Three approaches to national cloud strategy

Government cloud adoption is at its pinnacle. In fact, spending on public cloud services is expected to grow from $22 billion in 2010 to nearly $73 billion in 2015—a compound annual growth rate of 27.6%—according to IDC. This growth rate is four times faster than the growth of IT spending overall, and as the third-fastest adopter of cloud technology, the worldwide public sector is helping drive this trend.

National governments are leading the way with serious investment in cloud technology. With the financial crises of the past five years, revenue is becoming so constrained that they are looking to do new with less—innovating faster while saving tax dollars. The cloud supports these efforts by helping governments to centralize their IT assets, save money, and, at the same time, be more responsive to their citizens.

I see central governments taking three primary approaches to national cloud adoption:

1. Government-sponsored national cloud

This first approach is used by the majority—60 percent—of central governments. With this sourcing strategy, the government specifies the types of cloud services it’s interested in, including its requirements for data privacy, security, and sovereignty, and either chooses a dedicated service provider for its national cloud (national telecom, local host, etc.) or bids out the initial workload to the private sector. This approach is favored by governments that want to use the transition to the cloud as a way to support their local IT industries by developing skill sets, creating new jobs, and supporting companies that are going to pay local taxes.

2. Government as service provider

In the second approach, employed by about 30 percent of national governments, the private sector in that country lacks the skills and resources to build out the national cloud infrastructure, so the government itself becomes the service provider. We see this in many emerging markets, where the local IT industry is still in an early maturing phase. This is consistent with the ways countries have developed their critical infrastructures over time. Take telecom, for example: Governments initially supported and developed the infrastructure, and then turned it over to private industry.

3. Government procurement framework

The third approach, used about 10 percent of national governments, is best for larger, more developed markets such as the U.S. and U.K., which have established procurement practices. That’s because this approach involves the central government precertifying cloud providers and solutions, and then adding them to its procurement framework. This framework is then published to its departments, which can buy from the listed providers without going through the public tender or request for proposal (RFP) process.

Based on my meetings with central government IT teams across the globe, there’s a lot more I’d like to share with you about the trend toward using these three strategies for cloud adoption. Over the next three months, I will go deeper into each approach, sharing with you the challenges and opportunities each provides, so that you can choose the strategy that will lead you to the fastest ROI.

In the meantime, check out Microsoft’s Cloud Computing for Government Guide, which includes a cloud basics e-book series, buyer’s guide, and related videos and articles. 

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Dan Mannion
Director, Public Sector Cloud Strategy