.
"That large procurement activity job ought to become markedly simpler and so [allow the government to] reduce the number of people," Chant said.
"Security and IA are also a critical part of what we do but if we are getting some of that out of the way by pre-accrediting products as they come through at least a good percentage of the security will have been done once, and so doesn't need to be repeated time and time again across multiple organisations. That's the second part where there can be substantial reduction."
Moving to off the shelf cloud-based software will also remove the need for teams of staff dedicated to managing complex multiyear contracts with IT suppliers. Because government will be able to switch cloud services and software far more easily than it can currently switch IT suppliers, there will be less need for "a bunch of people chasing down various service level agreements that are in place with major suppliers", according to Chant.
"I can say to a supplier 'I'm on a monthly contract, this guy over here's doing it for a better price and the quality is really great, your price is not so good and you've let us down on a couple of occasions, see you later'," said Chant.
All of this is great in theory: however, none of these changes will be straightforward. For as long as government has used IT it's been locked into...
...big bang projects - those with eye-watering price tags that take years to complete - to build and support bespoke systems, and Chant faces an uphill challenge to overturn this orthodoxy to fulfil the vision of the G-Cloud.
Chant is not blind to the scale of the task. "I think there will be lots of challenges on the way to this but there's nothing that I see that leads to something that means we can't do it," he told silicon.com.
Not least among these challenges is that many of those big bang IT programmes still have years left to play out - potentially tying government into the old model of IT service delivery for the foreseeable future. The complication of how to exit old deals would appear to be why government has been careful to specify "new" IT spend when talking about its ambitions to move to the cloud.
For evidence of how difficult it can be for government to extract itself from IT contracts there are few better examples than the £6.95bn NHS care records project. Key parts of the project are running years behind schedule but the government has been unable to pull out of the deal for fear of incurring penalty payments that could cost more than seeing the project through.
Sarah Burnett, head of public sector outsourcing research at analyst NelsonHall, said that it will be difficult for government to exit existing contracts, or transition them to a cloud service model.
"None of this is going to be particularly easy when it comes to existing contracts. Any kind of change and migration as a project is in progress is going to be quite hard: it's got to be managed and controlled and all the risks evaluated," she said.
For Mark Taylor, chief executive of SME Sirius and head of the New Suppliers to Government working group, the fact that government will be tied into contracts with existing vendors is evidenced by the small amount of money that it has to pledged to spend on cloud services.
The government expects the public sector to purchase some £60m of cloud services over the next six months under its first G-Cloud framework contract. This £60m, Taylor said, is less than one per cent of the £17bn to £20bn that government is estimated to spend on IT each year.
"Out of the what is spent on ICT each year it is only a fraction, less than a rounding error," he said.
"There is a huge inertia in the way that government is doing things and this seems to be the best kind of deal that can be done."
Offsetting Taylor's concerns over the government's low level of spending on cloud services is the fact that the initial G-cloud framework will only run for six months and will be followed by larger framework deals for government cloud services.
Chant admits that the year-long pause in the G-cloud programme following the 2010 election, while the coalition government assessed whether the project was worth going ahead with, probably led to instances where government bodies had "missed that opportunity" to switch to cloud services as contracts expired. However, not every existing IT contract will be allowed to run its course, he said.
"We will be reviewing the contracts. We may well find ourselves in the position where we need to exit from existing contracts and deal with the consequential costs of that because the benefits might be greater than staying in."
And while government is locked into a number of...
...contracts with IT suppliers past 2015 - the date when government wants half of all new spend to be on public cloud services - government's proposition director for innovation Mark O'Neill said that many contracts will expire before then.
"Some of them have got a long time to run but a lot of them will be expiring over the next two, three, four years and I would be astonished if many, if any, of those contracts are let in the same way," he said.
Shaking off a legacy of inefficiency
Another challenge born out of the government's long history of buying IT is the amount of legacy technology in the public sector, with central government relying on tens of thousands of systems running in some 8,000 datacentres.
Shutting these systems down and dropping the data they contain into cloud services is difficult and will in some cases likely be impossible, necessitating running old systems alongside new.
"It will cost - data migration is not cheap and they will require expertise as well - so there will be some pain," said NelsonHall's Burnett.
The government's O'Neill sees this transition as less of a problem. He believes that cloud platforms can provide an easy route for migrating data from old systems, suggesting a staggered transition where legacy systems are hosted as virtual machines on a cloud platform and share data with the new cloud applications.
"I think that the cloud is an excellent way of dealing with legacy systems," he said.
"Over time, everything gets replicated to a new standard data store and the old legacy system just evaporates."
And when it comes to email - one of the first class of systems the government expects to migrate to the cloud - O'Neill said that most cloud vendors offer tools for migrating data from common packages such as Microsoft Exchange, Lotus Notes or Novell GroupWise.
Chant said that the problem of extraction from contracts and legacy systems could be dealt with if the government devotes more time to working out how it gets out of deals with suppliers.
"We don't understand exit now, we do very little work on exit. We come to an end of a large contract and go 'Oh, this is really complicated', we leave that to the new supplier and old supplier to know how they do that - it's hugely expensive and we pay for it," he said.
"We're moving to a slightly different world, to commodity-based short-term contracts and one thing we're going to make certain is that we understand the cost of exit."
Contract run times will be dramatically reduced under the cloud model, with larger programmes delivered iteratively rather than as a finished product, he said.
"I think that typically we will see contracts of monthly to a year," Chant said.
Chant hopes that these shorter, simpler contracts, combined with the highly visible shopfront of the app store and streamlined procurement rules, will encourage more SMEs to provide government IT. By attracting more SMEs to serve government, the thinking goes, increased levels of competition will drive down prices and increase innovation in the public sector IT marketplace. However, despite 500-plus companies responding to the government's first cloud framework contract, this contract is still not appealing to...
...large numbers of smaller vendors, according to the New Suppliers to Government working group's Taylor.
"Around one-third [of companies expressing interest in the contract] are SMEs, the rest are much bigger companies. Compare that to the number of SMEs in the country and it is a tiny fraction," he said.
Despite attempts by the government to simplify the process of becoming a supplier to the public sector, SMEs are still being put off by the need to fill out lengthy forms before government will consider them as a potential supplier for higher value contracts, Taylor said.
"In the private sector there is not a pre-tender questionnaire and a whole bunch of forms to get to the starting line," he said.
"That [the pre-tender documentation] has been greatly simplified moving forward, but the majority of SMEs still argue that it is too much trouble."
Has the government bitten off more than it can chew?
Even if government can overcome the contractual hurdles it could still struggle to meet the deadlines it has set itself on G-Cloud, as the government's ability to access cloud services in a secure and a reliable manner relies on it reforming its wider IT infrastructure.
"You have all these interdependencies between the different areas of the IT strategy and if one fails the other cannot be achieved," said Georgina O'Toole, director at analyst TechMarketView.
O'Toole gave the example of government's plan to have some 50 accredited cloud products and services available through the government app store by 2012. For this target to be met, she said, government will have to realise other goals to standardise end-user devices and implement common technical standards for networks.
"The end-user device strategy is very much intertwined with the push for open standards and the app store," she said.
NelsonHall's Burnett added: "There are a lot of interdependencies in the government's strategic implementation plan that is why I think the government's timescales might be a little ambitious. They have got their work cut out."
How much will be saved?
In this austerity-conscious era, government is loathe to do anything that won't save it money, and cloud does promise that.
When it comes to exactly how much will be saved from moving to the cloud the government is far more coy than it once was. In the early days of the project the then government CIO John Suffolk said that the G-Cloud programme was key to realising the £3.2bn annual savings targeted by government IT spend under the Operational Efficiency Programme.
Today Chant won't be drawn on the exact level of savings, preferring instead to provide examples of the type of cost reduction that has been achieved where government has made the leap to cloud.
The reduction in price will come from...
...using generic pay-as-you-go cloud systems, rather than bespoke, dedicated alternatives, and from high levels of competition to provide these cloud services, according to Chant.
The sheer size of the public sector and measures the government is putting in place to reduce the cost and time needed to apply for government contracts will encourage a diverse market of suppliers, he added.
"We've got enough scale to have a very vibrant market - take the example of we've probably got something like six million email accounts that we need in the public sector," he said.
"That's a lot of demand and what we can do is have a number of suppliers competing for that business.
"Once you've got that level of competition and we make sure we can get in and out of contracts and services easily, both from a technical and business integration point of view, we start to have a marketplace of commodity email services."
The first areas of work where government expects to utilise cloud services are in areas of commodity technology such as email, collaboration, CRM and infrastructure as a service. But Chant says that these applications are only the start, and that cloud technologies can be deployed and pieced together to build less immediately obviously applicable services, such as authentication and payment engines.
While moving away from bespoke IT systems may reduce the level of control that government has over the design of its software, improving that control can come at too high a price for an administration looking for savings. In a recent speech to an event hosted by the Institute for Government, Chant said that suppliers have charged government as much as £50,000 to change a single line of code in an application.
The move towards the cloud frees up government from costly overheads, according to the government's O'Neill, who gave the example of moving from an email system based on a local Microsoft Exchange server to the cloud-based Office 365 - which he said would immediately remove the hassle of administrating, managing and upgrading the email system from the organisation's hands.
"I go to Office 365, now most of that is no longer my problem," he said.
Giving an example of the scale of cost reduction that government could achieve, Chant said that email that handles data rated as restricted could be provided for about £1 per person per month using a public cloud package, compared to the up to £30 it costs at the moment.
The switch to the cloud will also play a central role in government plans to cut its datacentre running costs by 35 per cent over the next five years, allowing government datacentres to be shut down or reduced in size in favour of using more efficient datacentres run by cloud providers.
Whitehall has already begun saving money by switching to cloud, according to Chant, who said that the Government Digital Service (GDS), part of the Cabinet Office, has cut the running costs of its office systems by 80 per cent by moving to the Google Apps suite of email, calendar, contacts and word processing software - running on Apple Macs.
Chant said that Google Apps is suitable for use in the...
...majority of work undertaken by the GDS, as most of the information that the department handles is rated as impact level 0, the lowest security rating.
On the occasions when the department has to handle more sensitive information, rated as restricted, civil servants use a separate, more secure system he said.
"Is it convenient? No it's not, but that's a very small part of what we do and the trade off is massive convenience in the system that they use every day and also a dramatic reduction in costs," he said.
Realising that much of the information that government handles is low risk, and treating it as such, will be vital if government is to transition its systems to the cloud, Chant said, who added that CESG is reviewing data security levels in government.
"The vast majority of what government does is open anyway. We've got to be realistic about what the security risks are. It opens up a lot of possibilities."
And the possibilities for cloud services go beyond just saving money, according to Chant, ranging from easier to use software that is accessible from anywhere over the net to keeping track of how much government is spending on IT thanks to a pay-as-you-go cloud service model.
When will the move to the cloud happen?
Public sector's shift to the cloud is expected to begin in earnest in January next year, when government bodies will be able to buy SaaS, IaaS, PaaS and cloud support services through a prototype version of the app store.
The clearest guide to the pace at which the public sector will shift to cloud computing is provided by the strategic implementation plan for its IT strategy.
The two major cloud deadlines in that strategy were for 50 accredited cloud products and services to be available through the government app store by the end of 2012, and for half of all new government IT spending to be on cloud services by the end of 2015.
To date, large scale deployments of cloud services within the public sector have been limited to a number of public bodies that are acting as test beds for the government's wider cloud rollout. These early adopters include authorities of varying sizes implementing differing cloud services - ranging from Warwickshire County Council rolling out Google Apps to 4,000 staff to the Home Office, which is deploying a private cloud platform with supplier Savvis.
As government prepares to launch its prototype app store Chant is the first to admit that this is virgin territory for the government and that mistakes will be made, and learned from.
"Getting these policies and processes right is a question of iteration, and we won't get that right on the first framework," he said.
But Chant is confident that - despite the challenges of overcoming government's longstanding love affair with big bang, bespoke technology - that the G-Cloud programme will be carried by the support within government. The project has backing from Cabinet Office minister Francis Maude downwards and the Cabinet Office's Major Project Authority and CIO Delivery Board will enforce a "public cloud first" directive when the public sector buys IT.
"This is about a concerted effort to get this right at all levels, the cloud strategy and strategic implementation plan have been signed off ministerialy by all departments. They've all said they agree with what we're going to do," Chant said.