Cloud Computing results in up to 50% savings for government (not counting energy savings)

[Here is a great post by Harry Wingo from Google at the forum hosted by the Brookings Institution this morning. Not only do clouds make significant savings in labour and equipment, they can also make a substantial dents in an organization’s energy costs. In a typical office building computers and peripherals consume 30% of the energy according to a Gartner report. So a powerful incentive for government IT departments to adopt cloud computing is to reward them with a portion of the energy savings, which they can then spend on new and enhanced cloud services. Cloud computing could go a long way in allowing government departments to achieve their new CO2 reduction target of 28% as mandated by President Obama’s Executive Order 13154. For more details on this strategy please see http://www.slideshare.net/bstarn/crc-contract. Some excerpts from Google Policy Blog and Brookings report-- BSA]

Google Policy Blog by Harry Wingo
http://googlepublicpolicy.blogspot.com/2010/04/brookings-cloud-computing-can-save-govt.html

If someone told you that they had an idea that could help government agencies function more productively while also cutting IT costs up to 50%, wouldn’t you take them up on the offer? That’s the kind of promise cloud computing holds, and that was the topic of a forum I just attended at Brookings Institution this morning.

I had two take-aways:

First, Darrell West of Brookings released a new paper concluding that the government agencies who have adopted cloud computing solutions have generally seen “between 25 and 50 percent savings in moving to the cloud.” For the federal government, West concludes that “this translates into billions in cost savings, depending on the scope of the transition.”

Second, federal CIO Vivek Kundra (pictured right) spoke about his new plan to streamline federal government agencies’ certification of cloud computing services, by creating a “centralized certification” board designed to speed up federal cloud adoption.

Conrad Cross from the City of Orlando was on the panel this morning as well, talking about how his city reduced IT costs by 60% by using Google Apps. And the City of Los Angeles -- which adopted Google Apps a few months ago and expects to save millions of dollars a year -- makes a cameo in Brookings’ report.

We’re big believers that governments ought to make sure cloud computing is treated on a level playing field in procurement decisions, along with desktop and server-based computing. Brookings made several recommendations in their new paper on how policymakers can do that, and we hope Congress will take up their challenge.


http://www.brookings.edu/papers/2010/0407_cloud_computing_west.aspx

The U.S. federal government spends nearly $76 billion each year on information technology, and $20 billion of that is devoted to hardware, software, and file servers (Alford and Morton, 2009). Traditionally, computing services have been delivered through desktops or laptops operated by proprietary software. But new advances in cloud computing have made it possible for public and private sector agencies alike to access software, services, and data storage through remote file servers. With the number of federal data centers having skyrocketed from 493 to 1,200 over the past decade (Federal Communications Commission, 2010), it is time to more seriously consider whether money can be saved through greater reliance on cloud computing.

Cloud computing refers to services, applications, and data storage delivered online through powerful file servers. As pointed out by Jeffrey Rayport and Andrew Heyward (2009), cloud computing has the potential to produce “an explosion in creativity, diversity, and democratization predicated on creating ubiquitous access to high-powered computing resources.” By freeing users from being tied to desktop computers and specific geographic locations, clouds revolutionize the manner in which people, businesses, and governments may undertake basic computational and communication tasks (Benioff, 2009). In addition, clouds enable organizations to scale up or down to the level of needed service so that people can optimize their needed capacity. Fifty-eight percent of private sector information technology executives anticipate that “cloud computing will cause a radical shift in IT and 47 percent say they’re already using it or actively researching it” (Forrest, 2009, p. 5).

To evaluate the possible cost savings a federal agency might expect from migrating to the cloud, in this study I review past studies, undertake case studies of government agencies that have made the move, and discuss the future of cloud computing. I found that the agencies generally saw between 25 and 50 percent savings in moving to the cloud. For the federal government as a whole, this translates into billions in cost savings, depending on the scope of the transition. Many factors go into such assessments, such as the nature of the migration, a reliance on public versus private clouds, the need for privacy and security, the number of file servers before and after migration, the extent of labor savings, and file server storage utilization rates. Based on this analysis, I recommend five steps be undertaken in order to improve efficiency and operations in the public sector:

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