January 2011

Developing world’s IT maker

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Cloud computing can jumpstart governments with IT without requiring them to make huge investments in infrastructure

Samia Melhem
Sr Operation Officer, The World Bank

Every now and then the IT world produces   catchy buzz words appealing to the closet poet in some of us—killer app, WYSIWYG, TCOO, petaflop, and so on.

One of the latest ones—listed under the Global Language Monitor 2008 list of most confusing buzz words—is cloud computing, followed by an older relative grid computing and three related acronyms, software as a service (SaaS), infrastructure as a service (IaaS) and platform as a service (PaaS).

Cloud computing allows companies and enterprises to move applications, networking, services and computing infrastructure they currently have on premise to a virtual environment ‘out there’ on the Internet. That virtual  environment is actually running in some data center in large server farms  shared for different applications and clients (virtualisation is the buzz word to use here).

With IaaS, customers get on-demand computing and storage to host, scale, and  manage applications and services through cloud vendors’ data centres. This allows customers to scale with ease and quickly meet the infrastructure needs of an entire organisation or an individual department, either globally or locally. EMC, HP, CRM, Google, Verizon are examples of IaaS providers. For the customer, say a government or a private enterprise, there is no need to buy and maintain servers, data centres, or to build backup and redundancy  infrastructure.

PaaS customers get the operating system, a fully relational  database, and consumable Web-based services that provide security-enhanced  connectivity and federated access control for applications. IBM, CSCO, VMW  and Oracle are examples of PaaS providers. For the customer, there is no need  to buy operating systems, database or Web service licenses.

SaaS online  services are subscription based, on-demand applications and hosted services,  providing end users with a consistent experience across various client devices.  Microsoft SharePoint Online is an example of such a service. Google, Amazon,  SalesForce.com, IBM, Zoho and CRM are examples of SaaS cloud providers.

Cloud is big, getting bigger

Cloud computing has become serious business. According to latest Gartner reports, worldwide cloud services revenue was forecasted to reach $68.3  billion by end of 2010, a 16.6 percent increase from 2009 revenue of $58.6  billion. Worldwide cloud service revenue is projected to reach $148.8 billion in  2014.

Gartner estimates that, over the course of the next five years, enterprises will spend $112 billion cumulatively on SaaS, PaaS and IaaS put together. North  American and European markets represent the largest markets from a  geographic perspective.

The US share of the worldwide cloud services market was 60 percent in 2009 and would be 58 percent in 2010, but by 2014, according to Gartner, this will  be diluted to 50 percent as other countries and regions begin to adopt cloud  services in more-significant volumes. Western Europe was expected to account  for 23.8 percent of the cloud services market in 2010, and Japan 10 percent. In  2014, the UK is forecast to account for 29 percent of the market, while Japan  will represent 12 percent of cloud service revenues.

In the last few years, a  whole new industry based on cloud computing marketing, promotion,  operation and maintenance has transformed the IT industry and its media  machine. New companies are born, new jobs are being  created (like cloud evangelist and cloud manager), and cloud expos,  international cloud computing conferences are being organised. Large  companies are designing or adopting a cloud strategy for some of their  applications, and progressive enterprises are thinking through what their IT operations will look like in a cloud computing model.

Governments are still hesitant

Governments and large companies seem hesitant to take the cloud approach.  This seems to surprise some of the cloud proponents, as cloud computing is  supposed to reduce costs of operation and maintenance of large information  technology applications.

On the other hand, cloud is not free and requires  upfront investments and lot of changes to existing legacy systems. So why  break something that is working, unless you are desperate for savings or unhappy with your current environment?

Challenges inherent in managing  technology based on the principles of previous eras—with complex, custom,  expensive solutions managed by large in-house IT teams—have become  greater, and the benefits of cloud computing in addressing these challenges  have matured to become more appropriate and attractive.

The way I see it, the  biggest beneficiaries could be the new kids on the block, the new users who do  not have much to lose, but stand to gain much, and who can leapfrog.  Developing countries’ government using ICT to reform public sector services  and provide online services, for both local and central administrations are, a  good example of such winners, as they benefit from the latest and best services  available, and need not reinvent the wheel. Small and medium businesses in  need of email, storage facilities, accounting and customer care applications are  well positioned to benefit as well. Doctors and health care providers looking for  case management systems can be another set of adopters.

The cloud computing  deployment can be private cloud-based, where the data centre,  network or applications belong to the client and are managed  by the provider. Private clouds allow governments to have centralised control over  their data and IT resources and countries like UK, Japan, Singapore and China  have already implemented such government clouds.

Cloud computing can be an optimal route for catalysing government  transformation, economic growth and efficient allocation of resources

Then there is the public cloud model, where the cloud provider owns the infrastructure and runs the client’s system on it. A third model is the hybrid cloud, which is a mix of public and private clouds depending on the customer’s needs and requests for data ownership.

Benefits are many for
governments

Governments and public sector organisations across the world today are  starting to look into virtualisation and cloud computing to meet the rapidly  changing economic needs and to improve citizen service delivery. Experts  agree that these technologies will help cut down on IT management cost, while  providing greater flexibility in maintaining security, reliability and compliance.  Also, the public sector often has a huge problem to attract and  retain skilled IT staff, so sourcing these services from a private cloud may the  most efficient option.

At the same time, governments, worldwide, are facing budget constraints and  skills retention challenges. The recent financial crisis has emphasised the  importance of financial discipline and efficient use of resources. Today, state  authorities are looking for low-cost ICT solutions which would provide efficient  outcomes.

Some countries are already implementing government clouds which will allow them to cut spending on IT infrastructure, manage IT and labour resources more efficiently and provide high-quality public services to the  population.The use of cloud computing in the public sector is an optimal solution for catalysing government transformation, economic growth and efficient  allocation of resources in developing countries.

Instead of spending many  years and millions of dollars to develop and maintain public sector  management information systems such as a citizen registration database,  human resource management system for the civil service, business  registration; or an incident tracking system for the police, for instance,  governments today have the opportunity to select such applications from  cloud vendors. This is of course if government officials agree to adopt the  workflow and processes built in the cloud service itself. This may be difficult at  times, but cloud vendors are willing to localise and customise their services to  clients’ needs.

The technology piece in the case of cloud computing is the easy part. The more  difficult part is the change of mindsets, of policies and regulations, and the  development of relevant skills and competencies needed for cloud computing.  Legislation may be a challenge: some countries require that national data to be  hosted within the country itself.

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